PROACTIS Blog

A Better Understanding of the Limitations (Even Dangers) of “Simple Self-Service Shopping”

Charlotte Sutton
Charlotte Sutton,
PROACTIS
Over the past couple years, the growth of cloud-based software solutions has had many benefits, but it has also caused some confusion and has taken some organisations down a path they have later regretted.
Over the past couple years, the growth of cloud-based software solutions has had many benefits, but it has also caused some confusion and has taken some organisations down a path they have later regretted.

Everyone agrees that employee adoption is a key factor in the success of a purchase-to-pay roll-out within an organisation. The faster and more intuitive the experience, the more spend that’s likely to go through the system.

The problem is that the developers of some new solutions forgot that it doesn't do a lot of good to put spend through a P2P system if that system does not lead employees to purchase from approved suppliers using negotiated pricing and service agreements. If it just gives them a way to go to any website they wish, scrape off standard item and price information for whatever they like, then pass that along to their department manager for the OK based simply on purchase amount thresholds, that system is doing little to increase on-contract buying or true Spend Under Management. And if employees CAN do it this way, they probably WILL. The result can be a “free for all” that reduces compliance and therefore increases both cost and risk.

Lots of potential cost savings are never realised in that scenario. Although that style of P2P solution may look and feel like modern software, it is actually a throwback to the limited capabilities and benefits of first-generation P2P software – not a move in the direction of increased Spend Control.

Some high profile organisations have started down the path of this type of software and then realised it was the wrong direction and had to start over again.

If you are in the process of looking for your next generation P2P solution, be sure you look closely at how the solutions you consider are going to help with all aspects of increasing Spend Under Management – not just a demo of the employee user interface. Look at how:
  • they help with supplier management, sourcing and contract management
  • all types of categories are handled – from simple stationery to strategic categories, capital equipment and complex services contracts
  • employees are guided to preferred suppliers, or into a competitive quoting or sourcing process
  • budget-checking works
  • POs are generated
  • invoices are matched and how discrepancies are handled
  • electronic invoice capabilities
  • Procurement and Finance will manage the system from the back end
  • flexibilities for multi-national deployment

Ease-of-use IS extremely important – but not at the expense of the controls you need to drive increased Spend Under Management.

To find out more, download 'Procurement Automation: Key Trends & Hot Topics'