Three reasons to start an S2P project
Organizations start a Source-to-Pay project for one or more of these three reasons.
- New developments in Procurement and Finance and among software suppliers.
- Bottlenecks in the S2P process.
- The systems need to be replaced.
In this blog, we share a few examples of these reasons. Consider, for example, developments in the field of sustainability. Or about the new opportunities that AI offers. In the knowledge session on April 18, we delved deeper into the reasons for starting an S2P project. Do you want to watch the knowledge session again? That's possible here.
3 new developments in the field
1. More attention to sustainability
The category “new developments”, for example, includes developments in the field of sustainability. Since the legal introduction of the Corporate Sustainability Reporting Directive (CSRD), you as an organization must share reports on the sustainability of your company and that of your suppliers. This affects the Source-to-Pay process.
In the software, we are therefore increasingly seeing attention for sustainability and ESG. This makes it easier to register the risks and keep track of the sustainability measures you take with suppliers.
A practical example is EcoVadis. This is a platform that provides insight into the sustainability assessment of organizations in product chains. Several Source-to-Pay software solutions offer a standard link with EcoVadis.
You use the sustainability information from your suppliers to design RFIs and RFPs and register contracts.
2. Procurement focuses more on strategic value creation
Another development is that Procurement at many organizations focuses more on strategic value creation. Where the focus used to be on sharp negotiations with suppliers and cost reduction, the focus is now increasingly on:
- Realizing strategic partnerships with suppliers.
- Promoting innovation.
- Contributing to sustainability.
In order to make this strategic contribution, it is important to be in Control of your S2P process. Ask yourself questions like: what suppliers do we do business with? What are our contracts? And how do we ensure that the contracts are used properly? An S2P project helps you achieve this control.
3. Generative AI and smart analytics capabilities
Another development that is clearly on the rise: generative AI. Tools such as ChatGPT and Microsoft Copilot are an integral part of many organizations.
Generative AI is also increasingly appearing in Source-to-Pay software. For example, it helps to automatically generate texts for RFIs and RFPs or to draw up contracts. Invoice matching in software is also becoming increasingly intelligent through the use of AI.
In addition, generative AI is a powerful tool for using intelligent analytics. Where this option used to come as a separate module, it is now increasingly being integrated into the software. Previously, you had to take the time to draw conclusions from analyses yourself. Now, this is increasingly happening between work. For example, when you order a specific item and see a pop-up with: “We see that you've ordered an item x before. Do you want to make a catalog out of this?”
Starting an S2P project due to bottlenecks
Many Source-to-Pay projects start due to bottlenecks in the process. The bottlenecks can be experienced by buyers, Purchasing, Finance or IT. For example, we often see that users are dissatisfied with the process because they have to perform a lot of manual actions and find the system unuser-friendly. We also often see that Finance and Procurement do not have sufficient control and insight into the process, or that there are audit issues.
Our customer Dichterbij suffered from various bottlenecks in the process. That was a reason for them to start the project.
Another common bottleneck is cooperation with suppliers. We see that our customers would like to collaborate digitally with their suppliers from one platform. This way, they can immediately exchange master data, purchase orders and invoices. A good S2P process can streamline this collaboration. With our customer Royal Kaak this was an important reason to start the S2P project.
Replacing outdated software
For many organizations, this issue is starting to arise more and more often. For example, some S2P applications have been used for over 10 years and are beginning to become obsolete. It is also possible that the application contract expires soon.
Most of the time, your organization's goals have changed over time. Of course, you want your process and software to meet your current needs. New systems are often more intuitive and can save a lot of time for your organization. That is why it is wise not to replace an application one-on-one, but also to see how you can optimize and improve.
We have ROC Midden Nederland helped to replace their P2P application and achieve process improvements. Here you can read exactly how that went.
How to get your S2P project off to a flying start
You can start a new S2P project for various reasons. Of course, you would prefer this project to run smoothly. We have a number of tips for this.
1. Start with a good analysis
Because: measuring is knowing. A good baseline measurement is essential to get your S2P project off to a flying start. This gives you a good idea of your current situation and the way to improve it. For example, include the following questions in your analysis:
- What goals do you have?
- What bottlenecks are you currently experiencing in the process?
- What developments are there in the market?
- How do you score on a number of KPIs compared to the benchmark?
- What do users run into?
- What information are you still missing?
2. Compare your results with the benchmark
With a baseline measurement, you have a clear picture of the current situation of the processes in your organization. Are the results of the baseline measurement close to the benchmark? Then your Source-to-Pay process is already going well. In this case, it is important that you keep what is good and continue in this way.
3. Improve where necessary
We regularly see that organizations think that the S2P process needs to be addressed in a major way. But this does not always have to be the case. It is also possible that only a few parts need to be improved. Small improvement projects can also produce many results.
If your analysis shows that certain invoices, for example, are not coming in properly, the entire system does not need to be overhauled. Then it can also be sufficient to only work with certain file types.
4. Make a business case
Do you see a great potential for improvement in your organization? Then a larger S2P project and a business case are needed. Here you explain what the project will cost and what it will deliver. You are not only looking at the financial profits, but also at the increase in quality, user-friendliness and more efficient working methods.
5. Get started with your S2P project
You have now completed the preparation for your Source-to-Pay project. This allows you to start the next steps of S2P. Do you want more tips on how to approach this? Then continue reading on our blog.
Professional support with your S2P project
There are plenty of reasons to set up a new S2P project. But as we said at the beginning of this blog, you don't just start a Source-to-Pay project. Do you want to make sure that your project runs smoothly and gets the best results? We can support you in this. Do you want to know how? Please feel free to contact us.