Driving Procure-to-Pay User Adoption Through Change Management Focus

Transcription

1 Driving Procure-to-Pay User Adoption Through Change Management Focus CHANGE MANAGEMENT

2 Overview Today's procurement organizations are moving to the forefront of contributing strategically to their organizations' growth. Having evolved from their traditional role of merely negotiating with the suppliers for the reduction of prices, today's organizations around the globe expect their procurement functions to focus on value and innovation. As procurement readies itself to shift gears to become agile and proactive in order to meet evolving demands in a very competitive environment, it needs to ensure its house is in order for the mundane yet important back-end tasks, viz., managing requisitions, issuing purchase orders, mapping invoices, processing payments etc., commonly referred to as the Procure-to-Pay (P2P) process. Although procure-to-pay automation empowers businesses to streamline operations, increase control and cut costs, most organizations face difficulty in adopting a fully deployed procure- to-pay solution. More often than not the reason is hesitation towards accepting change in the organizational processes. In this white paper we are going to see how the next generation P2P solution helps organizations automate their processes and get the best result. Further, we will discuss the role of Change Management as a driving force in realizing near 100% adoption of P2P solutions after implementation. 3

3 A robust P2P solution Need of the hour from the perspective of Change Management Often, a procurement department has to spend a lot of effort to trace requisitions and purchase orders of materials for which they receive an invoice. In most of the cases, the purchase orders for these invoices are non-existent. To correct this scenario of non-existent requisitions and purchase orders, procurement spends substantial time and energy on educating buyers to follow a particular path and ensure compliance with required processes. Irrespective of the size of a procurement organization, with the need of the hour being agility, procurement needs to ensure it spends the minimum possible time on addressing mundane tasks and devotes maximum time to strategic activities one of them is having a tighter grip on its indirect spend. The Zycus P2P Benchmark for indirect spending finds that almost two-thirds of procurement organizations influence less than 70% of indirect spending. Refer to the graph below: Indirect spend influenced by procurement (% of all participant responses) 27% 22% 16% 11% 14% 7% 3% Less than 40% 40% to 59% 60% to 69% 70% to 79% 80% to 89% 90% to 99% 100% Poor compliance and visibility is leading organizations across the globe to leverage the benefits of technology automation. Current state of P2P Spend Compliance % Indirect Spend With: Wtd Avg Compliant Pricing 50% Compliant Process 45% Line Item Spend Visibility 45% Documents and Rebates Captured 45% Ability for Procurement to Address 40% preferred Suppliers - On Contract 40% 4

4 Next generation P2P are capable of providing Enhanced compliance with a consumer-style shopping experience and transparency across procurement processes Improved visibility with detailed insight into spend for analysis and cost reduction Budgetary compliance along with transparency across procurement processes Streamlined back-office operations through a seamless process Thus ensuring that procurement departments focus on value-added activities rather than on spending more time on tactical tasks. P2P User Adoption User adoption of any new system is an obvious pre-requisite for success, but when it comes to P2P, perhaps no enterprise system has as large a potential user footprint. Typical User Base Internal users- Within the enterprise, any employee in any functional organization could be either a casual user interacting with the system on an infrequent basis as a shopper, or the person who posted a requisition, or an occasional approver or reviewer. In addition, each organization will have a number of power users, such as procurement staff, or others with designated buying authority, along with IT or system administrator support staff. External users - Moreover, external suppliers must be on-boarded and enabled to provide catalog content and receive and respond to orders. Altogether, a typical P2P deployment encompasses thousands or tens of thousands of internal users and hundreds, if not thousands, of suppliers. Identifying the key usability requirements that will help achieve maximum adoption across each type and class of users while resisting the urge to develop exhaustive feature/function checklists which apply equal weight and importance to more esoteric or seldom-used capabilities is an important step in the due diligence process. 5

5 Change Management It has been noticed that even though organizations are aware of the benefits the automation of the P2P process can bring, they are often sceptical of the kind of change this would entail. Employees, who are used to working on the process manually, might not want to learn an alternative way of doing the process. If one 'sells' a change, the employee would reflexively refuse to adhere to it. Hence, change needs to be understood and managed in a way that people can cope with effectively. Let's see 5 steps to involve people in bringing this new change: Increase urgency 01 Motivate people to keep real objectives. For instance: Reducing errors and increasing productivity Build the guiding team 02 Get the right mix of skills and levels Get the vision right 03 Get them to establish a simple vision and strategy Communicate for buy-in 04 De clutter communication, involve people, make technology work for you Give them the right message 05 That the technology is there to empower them and make their work easy and error free 6

6 Results of the change A robust P2P model is capable of driving phenomenal changes in an organization. Some of the value drivers are: Greater adoption of preferred supplier contracts Reduction of supplier non-compliance process errors Improved focus on demand management Improved strategic sourcing effectiveness through greater spend visibility Greater early payment discounts Greater rebates from purchasing card usage Improved P2P process efficiency The Epitome of Change A Company Case Study Until very recently, a world-leader in consumer technology and wearable devices faced trouble with their P2P process, some of the problems were: Paper based requisition process No standard approval workflow or buy/pay channels defined No electronic catalogs in place No PO automation Few contracts in place Solution Implemented: Along with the implementation of Zycus' next generation P2P suite, some of the best practices they adopted to drive change across the organization were: Stakeholder Engagement conducting multiple supplier briefing/requirement gathering sessions with all supplier groups Communication Plan Conducting a 5-week communication workshop that involved testing the solution, webinar with the partner, and employee conference Extensive formal and informal training sessions were conducted for the solution users. It involved programs like drop by and learn, videos and cheat sheets, etc. Results after the change Full requisition and PO process automation Standard approval workflows or buy/pay channels defined and automated Punch -out and hosted catalogs deployed for key categories, etc. Guided buying forms for requisitioning non-catalog items No PO/No Pay policy implemented 7

7 Zycus is a leading global provider of complete Source-to-Pay suite of procurement performance solutions. Our comprehensive product portfolio includes applications for both the strategic and the operational aspects of procurement - eprocurement, einvoicing, Spend Analysis, esourcing, Contract Management, Supplier Management and Financial Savings Management. Our spirit of innovation and our passion to help procurement create greater business impact are reflected among the hundreds of procurement solution deployments that we have undertaken over the years. We are proud to have as our clients, some of the best-of-breed companies across verticals like Manufacturing, Automotives, Banking and Finance, Oil and Gas, Food Processing, Electronics, Telecommunications, Chemicals, Health and Pharma, Education and more.