Procurement process automation has constantly evolved over the years, with significant investments seen in the area of business intelligence, sourcing effectiveness & decision support systems. As a consequence, the 2015 Pulse of Procurement study (report encompasses inputs from more than 400 procurement executives and professionals across the globe) finds significant proportions of companies — some 24% – 42% — planning upgrades across all major solution sets studied.
A large proportion of procurement organizations are still seen using semi-manual/homegrown solutions, either custom-built by internal IT personnel or by procurement pros themselves. While this group is a large source of technology upgrade plans, there is also plenty of upgrade activity planned among companies that have already invested at least one time in either procurement-focused ERP modules or procurement point/suite solutions. In this post we will focus on the findings from Procure-to-Pay perspective. Some of the key findings from the report are;
• Prevalence of Procure-to-Pay (P2P) solutions has jumped 11-pts from year ago, with 64% now reporting solutions in place.
• Investment in P2P is divided roughly between ERP modules (46%) and procurement point or suite solutions (40%), with only 14% going the homegrown route.
• Some 29% classify current P2P solutions as inadequate or behind the curve and 31% say upgrade plans are in the works, with the largest group (43%) upgrading from ERP modules.
Only 13% of respondents had rated their current procure-to-pay solution as leading edge. Having a state—of-the-art solution definitely has its own advantages. The impact of state of the art solutions was visible on the key metrics of spend under management, contract compliance, user adoption & last but not the least – cost savings. Procurement organizations classifying their P2P solutions as state of the art report –
• Overall tech adoption rates of 18-pts higher than those classifying as behind the curve (55% Vs 37%)
• A 10-pt gain in average spend under management compared to those classifying as behind the curve (58% Vs 48%)
• Contract Compliance rates 17-points higher than those classifying as behind the curve (70% Vs 53%)
• A 3–pt increase in cost savings higher than those classifying as behind the curve (14% Vs 11%). This mere 3 point increase could translate into $15 million savings on a spend of $500 million
While the study was not designed to prove causality, the visible trend of higher performance as a direct impact of investing in state-of-the-art solution would be difficult to ignore.