Savings for the taking. Tighten your purse strings.
In 2013 I spent a lot of time interviewing a wide range of our iPOS for SunSystems clients on the “before and after” of their eProcurement projects. My plan was to do some qualitative research as the input for a white paper I wanted to write (now available for download here).
I had many fantastic face to face meetings and phone calls with senior purchasing and finance managers across a wide range of industry sectors. Thank you one and all – you know who you are and as agreed no-one has been identified in the research paper. The one thing in common for all the subjects is they use Infor SunSystems as their general ledger and financial accounting system and have implemented iPOS to improve their spend control.
One of the big questions I asked everyone was “can you quantify how much you have saved by automating your purchasing policies and procedures”. What leapt out from the responses was that pure cost saving, although of interest to all, had not been a fundamental driving factor for the project. Everyone cared about cost with respect to margin protection for the corporates and “money for mission” for the not for profits. However nobody was hung up on it; that wasn’t the ultimate driving force to do things better. As a result very few had put the effort into calculating a return on investment for their project. But when asked to consider what costs had been realised, people were quick with their responses. Pretty much everyone said various versions of the following:
“We reduced the AP team by 1 or 2 FTE.”
“We shortened the purchase order issue time from days to minutes.”
“We eliminated the situation where service contractors were being paid to sit idle on site waiting for a PO.”
“We have got rid of all the 3-copy paper PO books scattered around the company.”
“We no longer have all that time wasted, checking the hard copy delegated-approvers’ signature-checking book and keeping it up to date.”
“We have decimated the drain on the finance team by giving self-help access to buyers, managers and budget holders to track their own spend.”
“We have significantly reduced the collections calls from suppliers because now we are on top of our payment terms.”
“We have eliminated hours of tedious and risky spreadsheet admin every week creating our operational management P&L reports.”
“We no longer have all those valueless spreadsheets commitment reconciliations.”
“We have much cleaner end-of-period controls.”
“Our finance team isn’t plagued with PO-babysitting and tracking all those ‘lost invoices’ ”
“Finance don’t waste time correcting the cost allocations from ‘GL happy’ coding by people in the business.”
When you look at that litany of savings-making improvements I think the case for automating your purchasing processes is pretty compelling. However as I said at the start, cost saving wasn’t always the biggest reason for executives to tighten their spend controls. There was far more fear and uncertainty caused by the risks from poor financial management than cost and waste. That’s another blog.
You can read other eProcurement blog posts here.
You can download the Lessons from the iPOS user base whitepaper from our resources page here.
You can read more about Professional Advantage and iPOS here.
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