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Making a Business Case for Procurement Automation

By Linda Ashok
In Procurement Technology
Jun 7th, 2019
0 Comments
1917 Views

Have you been noticing how in 2019 so many technology leaders are discussing the impact of AI in business strategy, operations, processes for various improvement opportunities? Well here’s a Gartner report that states, “By 2023, 40% of I&O teams will use AI-augmented automation in large enterprises, resulting in higher IT productivity.” Organizations driven by AI are considered more strategically evolved to meet success.  With such high stakes of AI in business success, it is only reasonable for a business to consider procurement automation; migrate every manual process to structured automation. Yes, you agree with that but to make a case for procurement automation to convince the CPO isn’t easy. In this article, we help you achieve that purpose.

Professionals in charge of Procure-to-Pay (P2P) should find clear and compelling ways to explain the prospect of savings. They should be able to explain the benefits of procurement automation to their CPO or the decision making authority. In this regard, the initiating step should be to have an overall acceptance. This means there should be buy-ins from all the departments and their agreement for steady adoption. Although as a pro-salesman, you may end up selling the idea to the decision-makers, a lack of adoption from the remaining management can stall the prospect of every success you projected as an outcome of onboarding automation.

So, how do we ensure you have an all-round buy-in? On this note, you can persuade the management of how robust procurement automation generates up to 70% of savings. To demonstrate this with more clarity, procurement professionals should conduct a round of assessment on the current state and costs. Check out this current Procure-to-Pay Business Performance Calculator to estimate your current burden. It is only after you have tried this step, you’ll be able to differentiate the impact of the projected savings through a world-class procurement automation solution.

The Procure-to-Pay Calculator discussed above is intended to help procurement professionals understand their total cost of processing POs and invoices.  Also, it factors in all the variables that contribute to an organization’s estimated cost per purchase order (CPPO) and cost per invoice (CPI) computing the number of hours each account payable professional spends throughout the PO and invoice lifecycles.  All you need to do is to enter primary data and see how much cost reduction through automated procurement solution.

Take this for a case scenario in which a mid-market organization every month, processes an approximate 1,500 requisitions to 3,000 invoices with a headcount of three purchasing agents, two AP clerks, and departmental managers. By leveraging our Procure-to-Pay Business Performance Calculator, decision-makers of the organization can be aware of their current estimated CPPO and CPI, and view potential savings up to 70% through a world-class procurement automation tool.

Tips for Making a Business Case for Procurement Automation

Savings is just one of the lucrative outcomes to interest the decision making committee to consider procurement automation. In addition to that, there are other significant perks that the organization gains:

  • Ability to manage every procurement and order management tasks on a single platform
  • Purchase from multiple companies at one go
  • Access project-based requisition straight to the activity level
  • Reduce paper and manual processing
  • Eliminate maverick spend
  • Enhance cross-departmental communication & collaboration &
  • Assign staff to more strategic & non-redundant, value-added tasks

Building a case for procurement automation for a single person may be taxing. Therefore we recommend that procurement professional involves purchasing managers, users as per departments, and the chief comptrollers of audit/finances.  Together, a procurement professional can anticipate a clear roadmap to procurement automation. On developing a case with finances, operations, and strategy, it’ll make a stronger impact on the decision-makers.

 

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About "" Has 56 Posts

Linda Ashok is a content, communications, & branding professional with 12 years of work experience in BPO, Banking, Payroll, Robo-Advisory, Internal Communications, and Social Media. She is interested in how businesses perform at the intersection of Big Data, AI, IoT, and other emerging technologies.

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