Hot topics, Perspectives, and Debates - Trending in Procurement brings you

the trends and analysis for your Procurement needs.

THE VALUE OF ‘SOURCE-TO-PAY’ SUITES MODEL

"The Source-to-Pay suite model is a powerful tool for any Procurement Department looking

to new drivers to improve their organization performance. As demonstrated in the last

edition of Trending in Procurement survey, it is crucial for Procurement Departments, when

selecting and implementing a Source-to-Pay solution to take into account a range of criteria,

both human and technological, in order to maximize benefits.”

Gérard Dahan, EMEA Managing Director, Ivalua

Each day, multinational corporations have to process thousands of invoices, purchase

requisitions, supplier data, contracts, expense forms etc…. To meet this challenge, more

and more procurement departments are deploying "Source-to-Pay" suites (S2P suites)

which can be defined as ‘a suite of integrated applications designed to manage the

procurement processes from strategic Sourcing and Spend Analysis to operational Procure to

Pay activities, within a single solution’.

The S2P suites model allows for the easy and efficient management of activities as diverse

as: auctions, spend analysis, purchasing categories management, purchase requisitions,

sourcing events, billing and vendor relations.

These Source-to-Pay (S2P) solutions, have not all been developed according to the same

model. There are "homogeneous" suites developed from a single source code, a single

database, a single server and a single supplier table, and there are "heterogeneous" suites

developed from a variety of source codes (different modules developed from different

source codes) and/or thanks to the mergers and acquisitions of niche procurement software

vendors (or single-module).

To better understand the expectations of procurement decision-makers in terms of S2P

solutions and to answer all your questions about their benefits, Trending in Procurement has

interviewed procurement professionals to find out what they think:

o How do S2P solutions enable Procurement departments to better manage the

company's spend?

o Do all S2P solutions allow the same gains?

o What is the most efficient deployment method?

o What types of expenses can or cannot be managed in an S2P solution?

Panel of the Trending in Procurement survey

The Trending in Procurement questionnaire "The value of Source-to-Pay suites model» was

sent by e-mail to a database of European and North American procurement professionals.

A total of 210 responses were collected and analyzed.

Your annual spend budget:

What’s your Job title?

What benefits are you expecting from the deployment of a

S2P integrated suite?

The expected benefits of the deployment of a S2P solution are many and varied:

Effectiveness and performance lever for procurement departments

Some of the benefits considered as being "very important" by the Trending in Procurement

participants include: increased productivity of procurement staff (100%) and a better analysis

of spend thanks to the centralization in a single database of all information (90%). Other

advantages of S2P solutions: quick and sustainable users’ adoption, improved contract

compliance and a lower cost of procurement process.

Simplified administration

Most participants consider that S2P solutions present great advantages in terms of

administration: ease of administration thanks to a single architecture (94%), having a

uniform data structure (88%) and having just one vendor to manage (67%).

It must be noted that many of the benefits expected by the panel (from an administrative

view point as well that of the efficiency of purchasing departments), can only be carried out

in a homogeneous environment: same source code, same architecture, same database and

same data object.

Practical examples:

Example 1 - Better spend analysis thanks to the centralization in a single database:

case of the analysis of spend by suppliers.

A homogeneous Source-to-Pay suite (single architecture database shared by all the modules

of the suite) affords integrated and multi-dimensional analyses made simply and effectively

thanks to the linking of integrated data with all the modules of the solution: supplier data,

contract data, invoice data, delivery data, etc. These are single and shared by all modules.

A niche solution (e.g. an invoice management solution) has to go through an external

analysis solution (data warehouse) to cross supplier data, contract data, etc. from the

various information systems used by the company.

A heterogeneous solution (integrated modules but developed on different databases) will

certainly involve a level of complexity because it will have to cross databases from different

modules in order to be able to analyze spend: the supplier database of the contract module,

the supplier database of the SRM modules, the supplier database of the

e-Procurement module, etc.

