beware erp: expense & regret purchasing -...
TRANSCRIPT
Beware ERP: Expense & Regret Purchasing 10 Reasons Why ERP Can’t Deliver Smarter Spending and Savings ACoupaeBook
Feelfreetorepublishexcerptsfromthiswhitepaper,aslongasyoulinkbacktohttp://www.coupa.comforattribution.Andit’salsookaytosharethisreportinitsentiretywithanyoneyouthinkmightbeinterested.Infact,I’dbedelightedifyoudid.
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Introduction Thereisareasonwhy65%ofERPimplementationsfail.ERPsolutionsarecomplex,requireanobsceneamountofresources,aredifficulttodeployandevenmoredifficulttouse.Nowdon’tgetmewrong,ERPsoftwaredoeshaveitsplaceinthetechnologyecosystem–it’sabsolutelyterrificformanagingtransactionsandgeneralledger–I’mjustsayingitsplaceisnotinpurchasing.
EveryprocurementprofessionalknowsERPsystemsaren’tmuchhelpwhenitcomestoturningbusinessesontosmarterspendingpractices.Chancesareyou’rethevictimofanIT‐ledprojectteamthatconvincedthepowersthatbetospendhundredsandthousandsofdollarsonanERPsystemthatwould“solvealltheirproblemsandsavethemmillions.”Nowyou’reforcedtomodelyourprocure‐to‐payprocessonwhatyourERPsystemcansupport–andnotnecessarilyonwhatisbestforthecompany.
Nowhereyouare,stuckwithapurchasingprocessthatistime‐consuming,costlytosupportandavoidedateveryturnbythepeopleyouneedtouseit.Ratherthanfollowtheprocess,employeespurchasewhattheyneedandexpensetheitemslater,confidenttheywillbereimbursedforthepurchase.Managershavelimitedinsightintospendingasitoccursandoftenregretwhatthey’veapprovedoncetheyfindoutjusthowmuchtheywentoverbudget.
You’vehadenoughofthisERPmadnessandarereadytosellyourvisionfore‐procurementbutknowtheERPdefensewillcomeup.Sohowdoyoumakeyourcasefore‐procurement?Hereare10reasonswhyyourERPsystemcan’tdeliversmarterspendingpracticesorthesavingsthatcomewiththem:
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Number 10. No one can figure out how to use it
Inanerafordownsizing,rightsizing,doingmorewithless,andwearingmultiplehats,procurementgroupsnolongerhavetheresourcestosupporteverypurchasingneedintheorganization.Employeesarebecomingincreasinglyresponsibleformanagingtheirownrequisitionsandsupplierrelationships,anddon’thavethetimeorpatiencetonavigateacomplexsystem,orresearchpoliciesandprocedurestopurchaseofficesupplies.Ifthesystemisnotintuitiveandeasy‐to‐use,youremployeeswillsimplyworkaroundit.Letthemexpenseit,andyou’llregretit!
KnowYourUsersandWhatTheyNeed
ERPsystemswerebuilttobesophisticatedenterprisesystemsforcertifiedexpertsandprofessionals.Asaprofessionalaccountantorbuyer,youattendsomein‐depthtrainingclasses,putonyourthinkingcap,andfigureitout.Butifyouareanaverageemployee,it’sunacceptablycomplicated.
Don’triskarevolt(oryourcareer)‐completewithgraffitiwrittenonthebathroomwallsaboutyourfailedrollout‐byforcingemployeesintoasystemyouknowistoocomplicatedtouse!Knowyourusers,knowwhattheyarecapableofandgivethemasystemthatlet’sthemeasilygetwhattheyneedandgetonwiththeirday.
GiveThemAmazon.com‐likeEase‐of‐use
It’snocontest;e‐procurementsolutionsarethehandsdownwinnerwhenitcomestoease‐of‐use.Fromonlinecatalogstosupplierpunch‐outsites,it’sasfamiliaraspurchasingsomethingfromyourfavoritewebsite.Inaddition,youcansearchforspecificproductsandservices,reviewrelevantbuyingpolicies,comparisonshopandviewsupplierratingsandbuyerfeedbackmakingitinfinitelyeasiertocompleteyourpurchase.
