1. The eternal fight against costs... and inflation
There's no getting around it: cutting costs remains important in S2P.[1] It seems that purchasing teams must do everything in their power to reduce costs despite inflation. The Ardent Partners report highlights that 74% of CPOs see cost savings as a top priority in 2024.[2] This requires smart negotiations and tight contracts, but also collaborations where you act as a unit with finance. That sometimes turns out to be more difficult than you think. This not only requires strong Excel skills from purchasing, but rather an increasingly strategic contribution to business operations. In addition to cost savings, it helps enormously to manage liquidity and to increase speed and insight through digitization.[5]
2. The rise of AI and digitization
Digitization is now more than just a buzzword; it is the backbone of modern S2P processes. From digital contract management systems to advanced e-sourcing tools, the goal is to make everything faster, smarter and more transparent. But digitization sounds easier than it is. S2P systems are notorious for requiring decent data quality — and let that be the stumbling block for many organizations.
According to a recent Gartner study, many S2P teams miss the overview because data silos and poor integration stand in their way.[4] These obstacles cost organizations valuable time and resources. However, AI offers a solution here: from predictive analytics to the automation of recurring tasks, AI can be a great strength. This allows you to save a lot of time by automatically processing purchase orders or rapid analyses of supplier performance.[5]
3. Cooperation between Finance and Procurement: less rivalry, more effectiveness
The most important lesson from the reports? The cooperation between finance and purchasing is crucial, but unfortunately often substandard.[1] The gap between these teams can lead to inefficiencies and even higher costs. In the PRGX report, only 7% of S2P professionals say their data management is “excellent,” largely due to poor collaboration.[5]
The solution? Set common goals and give S2P teams the space and resources to truly work end-to-end. Or put together a team that is specifically dedicated to process optimization within S2P with clear powers and a solid budget. When finance and purchasing are really on the same page, we are no longer talking about simply working well together, but about jointly achieving strategic business goals.
4. ESG and sustainability — a new priority
Sustainability is also prominent on the agenda of many organizations in 2024. Not only does it feel good, but many customers, governments and stakeholders expect it. ESG initiatives will be at the top of the priority lists. Procurement plays a major role in this. It's up to them to ensure sustainable supply chains and limit risks. Fortunately, S2P technology can also help here by collecting ESG data to make better decisions.
Our tip: be proactive in monitoring suppliers for ESG criteria. Organizations that do this well not only reduce risks, but also strengthen their brand.
Conclusion: Get ready for a challenging but rewarding year
The common thread in all reports? Technology and collaboration are the keys to success in 2024, but technology alone is not enough — without strong collaboration, good data quality and a clear plan, you're nowhere. For those who think “easy-peasy,” rest assured, it is certainly feasible, but it requires the use of both finance and purchasing. After all, source-to-pay is about more than processes and systems; it's about partnership and impact. So let's take on this challenge together and make S2P a strategic spearhead in your organization!
Not sure where to start yet? At S2P & More, we help you step by step towards that ideal S2P future. Take informal contact with us.
The following sources and reports were used in this blog:
1. Title: Aligned Priorities for the CFO and CPO
Author (s): sharedserviceslink.com Ltd, Esker
Date: 2024
URL: sharedserviceslink.com
2. Title: The State of S2P Digitization 2024
Author (s): Ardent Partners, commissioned by Ivalua
Date: 2024
URL: Ivalua's website
3. Title: 2024 Procurement Agenda and Key Issues Study Results
Author (s): The Hackett Group
Date: 2024
URL: hackettgroup.com
4. Title: Magic Quadrant for Source-to-Pay Suites
Author (s): Gartner (authors: Micky Keck, Naveen Mahendra, and others)
Date: January 2024
URL: Gartner's website
5. Title: Still Missing: Much Needed Collaboration Between Finance & Procurement
Author (s): PRGX, in partnership with sharedserviceslink
Date: March 2024
URL: sharedserviceslink.com
