Over the last few years, the journey of digitizing Source-to-Pay (S2P) has emerged as a pivotal course for intertwining strategic precision and operational efficiency. Source-to-Pay systems have time and again proved their mettle, in terms of boosting profit margins, reducing manual paperwork and intervention, and improving compliance. However, a completely digitized S2P system is yet to move beyond fragmented adoption. There can be a myriad of reasons, from an operational standpoint, for why this is so. Insufficient investment opportunities, lack of infrastructure, a complex dependency on legacy systems, etc., are some that come to mind. From a strategic perspective, this gap comes from the absence of a structured approach in identifying and selecting the right S2P system.
In this blog, we will walk you through the ultimate 6-step guide that procurement professionals should follow to select and implement the right Source-to-Pay system for their business.
1. Establish the Arc of your Vision
Articulating the roadmap to reach the end-state begins by conducting an in-depth assessment of your organization’s procurement needs, objectives, and pain points. The 2023 Strategic Roadmap for Source-to-Pay Technology by Gartner emphasizes the importance of a tailored approach to technology adoption, ensuring a S2P system is aligned with the organization’s unique requirements. It is imperative to take stock of where the technology is at, where it is going, and how do you get there. While envisioning the end-state, you should also evaluate the system’s scalability to accommodate future needs and technological advancements.
By mapping out the steps and building a migration plan with set milestones and key drivers, procurement leaders can ascertain the potential impact on operational efficiency, cost savings, and supplier relationships. Define important business outcomes, identify gaps in the existing infrastructure, create and measure key KPIs, and establish a long-term support plan to set the tone for your S2P migration vision.
2. Build a Strong Business Case
Oftentimes, business cases for procurement technology investment are viewed with skepticism or are ultimately rejected. The fact that procurement sits at a lower priority order for technology investments in an organization is one of the top challenges that procurement leaders face. Businesses tend to view procurement as a support function, rather than one that paves the way for an uptick in revenue. Hence, it is crucial to build a winning ROI justification to get the investment greenlit. While cost-effectiveness is crucial, focus on the S2P system’s Total Cost of Ownership (TCO) rather than just the initial investment. Begin by conducting a comprehensive cost analysis that considers implementation, maintenance, and potential savings over time.
According to Gartner, building a strong business case involves answers to these 4 components:
- Reason (“Why is the challenge that an automated S2P system solves problematic and needs to be addressed right now?” “Why is the existing system no longer sufficient for the business?”)
- Resource (“What is the cost of the system to achieve the desired result?”, “What would be the investment required in terms of time, people, and effort?”)
- Benefit (“What is the absolute value that is estimated to be gained?”, “Why is this technology solution more valuable than the other ways the resources can be utilized?”)
- Plan (“What steps will be taken to reach the desired outcome?”, “What will be the mitigation plan in place in case of setbacks?”)
3. Negotiate Product Placement
Most organizations currently have point-solutions implemented to digitize their source-to-pay process, with limited end-to-end technical integration involved. These applications work in siloes, which ultimately becomes counter-productive. Instead of having a comprehensive solution that automates and manages the entire S2P workflow, data gets collected from different applications and then is condensed together manually. This significantly puts the sanctity of data into question.
Read our blog on: Your Guide to Source-to-Pay
The goal should be to comprehensively evaluate the source-to-pay technology suites as well as point solutions, identify how they bridge the gap in your existing infrastructure, and define where they fit in the larger ecosystem. It is also important to take note of the ever-evolving use cases as technology matures. The correct product placement depends heavily on the sweet spot where technology, infrastructure, and the expected benefits come together in harmony.
4. Get Stakeholder Buy-In
Procurement excellence is a team effort, and obtaining stakeholder buy-in is pivotal. A key part of selecting a S2P system is identifying and engaging key stakeholders to support the initiative and marshalling the resources to pull off a smooth implementation. Taking inspiration from the RACI matrix, define the roles that each individual or group will play during the project (Responsible, Accountable, Consulted, and Informed). Stakeholders must have a pulse on critical skills, both functional and technical, that need to be part of the process from the client side as well as the implementer side.
It is important to prioritize cross-functional alignment, since the key stakeholders identified will be directly impacted by the technology implementation. Engaging stakeholders early in the selection process ensures that the investment in the future-state technology bears fruit for everyone involved.
5. Focus on your End Users
A successful S2P system relies on user adoption. McKinsey’s “The Digital Procurement Transformation Imperative” highlights that organizations with a user-centric approach are 1.3 times more likely to achieve successful transformation. Having said that, it is quite common to see organizations struggling to maintain adoption, with respect to internal users and suppliers alike. This happens when the needs of the end-users within and outside the organization are overlooked. As per Gartner’s 2023 Strategic Roadmap for Source-to-Pay Technology
Users want technology that makes their jobs easier, makes them more effective and saves time. Sadly, most legacy procurement technology’s main value proposition is to make repeatable tasks quicker to perform, but they do little to make that task go away or help with making better decisions while performing the task.
It is ultimately the end-users that will need to engage and adopt the solution to achieve the desired results. And for successful engagement and adoption, one important factor to consider is the User Interface (UI) of the S2P system. The goal should be to implement a system that is intuitive and requires minimal training to use, thus reducing technical complexity for end users.
6. Leverage Source-to-Pay System Automation with AI
Most organizations expect to be adopting AI-enabled procurement solutions in the near future, and for good reason, given the potential benefits. In fact, 74% of procurement professionals responding to Zycus’ annual Pulse of Procurement survey say they expect to be equipped with AI-led technology solutions within the next 12 months. As artificial intelligence advances, the number of processes that can be automated and the level of possible automation advances with it. However, in the current scenario, most of the procurement solution stacks are layered together in a piecemeal approach. This reduces the scope of automation and hinders integration across processes.
It is not a lost battle yet, though. Consider AI based systems that take care of automating text-heavy use cases, deliver smart analytics, and are dynamic enough to adapt to your future-state capabilities.
Zycus’s comprehensive Merlin AI makes it easy to catapult to the future of procurement and AP automation. From requisition automation and unified search experience for catalogs, Merlin also enables inbound email automation and accurate invoice extraction.
It also adds value through effective risk management by detecting duplicate and fraudulent invoices. Merlin AI also enhances the strategic Source-to-Pay system with BOTs that can reduce time spent on data entry and identify risks during contracting.
Navigating the realm of Source-to-Pay system selection requires a strategic approach that combines vision, collaboration, and technology prowess. By establishing a clear vision, building a compelling business case, negotiating with vendors, gaining stakeholder support, focusing on user needs, and harnessing AI’s potential, procurement professionals can chart a course toward a digitized S2P ecosystem.
To learn more about how Zycus can help you implement a robust Source-to-Pay system, book a demo with us today!
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- Press release – Highlights from the 16th and hitherto, biggest edition of Zycus’ procurement and finance conclave – Horizon 2022!