There are many paths to Procure-to-Pay (P2P) excellence and many starting points. A P2P automation project may start with a focus in one area within either accounts payable or procurement or it may pursue a “big bang” strategy; no matter the initial project approach or budget, one unifying characteristic of Best-in-Class P2P organizations is the holistic, long-term view of P2P that they take from the start. Last week, we talked about the blueprint needed for a successful P2P project. Today we are looking at a departmental approach to the project.
Although the term Procure-to-Pay (“P2P”) has existed in the business vernacular for more than a decade, solutions that actually manage the process seamlessly to include a Requisition-to-Order-to-Invoice-and-Payment process, much less the entire source-to-settle process, are a newer phenomenon. Today, though many P2P projects start with a focus on the entire process, a P2P-based project is just as likely to start and end within a single department. There is nothing inherently wrong with taking a “departmental” or sub-process approach to automating the P2P process; in fact, many of the most successful P2P operations began with a departmental focus. But just as different wings (that house different exhibits and attract a different visitors) of the same museum must function as part of the larger building, a departmental approach to P2P must envision itself as one part of a greater whole, if the maximum benefits are to be realized.
The Accounts Payable Department Approach
For many enterprises, the accounts payable department can be characterized as paper-laden and inefficient. Any function that operates in an almost or fully manual manner can make a straightforward business case for investment and change. An accounts payable department seeking to improve its performance has several key areas upon which to focus: efficiency, effectiveness, and accuracy. Understanding the AP department’s main objectives and goals from process automation can help provide a better orientation for the other P2P stakeholders. The list of initial goals typically includes the following:
- Improve invoice processing efficiencies and customer service
- Gain better visibility into process, line item detail, and supplier performance
- Develop a more effective payment strategy
- Improve the ability to close the period’s books in an accurate and timely manner
- Gain better alignment with the CFO and the finance department
Beyond the automation of core AP processes, T&E expense management will continue to play an increasingly important role for Best-in-Class accounts payable departments.
The Procurement Department Approach
Over the last decade, procurement has undergone a broad, industry-wide transformation that was, at its core, a technology-enabled phenomenon. Though progress continues, much work remains for the typical procurement department. Understanding the procurement department’s main objectives and goals from process automation can help provide a better orientation for the other P2P stakeholders. The list of initial goals typically includes the following:
- Increase savings, spend under management, and overall influence
- Improve visibility and contract compliance rates
- Reduce supply risk and maverick spend
- Improve process efficiencies and department visibility within the enterprise
Beyond the requisition-to-order process, procurement transformations generally include a focus on strategic sourcing (Spend Analysis, eSourcing, and Contract Management).
