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Procure to Pay transformation is the topmost agenda for every CPO. However, no two P2P transformation outcomes are the same. A McKinsey and University of Oxford research suggests that on average, large IT projects run 45% over budget and 7% over time while delivering 56% less value than predicted. Some can put the whole organization in jeopardy.

Every transformation journey is nothing short of an off-road adventure that can be compelling and challenging at the same time. Even more for Procure to Pay software Transformation projects. As there is an additional burden on Procurement to reinforce itself as a value creation center and strategic leader.

With defacto “digital” prefix, P2P transformation could mean a winsome tech stack of process automation, integrated real-time analytics, consumer UX in a cloud-native application. These systems aim to centralize operations but may fall short in fully automating individual business processes, leading to challenges in tracking and compliance within the procurement cycle. No doubt getting this P2P automation bundle is important, however, the success depends on picking the right objectives, choosing the right approach, and partnering with the right P2P Software vendor. Optimizing and automating the procurement process can lead to significant financial benefits, making cost savings essential for organizations to thrive in a competitive landscape.

Let us deep-dive into these three unsaid but under-talked parts of procure to pay transformation conversations:

1. Setting the Right Expectations

The difference between ambition and aspiration can be boiled down to the difference between solving high-leverage problems and solving high-visibility problems. Hence, the absolute clarity on what do you want to accomplish i.e., “what are the expected outcomes and by when” can save you from a lot of bottlenecks.

Regardless of where your Procurement function sits on the Maturity Spectrum, P2P vendors like Zycus can leapfrog you to the top of the food chain. But is that what you really want? Probably, you might not need to undergo a complete P2P overhaul. Or you might need only partial automation. Without the above-said clarity, you might rush the adoption of plug-in, piecemeal solutions that will have less impact or sometimes an adverse impact. Adhering to business rules ensures effective management of the acquisition process and control over spending, ultimately leading to improved teamwork and operational efficiency.

Hence your expectation should be tempered by the strategic question “is that the future state that you would want to put time and money at?”

-Do you want to lower PO process costs by X%?

-Do you want to reduce Y% number of FTEs required to manage every billion dollars?

-Or you would like to cut down indirect spend by 50%?

All of these or some of these and in which order?

Then reverse engineer that into strategic and operational goals and milestones. And it goes without saying that there is always a Model-Reality divide, and setting the right expectations from the project will definitely narrow that gap.

Efficient contract management is critical for organizations undergoing procure-to-pay transformations, ensuring effective oversight, risk mitigation, and seamless integration with digital technologies to enhance procurement operations.

2. Figuring out the Right Approach

The procurement landscape is littered with many solutions and strategies that promise to deliver but eventually fail. The organizations that succeed are the ones that fully leverage technologies such as Artificial Intelligence (AI), Design Thinking and Process Orchestration to create an integrated P2P platform that connects stakeholders, provides spend transparency, and elevates the procurement function from value-enabler to a strategic business driver.

Also important to note that P2P is no longer an IT-only initiative. Procure to Pay transformation project, to be successful, must include all the business stakeholders who are looking for P2P solutions to derive better value from their spend data and platform that impact their decisions. Integrating electronic payments within procure-to-pay software ensures accurate invoice matching and efficient management of financial processes.

After the stakeholder buy-in, even with the right vendor and right expectations parity, outcomes go awry due to incorrect approaches. All the marketed approaches out there, can be grouped into two main categories:

-One-off Automated Solutions with Segregated AP

-Fully-automated P2P Suite

The first one is a conventional approach that focuses on identifying areas that need immediate automation. It works well in situations where the baseline maturity of the Procurement function is inadequate for full-scale transformation. In a way, this approach works as a pre-phase for strategic shift and also serves as a wake-up call for an organization to realize how they fare against their peers. Alternatively, you can use this approach to validate the capability of the chosen vendor.

The second approach is what Zycus recommends for most organizations. It helps you to have complete visibility into Spend and Compliance from strategic to tactical level at a single place. The singular platform brings in much-needed streamlining and workflow optimization enhancing inter-departmental collaboration. In fact, comprehensive, cloud-based and centralized procurement P2P solutions like Procure to Pay Software help procurement function in achieving the actual P2P transformation goals that is to become a strategic value creator and pro-active business driver. Strategic sourcing plays a crucial role in enhancing procurement effectiveness by automating procurement process and facilitating vendor management.

