Implementations Advisory Analytics Customer Success Cloud Software Transformation Unlocking Value in Source-to-Pay Realize Customer Success through Transformation and Cloud Software
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What s Trending in 2015 One of the hottest trends in business is the adoption of Source-to-Pay solutions by highperforming companies. This trend is most apparent when aggregating market activity by service and technology provider. In late 2013, Accenture acquired Procurement outsourcing specialists Procurian for $375 million, just three years after acquiring Ariba s strategic sourcing practice for $51 million. 1 During this same timeframe, the top cloud-based software companies in the e-procurement space Coupa, ivalua, and Ariba have seen explosive growth. Companies from small start-ups to global Fortune 50 entities have embraced these solutions. On the surface, there is nothing cool or exciting about Source-to-Pay which is loosely defined as the end-to-end process of negotiating, contracting, and ordering products and services from suppliers, and subsequent payment of the supplier s invoice. So why is there so much business activity in this space? Bluvault believes there are Five Transformational Forces at play in Source-to- Pay, and they are getting C level attention since they align very well with the 2015 goals and objectives of many companies. 1. Spend Savings 2. Efficiencies 3. Business Insights 4. Risks and Controls 5. Speed and Mobility Five Transformational Forces 1 Accenture procures procurement s prize property: Procurian, Horses for Sources, October 3, 2013 3
Spend Savings While many companies continue to trim costs, there have been diminishing returns to their efforts. However, service and software providers have harvested huge financial benefits for their clients by reducing supplier spend. For some companies, this is worth millions of dollars in bottom line hard dollar cost savings. To illustrate, one Financial Services company expects to realize net benefits of $15 to $25 million of spend savings out of $150 million of addressable spend over a five year period through a comprehensive solution that includes process optimization, outsourcing of some buyer roles, and a Sourceto-Pay technology platform 2. The secret to their success is a blend of new capabilities that enables the company to transform their old processes, increase supplier and user adoption, improve visibility and control of the buying process, and enable tracking of performance via dashboards and analytics. At the C level, this transformational force is most relevant to the CFO and CPO, but is appreciated by most business leaders since it can free up capital to be invested in other areas such as revenue growth. Additionally, the CIO may be a key stakeholder in the selection of the enabling technology platform. processes and IT infrastructure. Implementation of a leading Source-to-Pay software platform enables transformation by providing rapid benefits such as time savings through mobile access via smart phones to submit, review or approve purchase requests, or dramatic reductions of cycle times in processing requests. Companies looking to maximize their return on investment also assess current policies against leading practices or industry trends to optimize the balance between processing cost, internal controls, and end user satisfaction. Decisions that made sense for a start-up company may no longer be appropriate as the company grows. Prior to implementation we used to meet three times a week to discuss purchase orders. Since implementation, we haven t had one PO meeting. On24, VP of Finance, Eoin O Connor 3 We are consistently looking at what are ways we can improve our overall spend. Taleo, CFO, Kathy Murray 3 Efficiencies One of the most common reasons for transforming the Source-to-Pay process is to achieve cost savings from efficiencies. Smaller companies may have a completely manual or paper-based process, and larger companies typically have global workforces with complex Executives such as the CFO, CIO or CPO may be approving a large number of invoices to monitor spend or confirm purchases from a preferred supplier. With improved visibility and control through a top tier technology platform, the approval workflow can be delegated without sacrificing the ability to monitor and control spend, resulting in time freedom to invest into high value activities for these executive roles. 2 Source: Bluvault 3 Source: Coupa 4 4
IT departments recognize the value of a scalable cloud-based solution that is easy to configure and maintain, reducing the time they spend supporting applications. For companies utilizing the most popular ERPs and general ledger accounting systems, chances are that integration to their existing systems will be relatively easy. As an IT executive, having a solution that just works is money in the bank. Salesforce.com, CIO, Ross Meyer 4 Every role in the Source-to-Pay process has the potential to realize efficiencies from a reengineered process or technology enabled solution. Companies looking to build a business case for change have commonly looked to Accounts Payable for hard dollar savings from automating or streamlining the payment process (e.g. automated matching process with purchase order that is flipped into an invoice by the supplier, and matches within tolerance 4 Source: Coupa limits). For companies that have a large number of employees involved in the buying process, a small improvement can aggregate to significant value. To illustrate, one company with over 1,500 employees estimated that on average they would save 30 minutes per employee every month by making it easier for them to find and purchase products or services and/or reduce the time to approve employee requests, resulting in an estimated savings of $500,000 per year. Business Insights CFOs and other C level executives that are striving to make the leap from good to great will need to rely on improved visibility that enables them to derive timely business insights to make better decisions. To look beyond the finance function, CFOs must have visibility into the entire organization, including operational metrics. Balfour Beatty, CEO Ian Tyler 5 5 What the best CFOs do better: Secrets for Smarter Decision Making, CFO Publishing, 2014 5
