The more moving parts and variables a business process has, the more participants stand to benefit from visibility, consolidation and data-driven solutions.
This is readily apparent in the realm of the purchase-to-pay (P2P) process, wherein multiple departments within two or more organizations collaborate to buy and sell goods and services.
Historically, given the scope that purchase-to-pay encompasses, the process has been highly fragmented — a quality that has long meant businesses face a number of risks when engaging in the space.
As a result, businesses have long looked for one-stop-shop solutions for their purchase-to-pay processes, said Ilari Nurmi, SVP of Purchase-to-Pay Business at Finnish enterprise software company Basware.
There are a few key problems businesses face in the P2P space, Nurmi said. Some — like a lack of visibility and an inability to efficiently keep track of high volumes of spend — are typical of a number of business processes prior to the introduction of digital solutions.
“Sourcing teams and the procurement professionals within an organization go through a very expensive spend analysis project,” Nurmi said, “where they go through weeks and weeks of data crunching and identification of spend.”
Other risks are more fundamental to the procurement space, especially as companies are eyeing growth and look to a larger number of suppliers to facilitate.
On top of the risks of invoice and payment fraud when dealing with unfamiliar organizations, businesses risk compliance with local regulations when dealing with new partners internationally. Likewise, companies unfamiliar with P2P best practices risk overpaying for goods and services.
And, as Nurmi noted, companies active in the P2P marketplace span a range of maturity, and thus familiarity, with the processes at play.
“There are many different maturity stages in the sourcing and procurement,” he said. “They’re in very different places when it comes to both procurement processes, sourcing process as well as in the capability to work to identify the supplier and risks involved.”
Businesses are all too aware of these issues, Nurmi said, and have been looking to the market to provide a means to address them.
For their part, Basware recently announced a move to meet market demand by incorporating a strategic sourcing offering into its P2P solution suite. In a nutshell, this enables users with end-to-end capabilities for realizing savings, increasing contract compliance and reducing sourcing leakages.
“What we want to do is to make sure that we equip our customers with easy-to-use tools to address the barriers and to improve process steps,” Nurmi said. “Arming the sourcing and procurement teams with the ability to work with one solution, utilizing the significant amount of P2P data that they get from the system in the sourcing process.”
Process compliance and visibility are key elements of Basware’s solution. In any typical deployment, the company addresses the variability of agents in the space with business and process-consulting support to enable companies fresh to the space to develop and deploy industry best practices.
With all of this comes an enormous volume of data. Nurmi noted that some €500 billion worth of spend, and spend data, passed through the network in 2016.
Moving forward, Nurmi spoke to the role big data services would play in the space, not only to create more insight on best practices, but also in terms of benchmarking as well as identifying and preventing fraud.
“Whether we talk about process or sourcing-related benchmarking,” Nurmi said, “this is an area where data gives you an opportunity to evaluate process efficiency compared to that of your peers and other companies.”
The company is also investing in research on fraud analytics leveraging the high volumes of data that pass through their P2P network.
“The capability for us to harness that data is incredibly important,” Nurmi said, “and something that we envision will provide a significant benefit in the entire purchase-to-pay process.”