eProcurement and P2P: Contractual Flexibility + Quantifying Usability in Financial Terms

This post is based on the following paper authored by Spend Matters’ Peter Smith: What Does Usability Really Mean? Making Software Selection Decisions and Getting Behind the Rhetoric (free download with registration).

All too often, we think usability and the overall “user experience” of a toolset are synonymous with the actual interface of the tool for various users. But this is not necessarily the case. As Peter Smith observes in the above-linked analysis, “Consideration of the flexibility of what the organization is buying, its scalability, and indeed the exit route if it ever comes to that, can all be considered under usability.”

“For example, how flexible is the contractual route under which the system can be bought and used? Is it scalable – if more “seats” are needed or another business or country is brought onboard, can that be done without excessive cost and a long protracted vendor negotiation? (With traditional software, some procurement executives still have long-standing scars from those license negotiation situations)!”

The value of usability is something we can quantify and put in “hard financial measures” as Peter puts it. Specifically, as Peter notes, “To emphasize why this comes down to hard cash, consider the following:

• Nobody tends to measure, assess, and quantify the cost of the user time spent ordering stationery, or approving that hotel for their direct report, or checking on how much of the budget they've got left and whether they afford that interesting training course. And while these are all important activities to some extent, that's not what the organization is actually employing that individual to do. The individual is primarily employed to sell, develop products, 
handle customers, or come up with better finance strategies. So time wasted on spend-related administration is time that could be better used on added value activities.

• Training costs need to be considered. Where there is a large user population, this can be a significant element. And don’t forget training for whomever is going to administer the system and any “train the trainer” costs.

• Once we get into those issues of configuration, managing supplier interfaces, and deeper activities around managing the technology, the costs can mount up even more quickly and dramatically. What will it cost you to add a new catalog to the P2P system? Or change the approval structures for requisitions and orders? Or get the annual spend data cut in a different manner to how you wanted it last year? Assessing the likely internal costs around that broader administrative activity should form part of any business case and all product selection decisions.”

You can read additional elements of the usability quantification equation in Peter’s paper, What Does Usability Really Mean? Making Software Selection Decisions and Getting Behind the Rhetoric (free, but registration required).

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