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A large multinational corporation in New York recently launched a complex transformation program to replace their global Source-to-Pay platform. The primary business driver was to improve visibility and control of their spend with vendors, and the business case for change was in excess of $50 million. With additional granularity about purchases, they were confident that better purchasing decisions and negotiations would lead to spend savings and efficiencies. The volume of data available to businesses has never been greater, but there is a constant struggle to convert it to actionable information. According to a recent survey, a top priority for CFOs is to harness business intelligence and big data as keys to success for strategic planning, forecasting, budgeting and profitability analysis. There is a major drive within more organizations to understand in minute detail the performance and profitability of product and services lines, customers, customer segments, and sales channels, thus strengthening executive management s strategic decision-making regarding investments. 6 The leading software providers in the Source-to- Pay space have recognized the critical need for business intelligence, and have embedded analytics solutions out of the box. With integration of budgeting capabilities into the software, CFOs now have visibility across the company to details about expenses and related cash flow forecasting, can monitor favorable or unfavorable variance by department or other attribute, and can quickly make decisions to course correct the organization so that corporate goals and objectives are achieved. Risks and Controls Since the financial crisis of 2008, we have seen an increased focus on risk mitigation and establishment of appropriate controls. For many corporations, the responsibility of risk management folds under the CFO, or new positions such as the Chief Risk Officer were created. The Source-to-Pay process may not have the power to negatively impair a bank or company s going concern, but the process does warrant its own consideration for how to manage supplier risk, promotion of supplier diversity, and regulatory compliance. Figure 1 - Supply Risk Strategies Source: Aberdeen Group, Jan. 2013 At the process level, potential failure points that could have a financial impact include contract compliance validation to ensure supplier invoices match contractual terms. There is also risk that the company becomes too dependent on a particular supplier, and may choose to diversify its risk profile with another supplier. To the Chief Procurement Officer, control of rogue spend is critical to managing and achieving spend savings. With technology that automates key controls, a company s ability to manage risk is much easier. 6 What Are Your Priorities for 2015, Financial Executives Research Foundation, Aug. 2014 7
Speed and Mobility If you work for a small to medium sized company, chances are that you are already using cloud-based software. In 2014, the Small and Medium Business Routes to Market Study reported that 92% of SMBs are now using at least one cloud business solution, and 87% already use at least one cloud infrastructure solution. Even large companies that lagged in adoption are now jumping on the cloud bandwagon. So why is this important to Sourceto-Pay? Historically, software that supported sourcing and purchasing activities was very complex and could easily take 9-15 months to implement. The new generation of cloud-based solutions sometimes only takes a few weeks to go live, enabling companies to quickly realize benefits. Mobility has also become a critical requirement for business executives. Not so long ago, the debate raged about whether laptops or desktop computers would be replaced by tablets or smart phones. What s emerged is a hybrid where executives are leveraging mobile devices in the early mornings or evenings, and computers are heavily used during working hours. One of the most attractive and truly transformational aspects of some Source-to-Pay software platforms is the ability to request or approve transactions through a phone, tablet, or computer. I can check and monitor what s going on through my phone, my ipad, PC, through the internet anywhere, anytime. The thing I really enjoy is that my approvals are done via my smart phone or desktop notebook. The process cycle times for procurement have dramatically dropped. Pandora, CFO, Steve Cakebread 7 Figure 2 Preferred Devices by Time of Day 7 Source: Coupa Source: comscore device essentials, Jan 2013 8
How Can We Help Bluvault is a seasoned implementation partner for some of the world s leading cloud-based Source-to-Pay software companies. We provide global implementation, advisory and analytics services to companies implementing Coupa, ivalua and Ariba. Successful implementations come from thoughtful, well defined programs that consider improvement opportunities and potential impact to people, processes and technology. As a result, many service providers and clients are searching for business transformation skills to help implement leading practices and change management at a reasonable cost with speed to value. For each company, we recognize that needs and priorities will be unique based on where you are in your company s growth and its process maturity. We hope that your review of the Five Transformational forces has generated or confirmed opportunities for you to unlock tremendous value in Source-to-Pay. We look forward to meeting you down the road! 9
About the Authors About Bluvault Mark M Robertson, the co-founder of Bluvault, is a seasoned client executive with 25+ years of experience at top tier global consulting companies including Accenture, IBM, and HP leading complex implementations for clients like Microsoft, Google, AT&T, and Silicon Valley Bank. Prior to founding Bluvault, he was a managing director in Accenture and is recognized for his thought leadership in delivering value through Transformation and Business Process Outsourcing leveraging deep domain expertise in Procurement/ Strategic Sourcing, Finance & Accounting and Technology. (markr@bluvaultsolutions.com) Bert Reitsma, also known as the Procurement Professor, is a Source-to-Pay expert with over 20 years of business experience deploying complex solutions across clients such as Honeywell, Disney, Bank of America, Sony, Time Warner, Gov t DC, Pfizer, HP, Chevron, AirProducts, Target and many more. Bert has held multiple industry leadership roles including Director of Ariba s Professional Services Organization during its transformation to SaaS. Bert leads the Bluvault Procurement Practice. (bert@bluvaultsolutions.com) Bluvault is a seasoned implementation partner for some of the world s leading cloud-based Source-to-Pay software companies. We provide global implementation, advisory and analytics services to companies who are implementing cloud-based software such as Coupa, ivalua, and Ariba. Bluvault has assembled a team of top tier business and technical consultants from the world s top consulting firms who are experts in software functionality, recognized as transformation leaders, and have a track record of success driving maximum value to our clients from their software investment. Our professionals act as trusted advisors, leading clients in making the right business decisions by listening to their needs, sharing leading practices, and challenging their old processes to become more efficient and effective. Unlock real results with Bluvault! Copyright 2015 Bluvault Inc. All rights reserved. www.bluvaultsolutions.com 10