Inmanycases,employeesfindthatane‐procurementsystemis“easiertousethanavoid.”Sosaygood‐byetospendingsurprisesandunapprovedexpensestatements.Bygettingemployeesto“buyin”tothesystemanduseit,youmaximizeyouropportunityforsavingsandyourabilitytocontrolspendingcompany‐wide.
MakeYourCasefore‐Procurement
HelpthemunderstandhownegativitytowardyourERPsystemwillcostyoudearly!
• Ifyoucan’tusethesystem,howonearthdoyouexpecteverydayemployeestofigureitout?Makeiteasierthanexpensereporting,andwatchadoptiongoup.Noonewantstoshelloutfromtheirownpocketandtrackpaperreceiptsifthere’sabetterwaytobuy.
• Whileeveryoneend‐aroundsthesystem,we’llsuffer:decreasedproductivity,lostleveragewithsuppliers,higherprices,andincreasednon‐payrollcostsby15%
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Number 9. It is too slow and unproductive
FormostemployeesfillingoutapaperformisfasterthansubmittingarequisitionthroughyourERPsystem.What’smore,mostemployeeswouldratherjustgodowntothelocalstore,getwhattheyneedthenandthere,andsubmitanexpensereportlatertoaccountforthespend.Plus,mostERPtoolstake30‐45secondstologintoandtonavigatearoundtheendlessmenustotherightformfortherightrequest.Nottomentionthetimeittakestoprocess,getapprovalsandactuallyreceivetheitemyouneed.Nowonderemployeestrytoavoidtheprocessatallcosts.
UnderstandthePainsandObstacles
Acommonmisconceptionaboutchangingemployeespendhabitsisthatifyoumaketheprocessdifficultenough,fullofforms,reviews,approvals,tapdancingandhoopjumping,employeeswillnotspendanythingbecauseit’sjusttoodarnhard.Nottrue.Itonlyappearsthatyouareachievingresultsbecauseallofyourspendisnotundermanagement.
Butdon’tbemistaken‐employeesarespending,you’rejustnotseeingituntilamonthortwolaterwhentheysubmittheirexpensestatementsandyouarewonderinghowyouwentoverbudgetagain.Theyarebuyingoutsideofthesystem,outsideoftheapprovedprocessandoutsideoftheapprovedsuppliersandpre‐negotiatedprices.
EmpowerProductivity
Let’sfaceit,youremployeeswerenothiredtomanageapurchasingprocessorunderstandhowyourcomplexERPsystemworks.Somakeiteasyforthemtofollowtheprocess,ortheywillfindaneasierwaytogetwhattheyneedtogetthejobdone
RatherthanforcingemployeestopurchasethroughaforeignERPsystem,simplify!Usefamiliarconventions,andusee‐procurementtoincorporateeverythingtheyneedtocomplywithpurchasingguidelines,solicitcompetitivepricing,andprovidetherightinformationfororderingandbilling.
WeoncecountedthenumberofclicksandfieldentriesittooktobuyapencilthroughanERP.Theanswer?37.
MakeYourCasefore‐Procurement
Whattypeofworkenvironmentdoesyourorganization’sleadershipwant?
• Doyoureallywantpeopletobespendinganhourtryingtofigureouthowtobuyastapler?
• Canyourisknegativemoralebyforcingemployeestojumpthroughtime‐consumingandmindlesshoopsinsteadofdoingwhatitistheyarehiredtodo?
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Number 8. It is inconvenient for managers
I tcanbearguedthatERPsystemsarereallytheidealtoolformanagers.Afterall,itisapowerfuldataandreportingenginewithaccesstoeveryconceivablemetricandstatisticneededtomakeinformedbusinessdecisions.It’ssophisticated,it’sexpensive,andit’scompletelyinconvenientformanagerstouse!