3. Selecting the Right Procure to Pay Software Vendors

P2P is an umbrella term that covers all the operational elements of procurement. It’s important to recognize that your procurement solutions should address issues across the entire value chain – both supplier relationship management and customer-related challenges – so you can focus on creating greater value throughout the extended enterprise. In this background, the purchase to pay process transformation journey is no small decision and is a massive undertaking that requires heavy investment and the involvement of many departments. Ensuring accuracy, legitimacy, and efficiency within the procure-to-pay framework is crucial, and this is where the role of the purchase order becomes significant.

P2P Software Capabilities

The P2P software suite should offer a set of P2P solutions rich in functionality but with no excess baggage of traditional procurement features. The platform must get you the right data at the right time to raise critical insights for smarter decision-making across the procurement lifecycle. Not limited to reducing cost and eliminating complexity, it should go beyond process automation and be capable to add value through innovative offerings across the supplier ecosystem. Effective vendor management is essential in monitoring vendor performance and enhancing efficiency within the procure-to-pay cycle.

Look for their P2P road map and how is it backed by R&D investment. Parse through their road map to make sense of the future use cases concerning your procure to pay strategy. Also, ensure to get their promises vetted by social proof – both by customers and analysts community.

Procure to Pay Transformation Implementation Team

Your P2P software provider must have a team of experienced Procurement technology consultants who can help you understand your challenges and how they might be addressed by both existing technologies as well as future solutions aimed specifically at procure to pay transformation. Hence a purchase requests should comprise subject matter experts, business analysts, procurement specialists along with product consultants, etc. It is always recommended to have a hybrid team for this kind of cross-functional work. Make sure they have a solid proof of work and good credentials. In Gartner’s MQ’s lingo, focus on the Y-axis.

Sector-specific Implementation Excellence

Vendors with wide and deep industry experience come with an excellent understanding of the nuances and obvious hiccups. And with almost reflexive solutions to them. In addition, you have a sizeable and relatable reference base of organizations like yours. Not only the implementation gets faster but also eliminates the risk from the project significantly. For example, if you are into Manufacturing, check out how an American Multinational Manufacturing Company Partners with Zycus to Achieve Full Business Spend Automation.

Compatibility and Less Tech Debt

The success of new P2P solutions depends on how well it can function with your existing sourcing and procurement systems. That is P2P integration and compatibility without demanding a lot of legacy-killing. It includes both suppliers and customers/buyers who need access to P2P data (APIs) that sits within corporate systems (ERPs). These limitations can dictate which P2P solution will provide the best fit for Cognitive procurement, the final frontier of eProcurement.

IDC Highlights Zycus AI: A Game-Changer in Procure-to-Pay Solutions

Discover why IDC, a leading global market intelligence firm, recognizes the transformative potential of Zycus AI Solutions in the procure-to-pay space. This video delves into how Zycus’s innovative technologies are revolutionizing procurement processes and driving efficiency in the Philippines and beyond. Watch the Video to Learn More!

Quantum of Solace

The result of a successful implementation is not just when you Go-Live with the software within the budget and timeline. It is when you start realizing the value you had set out to achieve. The P2P project should enhance value and experience for all stakeholders with superior spend insights, a superlative reduction of complexities in procurement activities, and improved supplier performance through metrics such as quality, on-time delivery, and responsiveness. The ultimate goal for all the procurement professionals should be to get the cognitive procurement, the catchphrase for the convergence of digital technologies and industry 4.0.

Supply chain solutions are crucial in enhancing agility, efficiency, and resilience for global enterprises. Various platforms, like GEP and JAGGAER, utilize advanced technologies, including AI, to optimize procurement and supply chain management, ultimately helping organizations streamline their processes and mitigate supplier risks.

We, at Zycus, believe that “Principles endure, formulas don’t”, hence the blog gives you a set of guiding principles abstracted from 100s of P2P transformation engagements.

Ready to see how our solution can transform your business? Book a demo today and experience the difference firsthand!

Autonomous Sourcing: Speed, Savings & Strategic Edge in Procurement

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Zycus

Zycus is a leader in Cognititive Procurement. A leading SaaS platform used by many large enterprises across the globe for enabling efficiency and effectiveness of the procurement function.