“This all sounds terrific and exactly where I see our procurement function going, but we’ve got an ERP system, once we switch the module on we should be able to do this.”
My role as Business Development Executive at TouchstonePROACTIS gives me a first-hand insight into what procurement professionals want from procurement systems, with the above quote one of the most common things I hear and – during my early development – a bit of a conversation-killer!
Thankfully our team of procurement consultants and solutions architects have a bucket-load of experience in explaining the differences to our customers, and have been able to pass some of that wisdom onto me.
So who is better off using a bolt-on module and who really should be exploring a best-of-breed Source-to-Pay system?
It is very much an ‘it depends’ answer based on the processes procurement departments, finance departments and end users go through to purchase a good or service for use within the organisation.
A company may have a small set of already known, preferred suppliers they work with, one finance system consistent across the business, with the majority of staff based in one location and a few standard approval processes consistent across all categories. If so, settling for the functionality they can get out of their finance or ERP system seems reasonable. The issues of compliance, ease of use and the potential for future growth may not go away but it may be difficult to build a business case to adopt a best of breed approach given their circumstances
However, when the above conditions do not apply, and processes become a bit more complicated or the company structure doesn’t lend itself to a one-size-fits-all approach, that’s the time companies tend to start investigating a best of breed approach.
They may have recently acquired a new company with a different finance system leaving the Head of Procurement with neither visibility of spend nor the ability to compile any reasonable spend analysis on the newly acquired company. They may have staff based at disparate geographic locations and wish to drive consistent buying behaviour across all locations while still having the flexibility to allow for localised buying decisions. They may have a complicated approval process for certain items or categories which requires multiple sign-offs and a differentiation between a straightforward item request (i.e. purchase order) or an expression of need (i.e. a purchase requisition). It may not be about imposing draconian buying measures on anyone who wishes to simply buy something; they just want to know what is going on, who is spending what and who with!
In some instances it won’t even come down to a straightforward comparison of like-for-like functionality, some may wish to take advantage of the additional features not typically found in purchasing modules: punch-out to supplier sites, standardised sourcing templates for eRfx and a supplier relationship management portal. Many wish for a repository for contracts which not only monitors renewals and expiry dates but can be linked to P2P to drive the buying behaviours of end users (making sure they use those contracts procurement have worked so hard to put in place!)
So it’s certainly not a cut-and-dried answer, and you’ll certainly have your own opinion. I’d love to hear it.