Today’smanagersarefirefighters,handlingescalatingprioritiesanddealingwiththeproblemdujour.Thoughconnected24x7throughtheiriPhonesandBlackberries,theystillcan’tgettheiremailbacklogunder100.Thelastthingtheyneedisyetanothersystemtoaccess,anotheradministrativetasktoremember,andanotherprocesstoadaptto.
Yourmanagersarebusyenough
Flexibilityisessentialforsuccessfulmanagerswhoarejugglingmultiplepriorities,projects,employeesandmeetings.AndunfortunatelyERPsystemsoftenrequiremanagerstoapprovepurchasesonlythroughthesystemandinaveryparticularway.Theproblemis,it’srarelyaconvenienttimeformanagerstodropwhattheyaredoingtologintotheERPsystemtoprocessrequests.
ForcingmanagerstousearigidERPsystemtoapprovepurchasesandmanagespendwillonlycausefrustration,dissatisfaction,andpeopleultimatelygoingaroundtheprocess.Andbeforeyouknowit,yourmanagershavelostallspendcontrolandvisibility–alose/losesituationforeveryone.
Therighttoolsmakeallthedifference
Effectivespendcontrolmeansspeedyandefficientreviewanddispositionofspendingrequests.Otherwise,youriskdelaysandbureaucracythatslowdownthebusiness.Buttomaintainthiscontrol,youmustprovideemployeeswiththetoolsthatworkwithhowtheyworkandnotonesthatforcethemintoarigidconstruct.That’swherethevalueofe‐procurementcomesin.
Withane‐procurementplatform,managerscaneasilystayontopofspendrequestsandbudgetsthroughemailalertsandevenapproveorprovidefeedbackonrequisitionsstraightfromtheiremail,Blackberry,iPhoneorothermobiledevice.
MakeYourCasefore‐Procurement
ExplainwhyERPsoftwareletsmanagersdown!
• Peoplewon’taskpermissionbeforetheybuyunlessapprovalshappenfast
• Managersdeservetheconvenienceofapprovingstraightfromemailormobilephone
• Onaverage,youshouldbeabletocompletetheapprovalprocessinunder12hoursvs.thetypical2‐3weeksrequiredtocompletetheapprovalcycleinERPprocurementmodules
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Number 7. It can’t prevent over-spending
WhenyourERPpackagewasfirstimplemented,thereisnodoubteveryoneintheorganizationhadthebestofintentionsandthehopethatitreallywouldsolvealltheproblemsyouthoughtitwould.Andwhileithasdeliveredonthepromiseofmanaginginformationandpossiblyenforcingsomepoliciesandprocedures,nowthatthesolutionisdeployedyouhavediscovereditsabilitytohelpmanagespendandpreventoff‐contract,wasteful,maverickspendingleavesmuchtobedesired.
ERPdeliversbadspendingnewsonlyonceit’stoolate
Everyquarter,theaccountingdepartmentperformsa“close”andrunsreportsfromtheERPsystemtoseewhathappened.Didweover‐spendcomparedtoourgoals?Toooften,theanswerisyes.ButyourERPsystemcan’tpreventover‐spending–itsimplyreportsit.
Findingoutthatyouoverspent,twoorthreemonthsafterthespendhasoccurreddoesverylittletohelptheorganization.Youhavenoopportunitytocoursecorrect,nowayofknowingwhenyouapprovedthat$10,000purchasethatyoujustpushedyourspend$8,000intothered.Themoneyhasalreadybeenspentandthereisverylittlechanceforyoutorecoverthatspendonceithappens.Andthat’swhyyoudeservebetter!
e‐Procurementwarnsyouaheadoftimesoyoucanact!
Imagineifyouknewinreal‐timethatyouweredangerouslyclosetobeingoverbudgetandapprovingthosenextprojectswasgoingtoputyou$25Kover,wouldyoudosomethingaboutit?Wouldyoudelaytheotherthreeprojectsorfindamorecosteffectivewaytoconducttheprojects?Absolutelyyouwould!