Example 2 – Improved performance of procurement staff: case of the creation of a

contract following a tender award.

The link between the end of a negotiation process (RFx) and the formalization of the

contract is a strategic aspect of procurement process management.

In a homogeneous Source-to-Pay suite, the price, the documents created by the buyers and

suppliers (draft contracts, appendices, technical documentation, etc.) can be copied from

the screens of an RFx (e-sourcing module) and imported directly in a contract (contract

module) because the two modules share the same supplier database and documents, which

provide users of the solution (buyers, lawyers, suppliers, etc.) with a real collaborative space

and save them a lot of time given that procurement departments can handle several

thousands of calls for tenders each year.

Niche solutions (e.g., tender management solution) and heterogeneous solutions simply do

not allow this transfer and procurement teams are obliged to re-enter the data from one

module to another.

Example 3 - Ease of administration thanks to a single architecture: case of the

administration of procurement repositories

A homogeneous Source-to-Pay suite offers a single data architecture: the database

(organizational repositories, suppliers, types of tender) is then shared by all the functional

modules of the application. This simplifies the administration of repositories considerably.

For example, the editing (addition/deletion/update) of a tender type in the e-Sourcing

module will be automatically and instantly visible in the spend analysis module.

In a heterogeneous solution, the administration of purchasing repositories requires that

each change be duplicated in each module where the repository is used because the

databases are attached to each module and not the suite.

If you were to deploy a Source-to-Pay, which procurement

“categories” would you consider managing apart in a

“specialized procurement tools”?

The types of purchases most often cited by the panel as likely of being managed in a

specialized solution are: travel &expense, service procurement and commodity

procurement.

This distinction in procurement categories is primarily related to the specific characteristics

of the processes and rules linked to these categories. The management of travel & expenses

is often at the intersection of several company departments: HR, Finance, Procurement, etc.

services procurement involves unavoidable human considerations, and lastly raw material

procurement (commodity) is considered to be highly strategic and is increasingly involving

geostrategic challenges.

E-Procurement solution vendors only rarely take these specificities into account. This obliges

procurement departments to manage them outside Source-to-Pay solutions already in place

or to turn to niche solutions specialized in one of these areas. Consequently, these types of

purchases have often been excluded from the scope of S2P suites and the benefits that they

bring, in particular, in terms of spend analysis, performance gains for the procurement

teams and ease of administration.

Note that some S2P solutions vendors have developed specific modules to manage this

particular types of purchase (e.g.: Services procurement management) thus enabling their

management and full integration into a Source-to-Pay suite.

In your opinion, what is the best method for deploying a S2P suite?

Not surprisingly, most participants in the Trending in Procurement survey (72%) feel that

the deployment method the best suited to Source-to-Pay suites is step-by-step, module

after module.

The deployment of a Source-to-Pay suite

involves the complete overhaul of the

procurement information architecture and

therefore, a heavy workload split between the

project actors: procurement teams, IT team,

software vendors, and integrators.

Some companies, who have sufficient resources, choose to deploy the different modules at

the same time. However, most of them decide to deploy their Source-to-Pay solution by

modules or by module batches. The deployment of a S2P suite involves a change

management strategy that mobilizes the various players involved throughout the project, a

strategy which, according to best practices, must rely on efficient and regular

communication, the users training and a strong commitment of the procurement

department executives and the top corporate management team.

The timeframe for achieving the benefits of the Source-to-Pay solution is, in this case,

longer because the deployment is spread over time compared with a "standard" e-

procurement project.

Which of the following elements could deter your

Procurement department to implement a Source-to-Pay

suite?

The curbs to the implementation of Source-to-Pay solutions are neither based on the

maturity of the solutions proposed on the market, nor on their benefits. 75% of the

Trending in Procurement panel consider that S2P have demonstrated their utility and

benefits while 70% of participants do not question the maturity of S2P currently on the

market.

