Spend Matters Premium Content:
Invoicing and Finance

Best Practice Tips For Implementing Dynamic Discounting and Other Trade Financing Programs [Plus +]

In this Spend Matters Plus analysis, we investigate some of the key best practice tips for dynamic discounting implementation and trade financing programs. In a follow-up post, we will also share “worst practices” that far too many procurement and AP organizations are pursuing with dynamic discounting and trade financing programs because they don’t know better.

Want to Buy a Contract Management System? Here Are a Few Questions You Need to Ask [PRO]

Buying a Contract Lifecycle Management (CLM) application can seem daunting. There are so many stakeholders who touch contracts. We can’t imagine any more foundational commercial business application than contract management that affects so many stakeholders. And at the same time, there are so many market choices.

Trust us, we live these every day. We have over 50 functional requirements within our CLM SolutionMap evaluation database, and there are many requirements that are simply table stakes: version control, role-based access, contract renewal alerts, contract templates, and even basic clause libraries are becoming commodity functionality.

However, there are only a handful of decision points in the decision tree to get down to the few providers that will meet your needs.

First, you have to decide whether you need just pure buy-side capabilities or whether you also need sell-side capabilities and support for employee contracts as well (i.e., whether you really need truly enterprise-wide CLM). If you need strong sell-side functionality, then you’ll immediately be able to knock out some buy-side players, even some of the main procurement suite players.

Next, you’ll need to decide on whether to go with a broader suite or a “mini-suite” provider, or whether you only need just core CLM capabilities. A “mini-suite” can take many forms. Some providers combine CLM plus some sourcing functionality, and others combine CLM with supplier management capabilities (and some have even broader risk/compliance functionality). For practitioners that want to look at some custom combinations of providers, we now support custom SolutionMaps that cross multiple areas so that you can create a true custom SolutionMap rather than just our persona-based maps for various solution types. Contact me if you’d like to discuss this.

And there’s always the issue of whether your IT department prefers the solution to run on existing application infrastructure, whether it’s your ERP system or a SharePoint platform. Hopefully these aren’t hard constraints because there’s only so far that you’ll get with a document-centric approach! You can get to a certain level of capability by adding metadata to contract documents, but until you can model the contract data itself, you’re only going to get so far.

Finally, there’s a handful of unique detailed functionality that really separates the various players. Some of these areas will become more commoditized in the next few years, but others are not so easily solved by marching through the “Feature 500” list. Although the rest of this analysis is for Spend Matters PRO level members only, we welcome our Spend Matters Plus practitioner subscribers to contact us and we’ll send you a copy of this full analysis.

10 Reasons For Procurement to Work With Payments (Part 2) [Plus +]

e-invoicing

In the first installment of this series, we explored several arguments in favor of why procurement should get closer to the actual settlement process and cash flows of the final step in procurement transactions: payment. Today, we move into reducing supplier risk, capturing savings and reducing contract/compliance leakage through closing the transaction, invoice, and payment loop, and the importance of greater visibility into supplier engagement models and supplier network fees (amongst other reasons).

10 Reasons For Procurement to Work With Payments (Part 1) [Plus +]

Sometime shortly after the phrase “P2P” was born, we managed to collectively forget what the second “P” meant. As a friendly reminder, it stands for “pay.” Rather than spanning the length of a transaction from an initial order to payment to a vendor, P2P became known (while companies wrote RFPs for solutions and as vendors marketed tools) as the combination of e-procurement and e-invoicing. This duo, while extremely valuable, doesn’t exactly impact payment all that much (if at all).

But payment matters much more than most folks we talk to in procurement think. By taking control of payments, we can, for example, do an end-run around the administration hassles and supplier headaches that poorly run accounts payable (AP) functions create. And this is just one reason to consider getting more involved in payment strategy and execution. In fact, we can think of at least 10 reasons that should factor into a business case for procurement to seize control and initiative around payments.

