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Analytics and P2P: Using Spending and Payment Insights to Drive Savings and Working Capital Management Strategies

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Spend Matters research suggests that the most powerful approach in defining an ideal future transactional buying and P2P state comes not from what we've expected to achieve in the past, but what we can challenge ourselves to quantify, benchmark, define and measure in the future. Put another way, rather than simply implement P2P (e.g., eProcurement, EIPP, T&E, etc.) systems and related analytical tools to pursue and measure the previously bulleted activities, organizations should first understand both what's possible from a quantitative improvement standpoint and where they are today.This Spend Matters analysis provides both tactical direction for understanding P2P savings and working capital management strategies both broadly and on a category basis as well as expert benchmarks to help companies get more from their efforts.

Understanding P2P metrics, benchmarks and the organization's current standing can help us answer the following types of questions, all of which are fundamental to procurement strategy and execution:

  1. What are we really trying to do from a P2P systems implementation perspective—and how should we rank our priorities?
  2. What types of benefits can we expect from reduced labor costs versus other areas?
  3. How will our suppliers react to the system and can we expect added—or reduced costs—from new operating models?
  4. What is our definition of success around compliance and how do we plan to baseline and measure it?
  5. What is our plan to drive adoption—and to tie upstream and downstream procurement activities together alongside working capital and finance objectives?

Among other conclusions this analysis makes, Spend Matters suggests that companies which invest in the right sets of technology can drive significantly disproportionate returns when it comes to getting the most out of their overall P2P programs (including both eProcurement and invoice automation) as well as spend analytics. After reading this Spend Matters Compass series brief, readers will take away a set of key benchmarks (e.g., order processing and invoice processing costs, impact of electronic invoicing, impact of electronic invoicing on early payment discounts) as well as specific strategies for looking at more complicated P2P information sets (e.g., legal spend, T&E spend, etc.).