The main curbs ("very important" items) identified by the participants are the duration of

deployment of S2P solutions on one hand, and the fact that a procurement department

may have already deployed modules linked to a niche vendor (vendor specialized in invoice

management, for example) or a software vendor that does not offer a complete S2P suite

(e.g. e-Procurement solutions vendor).

In the first case, Procurement Departments that are reluctant to set up a Source-to-Pay

solution because the deployment time is too long must apply an ROI approach and calculate

the ratio between the resources invested (time spent by teams, budget, etc.) and the

qualitative and quantitative benefits expected (gain in efficiency, time saved for purchasing

teams, gains in financial performance for the company, etc.). If the gains expected are higher

than the investment, the question as to the acquisition and setting up of an S2P suite is to

be seriously considered.

In the case where there are more than one e-procurement modules published by different

vendors, the end of the commitment period with each vendor should be the occasion to

think about adopting a S2P suite. Indeed, as seen above, it is deployment by module that is

the preferred method for deploying a Source-to-Pay solution. The replacement of niche

solutions, module by module then becomes a strategy adapted to the company's

resources (human and budget) and contractual commitments.

Conclusion

There are many advantages of Source-to-Pay solutions and they are generally well

understood by purchasing departments. A S2P solution deployed in a company enables it

not only to make qualitative and quantitative gains, but also significantly improve the

efficiency of procurement teams. These advantages include: access to a precise and efficient

spend data and analysis, which results in a better control of spend and de facto, a better

application of framework contracts negotiated by the procurement departments.

Trending in Procurement highlights several elements that Procurement Departments must

take into account when choosing and setting up a S2P purchasing solution in order to

maximize the benefits:

The deployment mode: as in any IT project, the deployment strategy is a key

success factor. The Procurement Departments must beforehand raise the issue of the

resources necessary and available for the project. Although 78% of the panel

considers that a progressive deployment by module is the preferred solution, in

practice, the change management strategy that accompanies the deployment as well

as the training and involvement of the top-management continue to be the essential

conditions for a successful deployment.

The types of purchase that will be managed in the S2P suite: the types of purchases

that a Procurement Department would like to manage in a Source-to-Pay suite are

decisive in choosing the solution. If the company wishes to manage all purchase types

in a single solution, even the most specific (services, intellectual services, raw

materials, travel purchases and expense accounts), the Procurement Department

should look for a vendor that offers custom modules and/or modules that are so

flexible that the specific characteristics inherent to these types of purchases can be

integrated into the settings of the solution.

The environments proposed by the various market players: the benefits of Source-

to-Pay suites are very closely linked to the technical environment proposed by the

vendor. This is because the advantages of these solutions in terms of team

performance (time saved, etc.), ease of administration and improved spend analysis

can be fully achieved only in a homogeneous environment (1 code, 1 database shared

by all the modules of the solution).

About Ivalua

Established in January 2000, Ivalua is one of the leading global vendors in Spend

Management Software today. The company’s software suite Ivalua Buyer covers the whole

Spend Management spectrum, from supplier relationship management to spend analysis,

with e-Sourcing, e-Procurement and invoice management in between.

Based in the US and Europe, Ivalua has successfully implemented more than 150 projects

within large international companies in all sectors, enabling Ivalua to demonstrate strong

growth while remaining profitable since its creation. Ivalua solutions have been widely

tested and adopted by several tens of thousands of users worldwide.

Thanks to its ecosystem of partners, Ivalua supports its clients with a wide range of services

and content integrated within its solutions.

For more information, visit www.ivalua.com or contact us by email on info@ivalua.com

Find out more about the Source-to-Pay solutions and ask all your

questions to our experts during the next Ivalua webinar: “Source-to-

Pay Solutions: a strategic driver of performance for Procurement”

Thursday, May 22, 2014 at 13:30 GMT

More information and free registration on: www.ivalua.com