The Most Powerful Word in Procurement (Part 2)

Yesterday we published the first part of the essence of a very good presentation we heard from Wax Digital, a leading UK eProcurement provider, at eWorld recently. Daniel Ball, Business Development Director, gave a speech titled "Integration, Integration, Integration -- Why Good Connections Are Key to Raising Procurement's Profile." Here is the second part. (We also co-hosted a webinar on the subject which you can listen to here on the Wax Digital website.

Procurement integration challenges come in three forms - business integration, systems integration and software integration. Business integration we talked about yesterday, and today we cover the other two.

Software integration

First let’s look at procurement software. Nowadays it’s common for procurement to seek software that can deliver an ‘end-to-end’ sourcing and purchasing process. The most efficient way of doing this would be to implement a single Source-to-Pay solution that addresses the full sourcing and purchasing lifecycle and holds all data in one place. Indeed, analyst Aberdeen Group states that companies taking a ‘best in class’ approach to Source to Pay can expect to achieve more compliant purchasing transactions, higher realised savings and greater supplier quality visibility, among other benefits. However, many organisations already have a partial solution in place, in the form of a Source-to-Contract tool or Purchase-to-Pay system, or both. Integration of these two halves of the process is critical in order for organisations to realise full Source-to-Pay benefits.

Another challenge in determining an integrated software foundation is over the disparity of ownership between the procurement and accounts payable functions. They often share control of the P2P process resulting in conflicting choices over systems – such as whether to select eInvoicing or purchasing software. This can lead to more than one system being used or key departments not buying in to others’ choices.

Bundling of ‘cheap and cheerful’ procurement modules within wider software platforms like ERP can be another issue. Typically sold as integrated platforms, these procurement tools are often acquired bolt-ons to core systems and receive little ongoing development, maintenance and support from the vendor.

In contrast to integrated Source-to-Pay platforms separate software modules offer little in terms of true process automation, visibility and control. With integrated Source-to-Pay for example, spend analysis becomes easy because all data is held and viewed within one system. Procurement can use these spend reports to directly create sourcing events, automate management of and adherence to contracts across spend, and create cyclical improvement processes for the business.

Systems integration

What I describe above also centres on the benefits of a best-of-breed approach to procurement software adoption. But, inherently, this approach necessitates integration across the business’ various systems too (such as ERP, finance and supply chain management) - with twofold benefits. Firstly systems integration ensures that valuable activity and data within the sourcing and procurement platform feeds into wider business processes. Secondly this integration ensures that other systems can feed into procurement’s own tools, adding insight, context and value.

Traditionally businesses have struggled with an absence of genuinely cohesive and integrated systems. Early software tools were departmental by their nature, but at that time businesses didn’t rely on enterprise-level technology the way that they do today. Then came the behemoth software ERP platforms that promised to deliver all functions’ needs in one. For critical areas like finance, HR and customer service maybe, but more peripheral areas such as procurement have not been so well served.

Now, we’re seeing a rise in the use of intuitive integration platforms that let business functions make their own technology choices without the risk of their information existing in a silo. Modern integration approaches like Integration Platform as a Service (iPaaS) make it easy to link best-of-breed systems – whether cloud-based or on premise - not only from a data perspective but in terms of real process flows to mirror the true mechanics of the procurement organisation.

With stronger integration tools, procurement making its own system choices alongside other departments becomes a win-win. Not only can other software applications be connected across processes, so can wide ranging data points such as credit referencing databases, punch-outs to supplier websites and social media – all required in an increasingly connected business and world.

So for my money, integration has to be procurement’s watchword in 2016. This means full cohesion for its decisions across the business from boardroom to shop floor. It also means ensuring the elimination of gaps in its own procurement-centric processes such as Source-to-Contract and Purchase-to-Pay. And finally it’s about making sure that both its own systems and those used across the business are benefiting from being fully joined up. These aspects of integration are the critical foundations for procurement best practice.

 

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