How will Procurement impact our existing systems?
Spend Management business processes are largely outside the scope of most ERP systems, so the impact of implementing eProcurement is minimal from a systems perspective. For example:
- For implementation of the Purchase-to-Pay portion of eProcurement:
- If using purchase requisition within ERP, you will simply turn that off.
- Chart of accounts will continue to be maintained in your G/L and simply passed to the Procurement system.
- Supplier master files will continue to be maintained in ERP and passed to Procurement for use in raising POs.
- Most POs will be raised in your Procurement system and passed to your ERP system as accruals or commitments.
- Payment checks will continue to be written from your ERP system, but most invoices and credit notes will be registered and processed in eProcurement.
- For implementation of the Source-to-Contract portion of eProcurement:
- You will make the comprehensive Supplier Directory in your Procurement system, your new master repository of supplier information and pass only basic supplier information from there to your ERP system as needed.
- If you have any form of supplier contract file in ERP, you will replace that with the more robust eProcurement contract repository.
It’s really pretty simple, and Spend Management solution providers such as Proactis are very experienced in setting up the nominal level of required integration:
Do we need to replace our existing ERP system before embarking on a Spend Management program?
Unless you have other reasons for replacing it, the answer is almost certainly no. If you are getting the fundamental financial management and reporting capabilities you need today, most Procurement systems are not going to disrupt this.
Is the Procurement system that comes with our ERP system my best option?
Very few, if any, ERP systems have a Procurement system with the range of applications to fully support both the Source-to-Contract and Purchase-to-Pay business processes. Keep in mind that, because ERP and Procurement are relatively separate systems, the advantages of a solution from a provider that is fully focused on Spend Management and Procurement may well outweigh the advantages of a single solution provider.
Can we deploy eProcurement to support our Spend Management program now and then replace our ERP system later without replacing our Procurement system?
Yes, the same straightforward integration points will apply in your future system as in your existing system.
Can we deploy a single Spend Management process across multiple ERP systems?
Yes, and many companies are doing this today. If you have several different ERP systems supporting different business units within your organization, you can gain tremendous advantages by implementing a common Spend Management ‘umbrella’ across all of those business units while integrating as needed with each of the individual ERP systems.