Evolution of Procure-to-Pay Software

by Arnaud Malardé

With Gartner’s release of their 2019 Magic Quadrant for Procure-to-Pay Software, it seems a good time to reflect on what truly drives success. As our expectations as consumers continue to grow, it is only natural that we bring those to the workplace. After all, why can’t business purchasing be as simple and, daresay, enjoyable as consumer shopping?

The Times They are a Changin
This natural question has led to ever greater pressure on procurement to enable a consumer-like Procure to Pay experience for employees. In fact, a recent study by Forrester Consulting found improving the employee experience to be the number one priority for procurement in 2019, with 67% of respondents ranking it a crucial or important priority. This just edged out delivering savings on indirect costs (66%), which historically has reigned supreme as the dominant priority. In the world of procurement, this reflects nothing less than a revolution.

The Challenge
Procure-to-Pay Software is critical to success in this priority, yet far too many projects fail to deliver the promised return. The same Forrester study found that 82% of respondents had changed (39%) or were considering changing (42%) their eProcurement system. This reflected technology spanning the Source to Pay process, but the P2P process was highly represented, as evidenced by the reasons provided for switching.

In light of this, I can’t think of a more timely release of Gartner’s latest Magic Quadrant. The report evaluated full-suite Procure-to-Pay solutions from 13 different software vendors across a broad set of criteria reflecting ‘ability to execute’ and ‘completeness of vision.’ 5 vendors were secured placement in the coveted Leaders quadrant, including a strong presence for Ivalua. Ivalua’s placement was particularly dominant on the ability to execute axis, which is heavily weighted by customer evaluations. Ivalua also recently was awarded the best P2P Specialist Provider by an independent panel of industry veterans at the 2019 World Procurement Awards. So what is actually driving the recognition and, most importantly, customer success with Procure P2P tools?

Success Factors
When it comes to Procure-to-Pay Software, there are 2 core elements to success, which happen to be highly correlated and fall under the adoption category. The first is what normally comes to mind when thinking about the Procure to Pay process – user adoption. With employee expectations constantly growing, providing users with a consumer-like experience is a key element here. If employees don’t use your system, you’ll never realize the expected ROI, nor meet the objective of improving the employee experience.

Unsurprisingly, poor user adoption ranked highly as a reason for needing to switch Procurement software provider. Yet, it was actually the second biggest obstacle. The top obstacle was supplier management. High levels of supplier onboarding are key to a successful project. That ensures that spend actually flows through the system and users can find what they are looking for (both improving the experience and preventing excuses for maverick buying). So what actually drives high levels of user and supplier adoption?

Details, Details, Details
When evaluating vendor capabilities here, as in many areas, details matter. User friendly interfaces are certainly common among highly ranked procure to pay solutions, but are not sufficient. You need to ensure not just that the interface and flow is intuitive and simple, but that users can find what they need. Advanced capabilities matter here, such as Ivalua’s Search360. This allows side-by-side comparison of both hosted catalogue items and those normally requiring punch out to supplier sites, enhancing the experience by not forcing users to leave the system when placing requisitions and also ensuring real time availability and pricing so users are not frustrated by delays or price changes after placing an order.

With supplier management , knowing what to look for is especially critical. Many criteria sound as if they would lead to high supplier onboarding but in fact carry little weight. Network size is one search criteria often touted. It sounds logical, but given that suppliers onboard for different activities, have different offices, contacts, etc. the vast majority of suppliers must still conduct some onboarding activities for any  new relationship and system.

What really drives rapid and high levels of supplier onboarding is simplicity. No fees, no limits to activity, no vendor conditions to accept and a simple way to connect with flexible options that meet supplier preferences. This approach has led to 99% of suppliers being onboarded at companies such as CACI (>40,000 onboarded), Credit Agricole (>60,000 onboarded), Fannie Mae (>70,000 onboarded) and many others. Companies like Maxim Healthcare that tried different approaches prove this out.

As Procurement’s role continues to elevate and become more strategic, new priorities continue to arise. There are great opportunities to add value to organizations. Some, such as helping grow revenue or drive innovation can add great value to key stakeholders. Improving the employee experience is the best way to broadly demonstrate Procurement’s contribution. The right technology and approach are key to success. Gartner’s latest Magic Quadrant for P2P Suites is hence a timely evaluation of vendors. That and knowing the right details to investigate will put you on the path to a successful digital transformation.

If you are interested in knowing more about the Ivalua’s Procure to Pay solution, please visit our website or request a demo of our Procure to Pay software.