Withe‐procurement,youcantrackspendingagainsttargetsinreal‐timeandevenbealertedwhenspendreachescertainlevels.Sinceyouhavetheinformationyouneedwhenyouneedittomakethebestspenddecisionspossible,youareabletocoursecorrect,delayadditionalexpensesandultimatelysavethecompanymoney.
Inaddition,youhaveaviewintorecentspendingpatternsandpredictorforecastwherespendingwillfallfortheremainingmonthsallowingyoutobepreparedandplanforlonger‐termspendandsaveinitiatives.
MakeYourCasefore‐Procurement
Helpthemseethefuturesoyoucanshapeit!
• Wouldn’twerunthebusinessbetterifwecouldaccuratelyforecastnon‐payrollspend?
• Shouldn’twebesettingspecificspendingtargetsforourbusinessandtrackingagainstthosetargetstomaintainmargins?
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Number 6. It promotes a bureaucratic work environment
It’snosecret–whengiventheoptionpeoplewilltakethepathofleastresistanceeverytime.Whowantstospendthetimejumpingthroughhoops,fillingoutforms,chasingdownapprovalsandcallingpurchasingeveryotherdaytoseeiftheiritemhasbeenorderedandwhenitwillarrive.Whydoallofthatwhenyoucansimplygotoaretailstore,instantlypurchasewhatyouneedandjustexpenseitlater?ButthisisexactlywhatemployeestendtodowhentheyareforcedtopurchasethroughacomplicatedERPsystem,makingitimpossibletoeffectivelymanageandcontrolspend.
Employeeswanttodoitthemselves,butareblockedateveryturn
Theinternethasremovedtheboundariesofbusiness.NowasmallbusinessinGeorgiacansupplypeachpreservestoaParisiancafé.Thereisincreasedcompetition,improvedglobalinfrastructureandacompletelynewwayofdoingbusiness.Companiesthatwillsurvivemustbeabletoadaptandusethefullpotentialoftheonlineworldtooperatemoreefficiently.
ERPsystems,howeverhavefailedtomoveintothe21stcentury.Theycontinuetocopy20thcenturybusinessprocesseswhereinformationwasplacedinsilosandaccessibleonlyto“thosewhoneedtoknow.”Thismeansthatwheneveranemployeewantstocreateorcheckonthestatusofarequisitionorpurchaseorder,theyhavetorelyonphoneandemailtocontactthoseintheknowtofindouttheinformationtheyneed.Notonlyisthismethodinefficientandtime‐consuming,italsocausesincreasingfrustrationanddisruptionforyourpurchasingteamandemployees.
Helpemployeeshelpthemselves
Thenewgenerationofemployeeshaveneverbeenwithoutacomputer.Theirlivesareonlineandthelinesbetweentheirpersonalandprofessionalslivesarestartingtoblur.Theyknowhowtoshoponline.Theyknowhowtolookforagooddealbutareunabletousethatskillforthecompany’sbenefit.WitharchaictechnologieslikemostERPpackages,employees’handsaretied.Theyareoftenpowerlesstomakeapositivecontributiontotheorganization.
Ane‐procurementplatformempowersemployeeswiththeinformationtheyneed–fromreal‐timeapprovalstatustoadirectcopyofissuedPO’stobeingabletoratesuppliersonthequalityofthegoodsandservicesreceived–toeffectivelymanagetheirpurchasesandcompletetheirday‐to‐daytasks.
MaketheCasefore‐Procurement
Getthemtounderstandthedifference!
• Wouldn’twebebetteroffgettingemployees’helpinunderstandingthewho,what,when,andwhyoforderingandhowtogetthingsdonewithgreaterefficiency?
• Shouldn’tourdedicatedpurchasingprofessionalsbemaximizingtheirtimeonnegotiatinggreatdealsandsteeringpurchasingpoliciesvs.re‐keyingordersandansweringstatusquestions?
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Number 5. It isolates you from the outside world
YourmostrecentERPreportsshowthatyouwereabletoshave3.5%offyourquarterlyspendandyouthink“notbad,savingsomethingisbetterthansavingnothing”.Andmaybeitis,butwhatiftherewasthepotentialtosaveevenmore?
