2020 Predicaments and Predictions in Procure-to-Pay: Issues with E-Procurement, Invoice-to-Pay and AP Automation [PRO]

(Editor’s note: Spend Matters’ analysts are taking on the new year by looking at their areas of procurement technology to see what’s broken and what can and should be fixed this year. Here, analyst Xavier Olivera lays out the predicaments faced in the procure-to-pay sector. And for our PRO subscribers, this post also offers his predictions for 2020.)

The market for procure-to-pay (P2P) solutions — including its submarkets for e-procurement, invoice-to-pay and AP automation solutions — came a long way in the 2010s.

For e-procurement providers, we saw a strong focus on improving the overall user experience of their tools; a push to help organizations increase their percentage of spend under management; new approaches to identifying and eliminating maverick spending; and increased availability of intelligent analytics that can recommend strategies and action items that lead to better purchasing decisions.

Invoice-to-pay providers, for their part, didn’t sit still either. In fact, many solutions in the I2P and AP automation sectors evolved to better digitize and automate processes around invoice capture, validation and approval — primarily through the application of AI and machine learning to their tools.

That doesn’t mean there aren’t still problems, of course. So as we start 2020, we wanted to take a step back and look at two persistent predicaments in the P2P space that procurement organizations and their technology providers are facing:

* In e-procurement, there’s one problem in particular that will continue to plague vendors over time, requiring new capabilities and creativity to solve it: the need for procurement organizations to generate new savings year after year, especially when savings tend be viewed as related to sourcing while P2P is viewed as more transactional and focused more on efficiency savings.
* In I2P/AP automation, the real challenge is to support the broader organization’s goal of improving cash flow and optimizing working capital while balancing the needs of suppliers, who want to be paid as soon as possible. Balancing these goals requires improvements in the current P2P solutions capabilities, such as by incorporating functionality for payment processing, supply chain financing, and the ability to move money worldwide at a lower cost (especially in cross-border payments).

We consider these two challenges critical not just for procurement transformation but also for supporting value creation across the whole business. So now that we are entering 2020, this Spend Matters PRO also offers some predictions in regards to these challenges for what we believe P2P providers will do this year — or at least we wish they would. Issues include the need for total costs to be calculated in e-procurement, and for better P2P answers to working capital, financing and payments.

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