Crossing the Purchase Process Chasm…Stuart.Evans@invu.net

Every business wants Purchase Control…

• Control Spend• Precise coding• Efficient Process• Visibility

• Requests/Authorizations• Receipting• Invoice Approvals/Variations

• Reporting & Analysis:• Commitment• Accrual• Spend analysis/trends

Requisition

Approval

PO Raising

Receipt

Invoice capture

Invoice matching

Exception handling

Reporting

Budget &Commitment

If it’s so easy…. ……why hasn’t everybody done it?

1. Nothing in it for anyone but the FD – hard to get the “Go!”• ERP’s POP Modules inadequate or wrongly focused or both – by Finance for Finance• Attempt(s) have failed in the past (previous) – what’s different now?• The worse the system the “happier” the employee!

2. They think they already are doing it…(“Make do”)• Control but no visibility: “Spreadsheet ops” & Paper is not perfect either!• Process is often bypassed/worked around• Not systematic (Complete, Consistent, Visible and Audited)

3. They (think they) can’t afford/justify it• Financial cost• Time cost• Complex offerings

E.g. Adactus Housing Association:

• No Central PO management (spreadsheets etc)• Had already purchased POP module of ERP system• More recently had already implemented Invoice Processing• Still wanted a purchase control solution because:• Operational “fitness” – strategic aim• Auditor demand• Demonstrate VFM – an HA community directive

• But:• Non-Finance users would not accept ERP POP user interface for PO control• Finance felt this undermined credibility to roll out across business

Adactus – ERP POP Module Complaints….

Embarrassing and infective to roll out

The UI is Counter intuitive Only a few users can raise orders, I want everyone to be able to

The overall process was ‘clunky’ and not slick – too time consuming

User has to switch between workgroups to

enable them to carry out different stages of

the process – crazy & extremely time

consuming!

Slow system performance & the system freezes

No system of notifications

Training intensive

Order matching / receipting is very time consuming

Approvers have to visit 2

different

screens to APPROVE a PO

Overall lack of automation!

The Evil PO….

The Purchase Order is usually presented as the hero but has often turned out to be the villain:

• Items from different budget holders• Piecemeal delivery • Part invoicing – premature closure of Order

Increases complexity, exceptions or compromiseDisengages employees & drives workarounds

PO should be the means, not the end in the PO process

PO

Ingredients for aSuccessful crossing…?

Engagement – How your staff purchase at home

Engagement

• Visibility• Reporting• Minimal Setup/admin

• Enabled - Simplicity• Empowered• Involved• Confident

• Budget• Authorisation• Delegation• Oversight

”Something in it” for everybody…

• Freedom from transactions• Spend Analytics

CFO

Employee

Budget Holder

PurchasingManager

Disentangle the PO from Internal Process

Item level Authorization

PO transaction

Budget Holders

Employees

Supplier

Part or full invoicing

Item/Line level receipting

Payments

Item level Processing

The Invoice Pantomime

• Untrusted order time data• Long Approval chains• Slow payment sign off• Incorrect coding

”…Oh no it isn’t….”

System Requisition

Approval

PO Raising

Receipt

Invoice capture

Invoice matching

Exception handling

ReportingEnd to End Trusted Data

Adactus Housing: 1 year on

• 350 Users• All overheads now requisitioned & authorized via browser• All overheads have a PO• …and soon no Invoices accepted without PO ref.• Full visibility of Commitment• Full visibility & Audit of this process• Happier auditors.

Summary

• Engagement - it’s about everybody• System - Get the right data, and the data right, right at the start• Trust your process & data – avoid the Invoice Panto

….and remember, it’s a process - so refine & repeat

Thank youstuart.evans@invu.net