WithyourERPsystem,yourviewoftheworldislimited.Youcanonlycompareyourperformanceagainstyourhistoricaldataandallthatwilltellyouishowyouaredoingbasedonpastperformance.Whatitdoesnotprovideisinsightintowhetherornotyourperformanceisinlinewiththemarket,whichisessentialinordertogetaleguponthecompetition.
Howdoyouknowifyouaredoingagoodjob?
Youknowwhybenchmarkdatacoststhousandsofdollarstoacquire?Becauseitisdifficulttogetandwhenyouhaveitthevalueitprovidesisimmeasurable.Gettinganinsideglimpseofthecompetitionprovidesyouthecriticalinformationnecessaryforstrategicplanningandbeingabletostayaheadofthemarket.
WhenyourERPpackageishostedonyourdedicatedserverswithonlyyourinformation,youareisolatedandalone.Youareunabletoknowwhetheryourprocurementpracticesarecompetitiveorlagging.Sohowcanyoubeexpectedtotaketherightactionsthatwilldelivergreaterefficiencyandsavingsforyourbusiness?
Youneedtocompareyourorganization’sperformancetothemarket!
OneofthebiggestbenefitsofaSaaSprocurementsolutionisthatthereisasingularplatformthatalltransactionsareprocessedthrough.Andwhiletheplatformstillkeepsdataseparateandsecure,havingacentralizedsystemstandardizesthewaydataiscollectedandprovidesawaytoeasilybenchmarkperformancemetrics.
Thisaggregatedinformationempowersyoutoconstantlyassessimprovementopportunitiesbybenchmarkingyourprocurementprocessesagainstthemarketaverage.Byknowinghowyoucompare,youcanquicklysetgoalsandtargetparticularpartsofyourprocurementprocessforimmediateimprovement.
MakeYourCasefore‐Procurement
Helpthemunderstandgreatprocurementisaboutmorethanguessing!
• Howwillwesetaggressiveyetattainableimprovementgoals?
• Wouldn’tyouliketousemarketcomparisonswherewearelaggingtomotivatetheorganizationtochange?
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Number 4. It blocks employees from saving money
Withtheonsetoftheinternetandnewtechnologies,globalcompetitionhasexplodedleadingtotherapiddevelopmentandreleaseofnewproductsandservices–drivingpricesdownandincreasingtheopportunitytofindabetterdeal.Pricescanchangeweekly,andinsomecasesevendaily.Itwouldbeimpossibleforanypurchasingorganizationtokeepupwiththesepricefluctuationsforeverycategoryofspend.Andbeinglockedintoasix,nineortwelve‐monthcontractwillnotincreaseyourchancestotakeadvantageofloweravailablepricesandthesavingsyoucouldachieve.
ERPande‐Commercedon’tmix
Beforeeverysupplierontheplanethadawebstoreandeverybodystartedshoppingonline,thewaytobuysomethingwastopagethroughathickcatalog,findtheitemsyouneed,filloutyourorderformwithallthethingsyouneeded,gettheorderapprovedandfaxitovertothesupplierforfulfillment.
ERPsystemsarejustastepupfromthisancientwayofdoingbusiness.Sure,youcanuseyourERPsolutiontomaintainalistof“ApprovedSuppliers”fordifferentcommodities.Youcouldeveninputcontractsforitemsatpreferredpricing.Butforcategorieswhereproductsandpriceschangequicklyyouneedadifferentapproach!That’sespeciallytrueinthisknowledgeeconomy,whichisincreasinglycharacterizedbyservicesbusinessesandindirectspending.
