Combine the e-procurement and invoice-to-pay technology markets, and what you have is the P2P market, or procure-to-pay. The P2P market comprises hundreds of providers, as well as numerous sub-sectors such as catalog management, supplier networks, trade financing and supplier-side e-commerce. Today, we’ll address e-procurement and invoice-to-pay individually in this quick and dirty guide to P2P.
What is E-Procurement?
First off, what is it? The term refers to the automation of transactional procurement, focusing on the following:
- Requisitions and PO processing
- Services procurement
- Supplier setup and onboarding
- Receiving and integration to inventory/AP
- Supporting adjacent procurement processes
E-procurement was essentially created to combat the gaps in ERP support for purchasing activities. Spend Matters analysts Jason Busch, Xavier Olivera and Pierre Mitchell wrote that “the roots of e-procurement — which leading provider Ariba (now part of SAP) originally descriptively called an ‘operational resource management system’ back in the late 1990s — were sown out of enterprise resource planning (ERP) systems’ failure to address specific transactional buying considerations to enable both procurement and frontline business users to manage external expenditure more easily, efficiently and effectively.”
What Components Make Up E-Procurement?
The various functional components of e-procurement can be categorized into catalog management, requisitioning, ordering, receiving and supplier network/portal. Below are just a few of the key elements of each area (there are many more!).
- Capability to create, onboard, update and maintain catalogs in real time
- Native or third-party support capability, processes and mechanisms used for catalog data quality control
- Catalog maintenance — the process and mechanisms for actions (e.g., add/change/delete) of catalog records across suppliers, buyers and intermediaries, as well as integration to source systems
- Shopping interface — the “front door” for the user inclusive of capabilities that can narrow or restrict views based on different criteria. Includes the ability to personalize the user interface based on the user.
- Search engine — search methods (spanning internal catalogs, external catalogs, punch-out sites, marketplaces, web storefronts, etc.) including federated search and consolidate/master/virtualized catalog models
- Shopping guidance during the requisitioning process in support of the user and procurement policies
- Configuration and set-up for the ordering process
- Communication processes and transmission methods between buyers and suppliers
- Capability to handle multi-currencies and multi-languages for multi-country usage purposes as well as cross-border system integration and reconciliation
- Support for all elements of the receiving/receipting process including the ability to handle and track assets
- Ability to integrate receiving/receipting activity to adjacent processes
- International trade and logistics — receiving/receipting integrations and support for trade and logistics (including cross-border if applicable)
- Capabilities to support supplier performance and risk management efforts
- Onboarding approaches and models to enable suppliers across different categories, supplier tiers and technical capabilities.
- Capabilities to support invoicing and other document exchange from a portal or network environment
What is Invoice-to-Pay?
Invoice-to-pay is simply a combination of e-invoicing and e-payments, and invoice-to-pay solutions can complement e-procurement solutions or stand on their own. As Busch, Olivera and Mitchell explain, “while invoice-to-pay technology can bring benefits to both procurement and suppliers, perhaps the main beneficiary is accounts payable, as these solutions not only reduce paper-based processes and improve efficiencies… but also serve as a foundation for transforming AP by introducing new levels of operating effectiveness.”
What Components Make Up Invoice-to-Pay?
The various functional elements of invoice-to-pay can be categorized into invoicing, payment/financing, and connectivity/portal/network. Below are just a few of the key elements of each area. Again, keep in mind that there are many more.
- Capability to support collaboration between suppliers and internal stakeholders
- Capabilities to support both basic and highly complex invoice matching, including the incorporation of rules-based invoice validation and straight-through processing models
- Invoice compliance — compliance capabilities specific to the regulations of the tax authorities of countries
- Capability to support multiple payment methods and approaches, including integration with an accounts payable ERP module, with p-card/v-card providers and with banks or third-party payment solutions
- Capability to support payment cards or virtual cards, as well as card integration into native T&E modules
- Financing-specific analytical capability (for buyers and suppliers)
- Ability to connect to multiple supplier/business networks
- Supplier performance and risk management
- Capability to support different multi-tier scenarios
If P2P is an area that you want to explore more deeply, we encourage you to read our latest free research paper, Spend Matters Landscape Definition and Overview: E-Procurement and Invoice-to-Pay (Procure-to-Pay). Not only does it provide detailed explanations of the key components of e-procurement and invoice-to-pay, the research paper also gives an introduction to the vendor landscape — broken down by category such as suite, standalone and industry-focused.