Archive for the ‘procure-to-pay cycle’ Category

The future of purchasing technology lies beyond the war of words between Coupa and Ariba

February 26, 2010

Over at Spend Matters (here and here), there’s a heated debate over Coupa’s recent marketing campaign and it’s claims to better Ariba in many areas. Now I’m not going to jump into that fray – I’ve spent too many years as a copy writer and music critic to bother with marketing claims and hyping the flavor of the month.

In my mind, the one thing that stands out in differentiating purchasing software is ease of use. End-users don’t care if they work for a multi-national, multi-billion dollar company or if they work for a local firm with single-digit FTEs. They are users of a system and by default they expect things to work easily, smoothly and efficiently. It’s as simple as that. Just because you work for a multi-national doesn’t mean you should expect that the tools you use should be complicated.

Bizconnect’s recent poll shows just this (albeit that their research might be a bit shifty):

43 percent of the respondents said the most important feature they look for when evaluating new purchasing software is ease of use.

So what exactly is ease of use.

Well, today many purchasing software developers look at what Google is doing in the domain, or the major internet webshops. I would say that strategy is rather reactive. In an increasingly mobile (in all senses of the word) world – anything developed with a laptop or stationary computer in mind is going to be second-tier by the time they’re closing in on their release date. If your not convinced, check out this blog-post at Google Mobile; Smarter Shopping with Google Moblie to see where internet commerce is heading.

With smart phone sales boosting the entire mobile phone market in 2009, up by 23.8 percent year over year according to Gartner it’s a no brainer to see where development budgets should be going in the future.

Smartphone sales to end users continued their strong growth in the fourth quarter of 2009, totalling 53.8 million units, up 41.1 per cent from the same period in 2008. In 2009, smartphone sales reached 172.4 million units, a 23.8 per cent increase from 2008. More at Gartner.

It’s a fair guess that many a smart phone ended up in the pockets of business managers looking for ways to better manage their daily work (whilst keeping a front of success and innovation). Smart phones are ease of use. Mobile, simple, efficient and always online.

No matter where the war of words between Coupa, Ariba and the numerous commentators end up – purchasing software providers that do not support smart phones in the near future will not be seen as front runners or purveyors of ease-of-use. They’ll just be more of the same old that we are struggling to leave behind.

Posted in Marketing, News, Software as a Service, Technology, Vendor, Web 2.0, eprocurement, procure-to-pay cycle | 4 Comments »

Unbloating IM&S catalogs

August 17, 2009

Bloated gadgets aside, this recent Economist column entitled “When Less Is More” got me thinking in more than one direction.

Especially the poignant and precise quote from Antoine de Saint Exupéry which sums up the argument: “Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away.”

In my mind this is something that all purchasers in the indirect area should take to their hearts. It perfectly sums up why there is no need for unmanaged 5 million SKU catalogs that need to be browsed using a 25 000 node UNSPSC tree and – ultimately – forces the end user to become a maverick.

Next time you’re looking over your indirect contracts – don’t try to find stuff that is missing, try to weed away the stuff that (nearly) no one is buying.

Posted in Change Management, IM&S, Procurement, Supplier Management, Supplier Performance, eprocurement, procure-to-pay cycle | Leave a Comment »

Sure signs of summer: fraud invoices

May 27, 2009

A few weeks ago Ernst & Young unveiled a study entitled “Corruption or compliance: the 10th global fraud survey” in which Ernst & Young’s Fraud Investigation & Dispute Practice Service assess the level of understanding of anti-corruption practices and how these are abided by (or bypassed) in business.

Says David L. Stulb, global leader of the Fraud Investigation & Dispute Services:

“Executives in some companies today may still believe that paying bribes is good business; it “works”. But the risk of such action has certainly increased markedly in recent years.”

The report also concludes that corruptive behavior intensifies in times of turmoil – which anyone working with purchasing cannot have missed. Turmoil leads to confusion which leads to lack of transparency, which is further amplified by the effects of the downturn economy on staffing redundancies which in other cases could have been able to offload the workload to ensure full visibility into the processes.

So what measures can purchasing take to battle these unwanted behaviors?

A clearly defined and communicated purchasing policy is certainly a good start, usage of sourcing tools that ensures transparency and full visibility is also vital as are comprehensive purchasing processes.

On a more transactive level; a no PO/no pay policy in combination with widespread e-procurement adoption is a key lever that can secure that smaller corruption and fraud offenses such as fake invoices never see the light of day.

Posted in E-invoice, Governance, Organization, Sourcing, Supply Chain Management, eprocurement, procure-to-pay cycle | Leave a Comment »

Doing better by standing by your contracts

May 25, 2009

If everyone paid on time, it would give an enormous boost to local, national and regional economies. Not only would 270 billion Euro (*) per annum in written-off receivables be saved, but Europe’s firms could also save at least 25 billion Euro by not having to chase slow payers. Chasing debtors consumes time and money. Apart from breaking a contract, bad debt also helps to drive up the price of goods and services. Research shows that if companies did not have to allocate costs to get pain or have to write off sums of money, they could lower prices, increase investments and improve margins.
* 2,4% of GDP EU27

Last week Intrum Justitia released their annual European Payment Index report where they expose some of the shadier parts of a downturn economy:

  • Delay in getting payment beyond the agreed term has stretched from 17 days in 2009 to 19 days in 2009 (on average)
  • Written-off percentage has increased from 1,9 percent in 2007 to 2 percent in 2008 to 2,4 percent in 2009

Furthermore the report notes that 7 of 10 respondents believe that settlement risks will increase further during the coming 12 months. Bad news for smaller suppliers no doubt, especially in times of hard to get credit. Still from a procurement angle the report offers some really good incentives to get initiatives rolling:

  • 1 in 3 state administrative inefficiency as a reason for late payment
  • 1 in 4 claim disputes regarding goods and services delivered

”Administrative inefficiencies” is of course just another way of saying that there is a need to automate the procure-to-pay process. And the claims dispute angle is as strong an argument internally as it is externally. Supplier want to get paid on time instead of spending time disputing what was ordered and how much it costs.

Posted in Business, Procurement, eprocurement, procure-to-pay cycle | Leave a Comment »

How far should one go to implement full procure to pay automation

April 15, 2009

As I rode my bike (a deep red metallic Pinarello Treviso from 1984 with the group set removed and replaced by a pair of Campagnolo track hubs) to work this morning I passed a queue of cars slowly making their way along Strandvägen being held up by one of the royal horse carriages. Marveling at the historic advances of transportation – horse, bicycle, automobile – it got me thinking about how far one can take automation.

Many have championed the full automation of the procure-to-pay cycle; yet few have actually been able to show any real and substantial benchmarks that go beyond the pre-implementation business case.

Last year, I had the privilege of working alongside some of the senior purchasing executives as they prepared their presentations for the IBX Purchasing Executive Summit. One interesting findings that was presented was that it was very hard to create a business case for full automation of the procure-to-pay cycle. Instead, a hybrid model that included scanning, workflows, automated matching as well as a shared service center in a low cost location to process some of the invoices manually was presented as the best cost alternative. The streamlined process cost was in the low double digits with retained quality and while expanding on the subject in the presentation, the switching costs were ruled to high to go further into full automation even though it was technologically possible.

I think there is a great lesson to be learned from this; while technology might dazzle us with its might, one should not forget the human alternative as it may still be able to do the job faster and at a lower cost (be it to process invoices or as in my case – get me to work quickly and in style).

Posted in E-invoice, Outsourcing, Procurement, eprocurement, procure-to-pay cycle | Leave a Comment »