Empoweremployeestofindsavingsopportunities
Thereareafewcategoriesofspendwhereyourepeatedlyorderthesameitemstimeandagain,andpricesfluctuatelittle‐centralizedpurchasingcontractswithpreferredpricingmakessenseforthosetypesofexpenditures(likepartsforanassemblylineorsuppliesfortheoffice).Butmoreandmore,whatemployeesneedwillchangeday‐to‐daydependingonanorganization’sshortandlong‐termgoalsandobjectives.
e‐Procurementgoesbeyondthetime‐honored“approvedsupplier”mentalitytoleveragecrowdsourcingtofindthebestdeals.Withacrowdsourcingapproach,youremployees“doatworkwhattheydoathome”.Theyshoparound.Theycheckoutavarietyofvendors.Theyfindbargainsanddealsthatyourpurchasingteamisn’texposedtoandtheypurchaseatthelowestprice.Andthebestpart,you’restillincontrolandyou’respendisstillundermanagement,allwhilesavingfarmoremoneyandstayingontopofthemarket.
MakeYourCasefore‐Procurement
Givethemexamplestheyknowaretrue!
• Howmanytimeshaveyoupersonallyfounddealsonlinethatwerewaybetterthananoldcontractprice?
• Sneakuponthem:didyouseethatfantasticdealonOverstock?Nowaywe’resavingthatkindofmoneywhenpurchasingthroughourERPpackage!
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Number 3. Your suppliers hate it too!
Youcanprobablythinkofahundredbetterusesofyourtimethanduplicatingefforts,rekeyinginformationandpushingpaper.Guesswhat,socanyoursuppliers.Themoretimethattheyhavetospendmanuallyprocessingpaperwork,thelesstimetheyhavetospendonstrategicinitiativesthatwillultimatelyprovideyouwithbetterproductsandservices.Notonlythat,butthemoreresourcestheyneedtodedicatetomanualtasks,themoreyouwillenduppaying.
YourERPsystemmakesyouacostliercustomer
Asageneralrule,themorehandsthathavetotouchaproductorserviceinordertodeliverittoanendcustomer,thehigherthecost.Sowhenyoursuppliershavetomanuallyre‐keyeveryPOyousendbecauseyouareusinganERPsolutionthatdoesnotallowyoutoautomaticallytransmittheinformationtheyneedtofulfillyourrequest,howdoyouthinktheyrecoupthosecosts?
Chancesarethoseadditionalcostsarebeingpassedontoyou.Andasyourpurchasingteamisnegotiatingnewcontractsandmorepreferablepricingtodeliversavings,theyarefindingitismuchmoredifficulttogetthepricedownifworkingwithyouisinefficient,complicatedandrequiresalotofhighoverheadresources.
Youwantsupplierstolovedoingbusinesswithyou
Withe‐procurement,supplierscanelectronicallyreceiveordersandsubmitinvoices.Noneedformanualre‐keying,highvolumesofphonecallsorfaxes.Usinganout‐of‐the‐boxAPIconnectororsomesimpleXMLyoucaneasilyenabletheseefficienciesandtakeadvantageofthesavingstheybring.
Inaddition,manye‐procurementsolutionsprovideawaytotapintosuppliernetworkswhereyoucanfurtherimproveyourabilitytoworkseamlesslywithyoursuppliers.Throughthesenetworkssupplierscanaccessanonlineportalwheretheycanmaintaintheircontactinformation,publishcontractitemsandpricestoyou,andevenconnecttheironlinestore.
MaketheCasefore‐Procurement
HelpconnectthedotsbetweenERPsoftware,thepurchasingorprocurementorganization,andpoorsupplierrelations
• Aren’twetiredoflostordersandcrisisphonecallswithsuppliers?
• Wouldn’titbebetterifsupplierscouldreceiveorderselectronicallyandavoidanyre‐keyingmistakesintheirordermanagementsystem?
• Don’twedestroyourleverageincontractnegotiationswhenweregularlypaylateduetodocumentationandprocessproblems?
