Ardent Partners defines a business network as a web-based platform that enables interconnected buyers and sellers to trade, communicate, and/or collaborate with each other. In this increasingly global and digital economy, business networks serve as ideal platforms through which enterprises (buyers or suppliers) can automate processes, enable closer connections to their customers, suppliers, partners and distributors as well as improve collaboration internally. Business networks facilitate the digitization of many of the core procure-to-pay (P2P) processes, activities, and documents and enable multiple buyers to connect to multiple suppliers on the same platform.
Although most began with a buyer-centric value proposition, business networks today offer a variety of capabilities that are attractive to suppliers as well. This has made it more attractive for suppliers to join networks, helping to overcome the traditional challenge of supplier enablement. In fact, according to Ardent Partners’ research, a large majority of enterprises agree that networks enhance collaboration between buyers and suppliers, help accelerate the supplier enablement process, and are an important piece of an eInvoicing initiative.
From the buyer’s perspective, business networks can support the expanded Source-to-Settle process, which can include spend analysis, sourcing, contracts, procurement, invoice processing, and payment. Procurement and accounts payable (AP) teams typically manage this process with procurement focused on the “front end” of the supplier relationship – identifying the highest value suppliers, negotiating, managing and supporting those supplier relationships, and ensuring that the desired goods and services are ordered and delivered to the right place, at the right time, and for the right price – and AP focused on receiving and processing supplier invoices, making payments, and managing communication with a supplier’s accounts receivable team.
When managed holistically, each group benefits from the improvements made by the other making the P2P (or source-to-settle) process an ideal point of convergence for finance and procurement. When visibility and a cohesive management plan are added to this process, Treasury, a key stakeholder in the P2P process, can become proactively engaged to help guide the decisions that align the management of the enterprise’s cash across this process with the overall needs and objectives set by the CFO.
The P2P process involves multiple moving parts and various stakeholders who are connected to every transaction in different ways. Despite these stakeholders’ common interests in the transactions, in most enterprises, they remain disconnected from each other. The extent to which these three functions are able to collaborate and gain access to real-time and accurate information such as invoice, payment and accrual data, the more holistically the P2P process can be managed and the more effective they can be in achieving the larger enterprise’s objectives.
Despite the advantages of registering with and leveraging the power of business networks, just 41% of enterprise procurement teams do so today. Put another way, nearly 60% of these teams are missing out on the sourcing, procurement, and payment advantages that come with leveraging a business or supplier network. Put yet another way, there is significant opportunity for sourcing and procurement teams today to realize the value, flexibility, and agility of business networks, particularly as we are now closer to another year than we are to the start of this one.