An Opportune Time for Collaboration: Procurement and Accounts Payable (Part 1) [Plus +]

Historically, procurement and accounts payable have been slightly awkward bedfellows in many companies. They’ve been loosely coupled through the front-end (e.g., vendor on-boarding, registration process) and the back-end (e.g., approvals, dispute management, discounting, payment, invoice auditing) in both online and offline worlds for various aspects of supplier engagement and management.

Yet in the past decade, procurement as a role and business focus (not always as function, mind you) has garnered greater respect as a means of driving bottom line savings — often identified, not always implemented. It has still been one part of an odd couple, unfortunately, but the lesser odd partner. But that’s the subject for another post, let alone a volume of books. More important, for our purposes, accounts payable has not garnered the same level of interest, and has truly remained an odd cost-center and stepchild under the broader finance umbrella.

In fact, as many procurement organizations have been able to make the business case for more strategic resources based on quantifiable value (e.g., cost reduction, risk analysis/reduction) in the past decade, accounts payable has faced a near constant pressure to cut costs through reduced resources based on various automation schemes — internal shared services, business process outsourcing (BPO), technology or a combination thereof.

Procurement has not been overly keen on taking ownership of accounts payable, either. This goes back a long way. One of my favorites comes from Spend Matters UK/Europe Managing Director Peter Smith. Below, we feature his story and view into accounts payable from a CPO perspective.

Unlocking Deeper Value in the Procurement and Finance Relationship (Part 3): The Top 10 Impact Areas for Procurement’s Involvement in FP&A [Plus +]

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In the second installment of this series, we discussed procurement’s role in helping finance professionals and budget owners use spend data to improve the FP&A process and general business planning. Now in Part 3, we get specific about how to tackle this beast with some specific recommendations that we’ve seen proven out at both advanced firms and at firms that are further back in the bell curve of procurement maturity.

Unlocking Deeper Value in the Procurement and Finance Relationship (Part 2): Spend Planning and Analysis [Plus +]

e-invoicing

In the first installment of this series, we discussed ways to align procurement with the finance function, starting with financial accounting and then moving into cost accounting. Although cost accounting has one foot in the financial accounting world in terms of tracking costs and having them flow to the general ledger (GL), the more important side of cost accounting is its part in managerial accounting and total cost management.

Managerial accounting is about analyzing financials to make good business decisions. It includes analyzing historical costs and spending, but only in the context of improving future spending and reduce total economic costs. One aspect of economic costs is opportunity costs, and procurement must work hard with finance to understand the procurement ROI that comes from strong management of external spending led by the procurement organization. This ROI is measured in triple digits but must be demonstrated with hard numbers.

More importantly, however, procurement’s ability to partner with finance to better influence future spending is the most practical way to influence financial and business results. This comes from procurement aligning well with finance within the financial planning and analysis (FP&A) processes that occur in finance. Hopefully, FP&A is more than just basic budgeting at your organization. Done well, it provides the critical linkage to not only financial planning but also strategic and operational planning that drive success for budget owners, broader stakeholders and shareholders.

Given the importance of FP&A, we’re going to focus on this collaboration area and how to apply it to spend management, which you can think of as “spend planning and analysis” before the spend actually occurs, as opposed to traditional “spent analysis” of spend that already happened. This focus upstream is fundamentally about transformation and changing procurement’s role in the planning and budgeting process. Luckily, this area creates much higher quality of spend influence, which drives proven levels of spend savings.

The Consequences of Eliminating Purchase Orders (POs) [Plus +]

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Should procurement eliminate purchase orders (POs) entirely? This is a daring concept in theory, provided an organization has the right processes and systems to control internal purchasing and buying activities and to protect against mistakes suppliers might create, accidentally or otherwise, for unsuspecting purchasing and accounts payable organizations to correct. These errors could include duplicate invoices, use of substitute products or materials, wrong line-level pricing, invoices based on the wrong quantities and invoices impacted by escalation/de-escalation clauses that are tracked incorrectly.