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Number 2. It is completely stagnant
WhenERPsoftwarefirstburstontothesceneitssingularpurposewastoorganize,manageandreportonlargevolumesofdataforplanningpurposes.Andthroughtheyearsasnewtechnologieshavebeenreleasedandoldertechnologieshavereceivedafaceliftandbeenenhancedtomeetchangingbusinessneeds,ERPsystemshaveessentiallystayedthesame.Ithasn’tgottenanyeasiertousenorhasittrulyexpandeditsabilitytohandleotherfunctionssuchaspurchasing.SowhilemarketingmightrepackageyourERPsystem’scapabilitiestoseeminglyaddressaspecificneedlikerequisitioningorinvoicing,it’sessentiallyjustlayeringadifferentUIontopofanout‐dated,archaicERPtechnology.
Assolidasastone,andasunchanging
Accountingisatrickybusinessandonethatreliesonaccuracyandconsistencytobeeffective.Onceyou’vebuiltasystemthatbalancescreditsanddebitscorrectly,it’sbesttoleaveitalone.Andthat’spreciselywhatERPvendorsdo.
EveryfewyearsyourERPvendorwillreachouttoyouaboutupgradingyoursystem.Andwhileinmanyothersoftwareapplicationsthatmightmeanaddingnewfeatures,enhanceexistingcapabilitiesorevenmaketheUIabitmoreuserfriendly.ButintheworldofERPtheseupgradestypicallyconsistofbugfixesandnotmuchelse.
Howwebuyischanging,andyouneedasystemthatadapts
Ifonethingisclearintoday’s“new”economyit’sthis,businessasusualisnolongerbusinessasusual.Technologyhasdramaticallychangedthewaywedoeverything,fromhowwecommunicatewithoneanothertohowwegettheinformationweneedtohowwegetthegoodsandserviceswewant.
e‐Procurementcontinuouslyadaptstomodernbusinesspracticesandchallenges.Andit’sdeliveredasahostedsolutionviaSaaS,youarealwaysup‐to‐datewiththelatestinnovationse‐procurementhastoofferwithouttheneedofgettingyourupgradeonyourITdepartment’scalendarsincee‐procurementdoesnotrequireanyhardwaretomaintainorsoftwaretoinstall.
MakeYourCasefore‐Procurement
HaveanhonestconversationaboutthePurchasingcapabilitiesofyourERPsystem
• Whenwasitlastupdatedwithanewfeatureyoucaredabout?
• Howdifferentwasthesystem3yearsago?
• Howhasittransformedyourbusiness?
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Number 1. It is built for accountants, not procurement
Let’sbeclear,ERPsoftwaredoeshaveitsplaceinanorganization;it’sjustnotinpurchasing.ERP’sstrengths–managinglargequantitiesofinformationandtransactionsandpullingsophisticatedreportsandtrends–makeitanidealsolutionforfinance.Justlikeyouwouldn’tuseaspreadsheettobuildyourwebsite,youshouldn’tuseERPsoftwaretomanageyourprocure‐to‐payprocess.It’snotwhatyourERPpackagewasdesignedtodo,anddoesnotprovideyoutherightfoundationtoempowersmarterspendingandlong‐termcompanysavings.
ERPpurchasingisaboutcheckingabox
ERPvendorshavetoofferallsortsofmodulestowinbusiness.Theyhavesalesforceautomationmodules,marketingmodules,HRmodules,andevenprocurementmodules.However,thosemodulesarerarelythereasonanyonepurchasesERPsoftware‐theyaren’tcompetitiveandneverwillbe.AndaslongasanERPsalespersoncan“checkthebox”andsaytheydoprocurement,they’refine.
Butwhyleavesomethingasimportantasmanagingpurchasesandsavingyourcompanymoneytoasimplecheckboxonalongorderform?Don’tyouandyourcompanydeservesomethingbetter;somethingguaranteedtogetyouontherighttracktosmarterspendingandsavings?
Transformingprocurementrequiresabest‐in‐classplatform
Procurementleadershaveambitiousgoalsthatincludesustainablemulti‐yearsavings.Andwhenprocurementsucceeds,businessesthrive,plainandsimple.Butwhenyouarebuildingyourprocessesuponthewrongfoundation,itishardtotransformyourprocurementeffortsintosomethingthatwillhaveasubstantialandsustainableimpactonyourbusiness.
