ERP is Your Hero, But are Procurement Execs Missing a Superhero?

Spend Matters welcomes this guest article by Poulami Mukherjee, marketing, Zycus.

Being a superhero comic fan, I happen to sense a pattern in every superhero comic. Each central character, or rather the “hero” of the comic, needs his “superpower” to drive the story. Come to think of it, who is Tony Stark without his Iron Man suit? He could be a very rich guy, but he is not saving anyone. Or rather, who is Bruce Wayne without his Batman gadgets? But when each of these characters is united with their superpowers, the result is nothing less than marvellous.

In the recently released Pulse of Procurement 2015 Report, 64% of procurement execs have reported automation in place for their procurement processes, with 46% relying on ERP modules. ERP, without a doubt, is the key system that organizations bank on when it comes to a single source of truth for its various financial transactions. However, can procurement execs handle their challenges with this organizational “hero?”

Procurement execs are facing their own unique challenges when it comes to getting more spend under management, improving compliance with existing contracts, driving technology adoption, compliance with set processes and contracts and, most of all, generating higher cost savings. ERP systems, in their current state, do not offer the solution to address the above challenges. Especially when it comes to procure-to-pay (P2P) processes, first generation P2P solutions fail to meet the modern-day expectations of a more B2C user experience. The study also highlights the 31% of respondents who are planning to upgrade their existing automation to one that is leading edge, and a majority 43% who are planning to upgrade from their existing ERP solution. Also, of the 46% of respondents who rely on ERP modules, only 13% feel that it is leading edge.

So this brings us to the question: What is the best “leading edge” alternative that procurement can have alongside its existing hero?

Before we delve in detail into the alternative, let’s have an overview into the existing technology landscape for P2P per the results of the Pulse study. Investment in P2P is divided roughly between ERP modules (46%) and procurement point or suite solutions (40%), with only 14% going the home-grown route. Some 29% classify current P2P solutions as inadequate or behind the curve, and 31% say upgrade plans are in the works, with the largest group (43%) upgrading from ERP modules.

Next generation, state-of-the-art P2P solutions, equipped with intuitive user interface, smart guided buying and robust workflow functionalities help procurement organizations achieve compliant buying, thus enabling them to achieve key metrics around spend under management, contract compliance, etc. Procurement organizations classifying their P2P solutions as state -of-the-art report overall tech adoption rates 18 points higher than those classifying as behind the curve. Presence of state-of-the-art P2P also coincides with a 10-point gain in average spend under management. Some 82% of high savers have P2P solutions, compared to 48% of low savers; high savers are also most likely to be planning P2P upgrades.

So, while P2P can work as a front-end manager, ERP can handle the rest of the organization’s chores, as it usually does. Having the next generation P2P solutions integrated with the existing source systems, organizations can experience an impact that one usually associates with having a superhero. How about $15 million in savings on a spend of approximately $500 million? That’s the direct impact of having a state-of-the-art P2P solution at your side — an impact a lot of organizations would love to have.

First Voice

  1. Bill Kohnen:

    Did you really say ERP is a hero? On the contrary SAP is Hydra and Oracle is SPECTRE with the rest being a collection of goons like those that supported Joker, Penguin et al on the Bayman TV series.

    Legacy ERP systems are more of a constraint these days.

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