PROACTIS Blog

Survey: Current Levels of Spend Control & eProcurement Automation

Charlotte Sutton
Charlotte Sutton,
PROACTIS
Following our previous article: “Sector Comparison: Spend Control & eProcurement Automation 2016”, where we looked at where organisations stand today with their technology deployments. In this article, we summarise the areas with the ‘highest’ and ‘lowest’ current level of automation across industry sectors (from the 2016 Spend Control & eProcurement Technology Survey):
The two areas where respondents said they have the highest current level of automation are:
  • Invoice Receipt & Processing: With 49% saying that they are at a level 4 or 5, though only 14% rated themselves as ‘fully automated’
  • Purchase-to-Pay: With 43% saying that they are at a level 4 or 5 and 25% saying that are ‘fully automated’. Purchase-to-Pay was the area where the most respondents felt they had the highest level of automation
The areas with the next highest current levels of automation were considerably lower:
  • Spend Analysis: With 23% saying they are at level 4 or 5, though only 5% rated themselves as ‘fully automated’
  • Strategic Sourcing: With 22% saying that they are at level 4 or 5, with just 5% saying they are ‘fully automated’
Areas with the lowest level of automation
  • Supplier Relationship Management is the area with  the lowest current level of automation with 84% saying that they are at a level 1 or 2 and 68% saying that they have ‘no automation’
Other areas with very low level of automation were
  • Supplier Information Management With 75% saying that they were at a level 1 or 2 and 50% saying they have ‘no automation’
  • Contract Visibility and Management With 72% saying that they were at a level 1 or 2 and 44% saying they have ‘no automation’
  • Electronic Supplier Commerce With 69% saying that they were at a level 1 or 2 and 54% saying they have ‘no automation’
  • Strategic Sourcing With 68% saying that they were at a level 1 or 2 and 51% saying they have ‘no automation’
Comments

It’s not surprising that Purchase-to-Pay (P2P) and Invoice Receipt and Processing have the highest levels of current automation given that most organisations know the P2P framework is key to Spend Control success and often start there. However…
  • The relatively high level of automation of Invoice Receipt and Processing may be due to strategic initiatives around restructuring the back office – mainly standardising and centralising AP and other Shared Services
  • We see a wide variance in organisations’ current objectives for P2P automation – e.g. pre-authorisation of spend only, covering specific spend categories only (e.g. IT equipment in financial services or GFR spend, but not GNFR in the retail sector) or deployment only in particular business units in large organisations. Even those with a high level of automation almost all have opportunities to go further in terms of increasing compliance rates and on-contract spend, and achieving full transformation of the process for optimum efficiency
  • Where P2P functionality has been purchased as part of an ERP or finance suite, it is often not widely used because of the cost of implementation, difficulty of use, or lack of awareness of the benefits or value. We see a trend of organisations recognising the need to ‘plug the gaps’ with integrated best-in-class applications
  • The fact that Supplier Relationship Management, Supplier Information Management, Contract Visibility and Management, Electronic Supplier Commerce and Strategic Sourcing have the lowest current level of automation is consistent with what we see when we talk with organisations
  • Even those with high automation levels in Strategic Sourcing (mostly public sector) can almost all do more to tackle addressable spend. Many are just ‘ticking the box’ in certain categories to ensure regulatory compliance and focus on transactional applications
  • Best-in-class are taking a more ‘strategic’ approach to improve Spend Under Management (SUM), adopting wider, more integrated sourcing suites and deploying tools that enable greater flexibility and innovation in the achievement of service delivery – e.g. support for the Dynamic Purchasing
  • System (DPS) process

Related Observations

Those that have deployed Supplier Relationship Management (SRM) tend to have high levels of satisfaction. SRM is generally seen as a tool that delivers results and supports Procurement’s goals for risk reduction, improved supplier relationships and improved supplier communication.

  • The impact of low levels of uptake in Supplier Information Management is significant. Organisations that have not focused on this are ‘missing a trick’ to eliminate pollution of data in all downstream processes. High quality supplier information is a fundamental requirement for a fully successful Spend Control framework
  • The low level of automation of Contract Visibility and Management is also something organisations`need to pay attention to. Contracts are the centre-point between Source-to-Contract functions and the Purchase-to-Pay process. Automating that integration to support greater end-to-end process controls can have a big impact on on-contract spend levels. Results in this area might also be affected by the profile of organisations that responded – for instance the perceived level of automation for a complex multi-site, global organisation vs. that for a one office location; and the management of corporate contracts vs.enterprise-wide contracts
  • Based on conversations with hundreds of organisations over the past couple years, we know that there is another dimension to the question asked about current levels of automation in this survey, i.e. how broadly that automation is being applied. Virtually every organisation we talk with still has ‘coverage’ gaps in how they are applying Spend Control and eProcurement technology – categories of spend yet to be covered; areas of the organisation yet to be covered; percentage of activity yet to be covered and cross-area integration yet to be covered. Best-in-class organisations understand that this is an iterative process in each process area. First the tools to automate or streamline it must be put in place – that is usually done for a limited scope of spend and organisation coverage at first. Then, once proven, the scope across which those tools are applied needs to be steadily expanded in stages to ultimately cover as much of the organisation’s total spend as possible. That is the process we most often see leading to world-class performance
  • Spend Control and eProcurement technology is making progress and can deliver real value when organisations invest in both implementation and change management. To achieve maximum value, best-in-class organisations include best practice thinking on policies and process as part of their implementation so that the capabilities of the technology are fully leveraged while achieving best business fit across all stakeholders and, most importantly, optimising the way applications are used
To learn more, download the full survey results.
 
 
 
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