But procurement has been trained (mostly by control-crazy finance) to require the PO. In fact, think about CPOs touting 100% “no PO, no pay” policies.  Yes, it’s highly controlled, but does it make sense? Are the purported controls worth the cost and risk (in the form of time not monitoring other more important risks)? Procurement and AP organizations considering a “no PO” policy not only need to find ways to protect against these types of errors and mistakes, as well as outright fraud, either supplier-driven or internal. They also need to consider other side issues where key workarounds are necessary

Supplier Onboarding: Linking Design With Action (Part 2) [Plus +]

You’ve defined a strategy for supplier onboarding and given full consideration to all of the elements that make your requirements unique. You’ve fully considered which internal stakeholders besides procurement need to be included in the process of supplier onboarding and management. And you’ve mapped specific initiatives to onboarding requirements. But now it’s time to define specific supplier onboarding workflows, fully linking design with action.

Vendor Summary Report: Invoice-to-Pay SolutionMap℠ Q4 2017 [PRO]

e-invoicing

This SolutionMapSM analyzes a select group of invoice-to-pay solution providers. It is part of our Q4 2017 SolutionMap report series, also featuring spend analytics, sourcing, supplier management, contract management and e-procurement providers. Our Q4 release also features SolutionMaps for procure-to-pay and strategic procurement technology suites.

Summary

Spend Matters tracks more than 50 procure-to-pay solution providers. This analysis features many of the largest invoice-to-pay providers, specifically Basware, Coupa, Determine, GEP, Ivalua, Invocus (Zycus), SAP Ariba, Taulia, Tradeshift and Vroozi. Data from other providers is also included in our SolutionMap scoring benchmarks. Among the providers featured, this SolutionMap release includes select industry/specialty capability of providers, although it does not highlight them in a specific persona, a change from our last SolutionMap release.

Scoring and Ratings Inputs

SolutionMap ratings provide comparative rankings and insight into how each provider scored from a Solution perspective and Customer Value perspective.

It provides a breakdown of Solution scoring for each vendor on an overall category level. This includes each provider’s comparative capability to support:
  • Invoice structure/capture
  • Invoice collaboration
  • Compliance
  • Additional invoicing technology components
  • Financing
  • Payment
  • Supplier network
  • Configurability
  • Technology/architecture
  • Services
Solution scoring is based on analysis of individual vendor capability, including in-depth technology reviews, a highly detailed Spend Matters RFI and live demonstrations and Q&A by the Spend Matters team. The Customer Value score stems from aggregated direct customer input (survey based).

The SolutionMap also provides insight into how customers scored each Supplier Management vendor based on a Customer Value scorecard (e.g., likelihood of recommending the provider, level of value perceived, business value, ability to meet expectations, deployment speed, ROI, TCO and innovation). The Spend Matters SolutionMap database includes more than 275 customer references collected in 2017.

Our SolutionMap approach intentionally does not “co-mingle” Solution and Customer Value scoring, allowing readers to prioritize what matters most to them.

Using SolutionMap

While Spend Matters does not recommend that existing and potential customers of providers use technology and customer scoring alone to shortlist or evaluate technology providers, the insight, along with SolutionMap persona-based ratings, provides a point-in-time perspective that may be useful as either a starting point in an evaluation or a contributing factor to a formal software selection process.

Going Deeper in the Data

Spend Matters reserves its most granular level of scoring and analysis for our practitioner advisory clients, and we invite procurement organizations to contact us for more information.

For example, Spend Matters maintains highly granular scoring insights and ratings in specific areas such as invoicing collaboration and compliance (e.g., core collaboration, invoice validation, invoice approvals, invoice integrations and invoice compliance).