UnlikeERP,e‐Procurementsystemsaredevelopedwithonegoalinmind:makeiteasyforthecompanytocontrolspendandsave.That’sit.Everyfeatureandfunction,fromthewayyouworkwithsupplierstohowyoubuytogetthebestpricespossible,arealldesignedtodeliversavingsforthecompany.Sowhynotinvestintherightplatformfromthestartandreallyseewhereyourprocurementeffortscantakeyou.
MaketheCasefore‐Procurement
Helptheorganizationavoidbeingpenny‐wise,pound‐foolish
• Lookforexamplesinotherareas(i.e.HR,CRM,etc.)wherethecompanyhasmovedbeyondERPsoftwaretobest‐in‐classsolutions–highlightthoseareasanddrawparallels
• Askyourselfwhatyouwanttoaccomplishfortheorganizationoverthenext1‐2yearsandwhetheryou’rewillingtoriskyourreputationandcareeronyoursecond‐rateERPpurchasingmodule
• Organizeapilot/bake‐offbetweenCoupaandyourERPpurchasingmoduleandgenerateachorusofcohorts
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Summary
Inthise‐bookwehavecomparedandcontrastedmanyofthedifferencesbetweenmanagingyourprocure‐to‐payprocessthroughyourERP’spurchasingmoduleandusinge‐procurement.WehavetalkedaboutwhereERPsystemswork(i.e.accounting)andhowtherearemanynuancesofpurchasing(liketheabilitytocrowdsourcebetterpricesandgreatersavings;ortrue,market‐widebenchmarking)thatitgenerallydoesnotaddress.Butifthereisonlyonethingyoushouldtakeawayfromthise‐book,it’sthis:
ERPsystemsweredesignedtoorganize,manageandreportonmassquantitiesofinformation–nottoempowersmarterspendingandsavings.Ifyouareseriousaboutsavings,youneedtoseriouslyconsidere‐procurement.
So,nomatterhowmanymodulesyourERPvendoroffers,orallthecompellingargumentsyouhearfromthevendor(andmaybeevenyourITdepartment)onwhyyoushould“standardize”onthem,bewary!ERPisthewolfinsheep’sclothingwhenitcomestohowcompaniesmanagetheirpurchasing.Whileitmightlooklikeapurchasingsystemandtheymightsayit’sapurchasingsystem,itismostcertainlyNOTthepurchasingplatformyouneedtopracticethetypeofsmarterspendingthatwillhavearealimpactonyourbusiness.
Learn More
ERP&ProcurementSystems
• InsideERP:MidmarketERPSolutionComparisonGuide
• SourcingInnovation:WhatisaSuccessfulERPImplementation?
• ESourcingForum:TheAgeofthee‐Perp
• SpendMatters:IsSaaSReallyCheaperthanOn‐Premise?Maybe,MaybeNot...
• CoupaTCOCalculator:ComparetheCostofOn‐Demandvs.On‐PremiseProcurement
CompareCoupatotheCompetition
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• BellwetherCorp
• ExpenseWatch
• Ketera
• Sciquest
ExperienceCoupaFirstHand
• CoupaInnovations
• CustomerTestimonials
• OnlineDemoLibrary
• YourFreeTrial
Coupa Software BEWARE ERP: EXPENSE AND REGRET PURCHASING 14
About Coupa Software
Coupaistheleadingon‐demandproviderofsolutionsthatcontrolandstreamlinepurchasingfororganizationsbeyondtheFortune500.Coupae‐Procurementdeliversaneasytouse,fasttodeployandaffordablesolutionforrequisitioning,purchaseorders,RFQs,inventoryandinvoicing,withnohardwaretobuyorsoftwaretolicense.Withdeepdomainknowledgeine‐procurement,abest‐in‐classsoftware‐as‐a‐serviceplatform,anetworkofmorethan2,300suppliers,andafast‐growingcommunityofcustomers,Coupaenablessmarterspendingpracticesthatallowcompaniestosavemoneyquickly.Formoreinformationpleasevisit,http://www.coupa.comorcall+1.650.931.3200.