Value Of Source-To-Pay Solutions: A Step-By-Step Guide For Executive Finance Professionals
E PURCHASING SOFTWARE
The broad, sweeping introduction of e-commerce and digital payments into almost every corner of everyday life has caused seismic shift in the way businesses and consumers pay for goods and services. This necessitates the need for an efficient, integrated and secure solution that can manage the procurement process from beginning to end. Source-to-Pay (S2P) is an automated, end-to-end software that helps corporate business to handle the entire purchasing process, from initial supplier sourcing right through to payment and payment reconciliation. With an abundance of S2P solutions on the market, executives in the finance sector are in the unique position of finding the most appropriate approach to source and purchase goods while also maintaining tight budgetary controls.
The goal of any successful corporate business is to ensure that the ultimate profits are maximized. And to do so, financial directors are in the important role to ensure that procurement costs are minimized. But, how can an executive finance professional maximize the value of S2P solution? The following step-by-step guide lays out an efficient and cost effective system of integrating S2P into an organizations current procurement process.
Step 1: Understand the Difference Between Indirect and Direct Spend
Before embarking on an S2P initiative it is important to understand the difference between the two kinds of Spend (Direct and Indirect). In simple terms, Direct Spend refers to the purchases made directly from suppliers which are necessary for the operations of company. Examples include raw materials for production, office supplies, and equipment for maintenance. Indirect Spend, on the other hand, makes up purchases for operational expenses and services, such as staff training, IT, travel, etc. The two categories of Spend can be easily differentiated by their intended use.
Step 2: Map Out Plan of Action
Once understandings of the different types of Spend are clear, it is critical to map out the detailed requirements of the S2P solution so that any technology provider can develop an agile, effective system. it ishould be noted that all technology solutions will be unique and should be tailored to fit the specific needs of the organization and its purchasing process.
Step 3: Select the Right Technology or Solutions Provider
With clear objectives and system requirements in place, it is time to select provider that is the best fit for the business. Conduct detailed analysis of the available options to ensure they meet the needs of the organizations S2P strategy. Consider the providers? portfolio of solutions, scalability, cost, integrated technologies, market share performance, level of customer support, and project integration capabilities. Research the companies portfolio of customers to gain insights into the success of their products as well as the level of satisfaction among customers.
Step 4: Assess the Context of Legacy Systems
It is essential to review and assess the organizational context of the current set-up of the existing legacy applications, internal processes and structures in order to determine the transition path from the existing system to the new system. Doing so is instrumental for the implementation of the new S2P solution to minimize implementation risks and maximize its potential.
Step 5: Create Launch Roadmap
Once technology provider is selected, develop launch roadmap to outline the timeline, activities, and tasks needed to transition to the S2P Solution. This includes outlining the strategy, execution, and governance plans as well as actively monitoring the progress of the implementation plan.
Step 6: Implement the Solution
The implementation phase is critical to ensure that the S2P solution is successful. During this phase, the process of configuring and customizing the solution using real-time data occurs to complete the transition of legacy systems to the S2P solution.
Step 7: Measure and Track the Performance of the Solution
Measuring performance is imperative both during and after the implementation phase. During the implementation phase, performance metrics can determine if the system is configured and working according to plan. Additionally, tracking performance post-implementation will provide insights into the efficacy of the new S2P system and also provide areas of improvement that may need to be addressed.
Conclusion
Selecting Source-to-Pay solution can provide enormous cost savings and increase levels of efficiency across the procurement process. For the executive finance professional, taking the right steps to select, integrate and measure the performance of the new system can be the difference between success and failure in achieving significant cost savings and improved procurement performance. By taking the necessary precautions before, during and after an S2P system is implemented, executives can maximize value and bring greater returns to their organization.