This allows us to provide highly granular insight into how specific solutions compare to both an industry standard Spend Matters benchmark and peer group/competitive vendors for each of these areas to support technology selection processes. We allow PRO subscribers — and on a much deeper level, our practitioner advisory clients within procurement organizations going through a selection process — to get into the data as much or as little as they require.

What is Your I2P Persona? Understand Your Requirements and Mass Customize Your Vendor Shortlist (Q4 2017 Update) [PRO]

e-invoicing

No two accounts payable, finance or shared services organizations are alike (or procurement departments, for that matter). Each has its own persona that reflects not only its own value proposition and engagement approach but also the stakeholders it serves — and its supply base. The same principle holds true of procure-to-pay (P2P) application providers. Each has a persona that reflects its value proposition, solution strategy and targeted customer segments. Therefore, finance and procurement organizations should seek providers whose personas best align to theirs. In other words, there is no “magic” solution provider, and finding the right fit is critical, because a P2P application represents the main interface for most of procurement’s internal customers.

To that end, we are excited to lay out our approach to Spend Matters SolutionMap, a comparative analytical framework for practitioners to evaluate relevant solutions to meet their accounts payable, working capital and procurement needs. Our SolutionMap initiative depicts vendor rankings based on specific buyer personas to reflect the unique value proposition, solution strategy and customer segments served by a vendor. Participating vendors are scored both on their Solution as well as on Customer Value, based on in-depth tech reviews (including live demos) by the Spend Matters analyst team and aggregated direct customer input from surveys. Each SolutionMap is updated quarterly rather than in 12-month (or longer) cycles, to accurately reflect the pace of market developments.

As part of our second Spend Matters SolutionMap vendor comparison ranking for invoice-to-pay and procure-to-pay solutions, the Spend Matters analyst team has dedicated considerable time to developing the unique organizational “personas” that we’ve most often seen in our decades of experience working with procurement organizations.

We have used these personas to weight the requirements that we used in solution scoring, which includes customer satisfaction scoring by solution customers. Having collected feedback from hundreds of invoice-to-pay users, vendors and consultants in recent months as part of our SolutionMap research, we see these personas as useful starting points for procurement organizations to classify themselves before looking at solution rankings of providers in the market.

This Spend Matters PRO analysis shares five of the most common customer personas in invoice-to-pay buying needs. Aimed at practitioners as well as vendors and the consultants advising them, this research brief will be helpful to drive the type of “mass customization” of procure-to-pay solutions needed to meet specific organizational needs.

Below, we present our five personas for invoice-to-pay. For each, we include the following: full definitions, typical organizational priorities (based on each persona), functional / solution and customer value emphasis and recommended selection processes. Comparative vendor rankings are published for each persona separately on Spend Matters (and updated quarterly).

How to Use Planning and Budgeting to Transform Procurement — and the Enterprise [Plus +]

As summer turns to fall, that time of the year that so many enterprises enjoy and look forward to is here: the annual planning and budgeting process for next year. Yes, I’m kidding. This process ranks only a few notches above root canal for most budget owners. Yet if you had to look at the single most powerful best practice within procurement, especially for indirect procurement, it would be procurement’s involvement in the planning and budgeting process to improve the effectiveness of this process for stakeholders and for procurement.

To restate this: The best way to increase spend influence and to translate it into economic benefits is to increase the quality of spend influence. Getting a seat at the table can be challenging, but this table is a perfect entry point, and it also allows procurement to set its own table and bring stakeholders to it. The beauty of planning and budgeting is that it requires some incremental capabilities that are critical for procurement and, more important, for the business. This includes analytics, benchmarking, policy setting and continuous improvement (most of it enabled by strong technology, of course) even beyond this annual process.

Such early engagement also creates a moment of truth where procurement and finance either come together to unlock this value or where they are left to their own devices. In this analysis, I will highlight the hard dollars surrounding this broader practice and how progressive organizations are creating this critical joint capability, as well as give some pragmatic advice regarding how to implement this benevolent and transformational multiheaded beast.