There are multiple approaches out there when considering procurement technology. But where should you start when implementing a Digital Procurement Suite? Let’s evaluate each option.
Starting with Procure to Pay will relieve the Procurement Department from filling out POs and checking approvals. Requesters could search in an internal or external catalog for goods and services and no longer bother the buyers with unclear requests.
Starting with Supplier Management will bring Supplier Data (including Certificates as well as deeper knowledge about incumbent and new suppliers) to a totally new level. All while including Self-Registration and updating data directly by the suppliers.
Starting with Contract Management will dramatically increase the “best-practice-approach” of all future contracts, as these are always updated from the centralized legal department, avoiding anyone from re-re-using an old contract, where new clauses or new regulations are missing. For most users, arguably the best functionality of a new Contract Management solution is the ability to search for contracts, search within contracts, or even search out of 100,000 contracts worldwide (one of our clients has that many). Secondly, the reminder functionality ensures no contract will expire and become a bad surprise for the company in auto-renewal, for example.
All that is definitely true, but our recommendation, based on nearly 20 years of experience in the market is to start with the greatest values:
Transparency and Savings!
I have always wondered why strategic decisions are quite often made from weak data. As a lot of spend is not in the Spend Analysis solution, the taxonomy is vague and duplicates in the supplier master data are not solved. Due to M&A, a lot of “NewCo” have difficulty seeing with one click what they really spend worldwide on a daily, weekly, monthly or yearly basis.
With this said, it is Synertade’s strong recommendation to start with real Spend Analysis – real means reliable, clean data. If this is not the actual situation, let somebody clean and harmonize the data, and cleanup the taxonomy for a material tree. The solution should support hierarchies for Supplier Families and Material Master Data.
When transparency is achieved, the strategic buyer will find dozens of opportunities to start strategic projects in the data (when it is an easy-to-use solution). Even better when Spend Analysis can provide hints as to where to start based on Predictive Analysis.
In the best case, when selecting to start with Spend Analysis, the solution is fully integrated. So, when finding something to renegotiate, the buyer should just click in Spend Analysis and the Sourcing Application will start with the data and material group and other information pre-populated once in the Sourcing Solution.
Providing transparency to not only the Procurement Department about company wide spend, but with reliable data and a clear classification plus savings achieved with a modern sourcing tool for RFX and world-class Auction, is giving a lot of momentum to the organization to later implement Supplier Management, Procure to Pay and Contract Management.
To make it short:
- See what you spend
- Start new initiatives
- Achieve savings
- Clean supplier master data
- Implement Procure to Pay
- Then implement contract management.
When a company has a certain need or has to fulfill external or internal regulations, the steps could begin differently – as always, exceptions prove the rule.
About the author
Rainer Machek ~ Executive Vice President, SynerTrade Rainer is celebrating 17 years with SynerTrade in his global role as an Enterprise software executive. With a long history of selling software licenses, cloud-based subscriptions and professional services, Rainer is responsible for SynerTrade’s customer relations with Fortune 1000 companies in Europe and North America. He previously worked as a self-employed Sales Consultant for more than 8 years, supporting large and mid-size companies in go-to-market-strategies and winning back "lost deals“.