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Tracking Procure-to-Pay (P2P) Transformation

8th February 2017

Enterprises worldwide are recognizing the importance of business process management, which helps in integrating the flows used in different departments and enables a holistic approach to understanding enterprise performance management (EPM).

The common end-to-end processes followed in most companies is Source-to-Contract (S2C), Procure-to-Pay (P2P), Quote-to-cash (Q2C), Record-to-Report (R2R), and Hire-to-Retire (H2R).

Why Transform Procure-to-Pay?

It is important for enterprises to examine their own procure-to-pay processes and compare them against the capabilities in the marketplace. In doing so they may find that there are several areas in which they need to change their practices by implementing software.

Procure-to-pay is usually common across enterprises because it’s easier to standardize. Through process standardization, workflow automation, system integration and compliance enforcement, enterprises have achieved enormous savings both on spending and operating cost savings. Businesses are also managing risk better with a standardized procure to pay solution.

How Can Enterprises Transform their Procure-to-Pay Process?

Identify the stakeholders:

Before beginning the transformation, it is a good idea to identify the key stakeholders in the organization. Stakeholders could encompass everyone from senior management, staff, customers, and suppliers (both internal and external). Understand the need and requirements of each stakeholder and how it relates to the organization’s procure-to-pay process.

Understand the Procure-to-Pay Process of the Business:

A clear understanding of the procure-to-pay solution of the business is key to evaluate and optimize the workflow. Fully discuss the changes that would take place after the transformation and the current state of the business with all the stakeholders and identify instances which are unique and not common across the industry.

A 10-step Framework for Procure-to-Pay Transformation

In a study conducted by the Everest Group that analyzed the critical success factors for procure-to-pay transformation across businesses, a common set of well-defined performance metrics across the organization was found to be the critical success factor for P2P transformation. The metrics had to be the same for internal and third-party delivery partners. These metrics were clearly linked to business goals and were applicable across geographies. Everest also noted that P2P effectiveness and efficiency should be easily quantified, measured and benchmarked in order to track its transformation.

Everest suggested a 10-step framework through which companies can change their own procure-to-pay process:

  1. Common metrics: objectives should be clear for all the stakeholders – internal, external and third-party partners.
  2. Standard methodology and systems- for tracking the performance easily,
  3. The measurement scope, parameters, methodology, data sources and frequency should be consistent
  4. Reporting dashboards and benchmarking methodology had to be consistent.
  5. Accountability for measuring and tracking performance metrics,
  6. Benchmarking and reporting overall P2P performance
  7. Identifying and reporting continuous improvement opportunities
  8. Reviewing and approving CI (continuous improvement) projects
  9. Implementing and monitoring CI initiatives
  10. Changing metrics based on the changing business objectives.

When it comes to end-to-end process management, having a common set of performance metrics is a key factor for and a sign of successful transformative procure-to-pay solutions.

The Importance of Peer Review:

The more the level of maturity in a company’s business processes, the more the executives may feel overwhelmed as they begin the transformation. It is a good strategy to identify peers in the industry who have gone through the same process and to share experiences. If your company is undergoing a transformation, ask a solution provider to help you figure out clients who’ve had similar requirements. A lot of counterparts will gladly share their lessons learned which will be quite useful when you embark on your own transformation.

In closing, a clear picture of the business goals and the stakeholders involved coupled with a proven framework and peer feedback will lead to a smooth P2P process transformation.

Corey is an all round tech guru who has worked at some major blue chip companies. He started Poweronemedia to share his views and knowledge with the rest of the blogging world.