Nearly every organization in virtually every industry is facing similar pressures.
- How can we be quicker and more nimble with everything – from back-office processes to how we get products to market?
- How can we find more savings and increase margins to fund new ideas and new sources of growth?
- How can we free up our team so that they can focus more on customers and less on low-value tasks?
- How can we better collaborate as a team and with our partners to bring more speed and innovation to the business?
These are just some of the questions that drive technology investments and process automation. But one core business process that can get overlooked in a foundational digitalization initiative might just hold the key to successful digital transformation for the long run.
Including a procurement and spend-management effort in your ERP transformation might seem like an add-on or a diversion from your scope. However, with the tangible economic and productivity benefits that can be realized, there’s plenty of reason to not only phase it into your scope but also to have procurement lead your project to amplify the company-wide impact.
Take a look at what other companies have seen when they’ve packaged procurement into the switch.
1. Your procurement savings cover the cost
With the right procurement solution, you’ll see cost savings between four percent and 15% from sourcing events, according to SAP Ariba Performance Benchmarking. Think of it this way: If yours is a $500 million company with $100 million in indirect spend, that’s as much as $15 million in savings. Add two percent compliance and cash-management savings and four or more percent in tail-spend savings, and you will realize significant numbers that could pay for the cost of the broader project.
2. You get a simple, centralized, more efficient procurement process
Automate and integrate the entire source-to-settle process, and the process moves faster. You can see up to 80% faster requisition-to-order cycle time, along with 70% of invoices processed without exceptions, according to SAP Ariba Benchmark Soundbites, June 2018. This can save your team precious time, allowing them to focus on more strategic, customer-focused issues.
3. You can manage all your spending in one place
The right solution gives you control of each spend category – direct, indirect, T&E, services, and external labor – and orchestrates spending and processes across categories. With a single dashboard, it’ll be easier to see where your funds are going, to ensure that they’re directed to your organization’s top priorities, and to manage risk and regulatory requirements.
4. You create an experience that drives adoption
When you offer a consumer-simple buying experience with built-in catalogs, contracts, forms, and preferred suppliers, you can drive employee satisfaction, engagement, and purchase compliance. You can also see as much as 89% of purchase order spend coming from contracts and catalogs and as much as a 50% reduction in maverick spend, reports the SAP Ariba Benchmark Soundbites, June 2018.
5. You can redefine how you collaborate with suppliers
The right solution can connect you to millions of suppliers around the world who are waiting to work with you. Automating supplier collaboration gets rid of paper, fax, email, and other manual processes for routing specs, invoices, purchase orders, and payments. You’ll not only eliminate time-consuming, back-and-forth administration, you can open up an opportunity for more cost savings by accessing a larger, more competitive pool of suppliers.
6. You can start small and scale at your own pace
You don’t have to tackle the entire source-to-settle process all at once. Start with a specific procurement issue – the key challenge that is causing you and your people the most pain – then improve that part of the process and move on. Whether you need to address sourcing, contract management, or the entire procure-to-pay process, this approach allows you to create a solution that scales (the crawl, walk, run approach) and gives you a platform for life as your business grows. Imagine managing one relationship for ERP, procurement, and spend management and never having to go through a vendor selection process again, even as you add new markets and business units.
Procurement can be part of your ERP transformation. And it can be quick and painless. For more information on pulling procurement into an SAP S/4 HANA transformation, reach out to us online.