Planning an International Spend Control Rollout Project? (Part 2
.. continued from Part 1
Your COO might tell you that this is already available within your existing ERP infrastructure. But closer inspection will probably reveal that globally, this is highly fragmented with territories and countries all running their own systems and favouring different ERP and financial system brands.
Further complications will almost certainly include various charts of accounts and different business processes – all the consequence of growth through acquisition.
The problem is that most eprocurement systems and ERP modules are developed to address the needs of the ideal – a single financial organisation with one set of ledgers. And your reality could hardly be more different.
In addition, many of these systems cover a broad function scope and offer a degree of integration across their different applications. Yet this breadth often leads to a lack of focus on issues such as bringing ‘maverick’ spend under control, giving visibility of the cost pipeline and delivering economies of scale.
This is where infinitely configurable, best-in-class Spend Control and procurement solutions offer advantages and should be considered in an International Spend Control initiative.
One example is PROACTIS, which is very different from the purchasing module of an ERP system.
PROACTIS includes a full suite of modular, integrated applications to support all key aspects of the procurement cycle. Each application is built around proven best practices, with a depth of functionality not often found in packaged software products. Each application can be implemented individually or in combination to compliment existing ERP back office systems and financial packages.
Compare that with the concept of trying to impose a monolithic ERP procurement module across 10 territories, each with their own unique mixture of environments. Without rolling the system out across them all, it would be highly problematic to generate complete visibility of group spend – your ultimate goal – and consultancy, training and integration issues would probably turn a project that should be delivering results in weeks into a five-year development epic.
PROACTIS supports procurement of the tremendous variety of indirect goods and services needed throughout the organization, as opposed to the relatively few direct materials or products that are usually driven by automated MRP or replenishment methods.
It has been designed to be practical for complex organizational structures, and it is highly configurable as an overlying procurement platform or within any number of specific, pre-existing environments.
And it has the look and feel of an intuitive front office application that a generation of Microsoft users has come to expect and willingly embrace. This is where many ERP systems are found wanting: they have been designed for the finance professional in mind, not the casual user. But unless a system is easy to use, and everybody has access to it, it will be impossible to get any control over maverick discretionary spend.
In one global organisation comprised of 2,000 independently managed offices, PROACTIS has been deployed as a single spend management front end across four different ERP platforms. Wherever they are in the world, the user logs in and sees the same, simple system. They know nothing of the underlying sophistication – they simply take advantage of it.
Once you’ve made your system choice, you may still encounter resistance from territory managers who see it as a threat to their autonomy. Just because the board is convinced about a rapid global Return on Investment, it doesn’t follow that everybody else will fall into line, particularly when they are concerned about protecting their own Profit and Loss.
They might see pressure to deploy the ERP procurement module as using a sledgehammer to crack a nut and, even while they are paying their share of the system’s cost, they would rather pursue a different solution that is less likely to impact on their established methods of remuneration.
But as Triple-Tree’s estimates have already shown, spend control is hardly a nut-sized problem. And this is where the board – and principally the CFO, aided where possible by a high-visibility CPO – has an opportunity to drive change across the organisation, cutting through political issues to demonstrate the benefits of the new system and encourage comprehensive end-user adoption.
Many employees will respond positively to evidence of how cost savings they make by using the system contribute directly to the business’s profitability. But ironically, as CFO, you may find yourself pushing non-financial benefits to their managers in smaller divisions and territories.
For example, increased visibility will actually help them to manage their Profit and Loss and budgets more effectively and identify areas for cost cutting. The system may also offer them a way to iron out the discrepancies, inaccuracies and limited analytics hitherto generated by the variety of underlying platforms and applications that now come together under its integrate umbrella.
The double whammy of avoiding a massive Process Reengineering Programme simply to establish a system-based model for spend management, and achieving an elevated view of spend control should ultimately provide a winning argument against even the most stubborn resistance.