Future-proof your business - strengthen your procurement process as economies reopen. Streamline the process by deploying procurement software.
Procurement software: Getting buy-in to digitize or upgrade your procurement system
You head up a procurement department and your key objectives are to improve process efficiency, to gain more spend under management, and ultimately reduce costs.
You’re likely faced with one of these two challenges:
Manual or paper-based procurement processes
An outdated legacy system
Your goal: to modernize or digitize your company’s procurement function and gain complete spend visibility. But how do you go about getting buy-in from senior management and building a strong business case to motivate an upgrade, or investment in digital procurement software?
Perhaps your company has carried out manual processes or used the same procurement software for several years now. Management believes that because you’re still open for business and able to provide value to your customers, an upgrade or software deployment is an unnecessary change. A familiar adage comes to mind in that “you need to spend money to make it” - in this case it’s needed to save it!
You know that implementing digital procurement software will help your business:
Promote spend control
Guide data-driven decision making
Elevate procurement efficiency and cost-saving potential to new heights
So how can you get the buy-in you need to convince management it’s time to invest in or upgrade your procurement software?
7 Grounds for procurement software
Here are seven justifications you can use to build your business case and convince stakeholders that a procurement software investment is not only beneficial, but necessary in the prevailing uncertainty and operating environments.
1. Mobility and business continuity
Managing procurement processes with today’s common remote or hybrid working models presents a new set of challenges, over and above the usual approval and control issues. Manual paper-based processes and legacy technology cannot adequately support these workforce models.
You need to empower your team to operate efficiently wherever they are, while providing a framework for effective spend management. Deploying cloud-based procurement software not only enables remote productivity via a mobile-app or browser-based access but empowers a responsible spending culture by guiding purchasing decisions, providing complete transparency, and implementing policies and internal controls
This proactive, always-on approach to spend management is invaluable in the current realities where teams are dispersed and procurement processes and operating and delivery locations are decentralized.
Adopting agile principles and digital technology can help your business meet transformation goals, improve business processes, and thrive without disruption.
2. Operational efficiency
Save time and accelerate business processes. Businesses that have mastered procurement management with the help of automation and digital procurement software, for example, are able to process purchase orders within five short hours. Companies at the other end of the spectrum can take as long as two days to complete the same process.
With cloud-based digital procurement software in place, your company can move much faster than your competitors. This helps you better serve your customers and deliver business value that much quicker.
Modern procurement software fast-tracks processes by:
Enabling on-demand access from any location
Simplifying processes and reducing repetitive tasks
Automating workflows and routing multi-level approvals to reduce processing times and costs
Centralizing documents for quicker access and verification
Minimizing human error and improving accuracy
Enabling collaboration between users and departments across locations
Speeding up invoice matching and AP processes
Implementing internal controls, so all purchasing is compliant - eliminating the need for costly and time-consuming corrective action, after costs are incurred.
Integrating with ERP / accounting solutions for end-to-end efficiency and accuracy.
3. Risk management
Fraud and unauthorized spend: A recent report found that businesses will lose an average of 5% of their gross revenue to fraud. This risk is prevalent in companies that are using outdated paper-based systems or spreadsheets for purchasing and expense management.
Procurement software drives accountability and provides internal controls and complete spend visibility - significant risk mitigating factors. Fortunately, unauthorized spending is highly unlikely to occur with the help of:
System-configured procurement policy controls
And transactional audit trails
Meanwhile, accounts payable processes are relieved of the risk of overpayment or duplicate invoices. With centralized data and proactive controls, your AP team can rest assured that compliance is in check at payment stage, and can easily verify purchases and expenses, complete 2 or 3-way electronic invoice matching and get notified of any exceptions, with system alerts.
Your processes are sound, and risk is managed with a robust, catch-all internal control framework in place, protecting your working capital.
4. Spend visibility
The biggest issue linked to manual procurement processes – the lack of visibility into spending behavior.
Legacy technology presents its own set of challenges due to expensive licensing structures and functional complexity that limits the number of users, often confining usage to procurement or finance departments. This inflexibility doesn’t lend itself to effectively tracking spend by user, department, supplier, or company.
Investing in a scalable, user-friendly solution extends visibility and control to the edge of the organization, so you can unlock untapped opportunities and scope for improvement. You’ll gain complete visibility into spending behavior, identify trends and saving opportunities, and become empowered to make data-driven decisions.
By investing in procurement software with advanced business intelligence and reporting tools you’ll gain insights and analytics to reduce the right costs and make better informed decisions that will positively impact your bottom line, outcomes that a spreadsheet simply cannot deliver.
5. Supplier management
With no visibility into the number of suppliers you’re purchasing from, how much you’re spending with them and no way of ensuring contract compliance, you’re almost certainly leaving money on the table.
You could be qualifying for better deals and saving. With a clear view into pricing comparisons and spend by supplier, you can easily consolidate your supplier base and negotiate contracts with high-performing suppliers. Leverage this data to qualify for early settlement and bulk discounts to get the best deals for your business.
Procurement software streamlines the onboarding and approval of suppliers, ensuring that spend can only occur with contracted or authorized suppliers. You can take advantage of vendor PunchOut integration or internal catalog features in your procurement software. While still leveraging requisition, budget review and approval processes, and eliminating rogue spending, which can greatly diminish your saving potential.
Ensuring that you’re purchasing high value or capital expenditure items at the lowest price can be simplified by utilizing software-enabled request for quote (RFQ) capabilities. If required, your procurement software can facilitate any corporate social responsibility (CSR) initiatives or supplier diversity programs, with easier tracking capabilities, authorizations, and policy configurations.
These procurement and vendor management benefits alone are convincing enough to motivate the shift to optimized digital procurement.
6. Employee retention
A highly skilled talent pool is needed to drive your business forward and achieve your strategic goals. To attract and retain these individuals, your tech stack needs to make the grade.
You can’t expect to keep up with your competitors or attract the most talented procurement professionals if you’re relying on paper-based processes or outdated legacy technology to manage procurement and spending processes.
By investing in modern procurement software, you can expect employee engagement and retention in procurement to improve. Productivity will increase, and cost-saving and efficiency rewards will follow. Achieving these procurement KPIs can have a direct impact on profitability, and your company’s overall performance.
7. Cost reductions and sustainable savings
Procurement software protects your cash flow. You’ll only spend money when you absolutely have to. You can implement an effective spend management strategy, underpinned by accountable and transparent purchase and expense requisition and approval processes, that are tracked against and compliant with budgets and procurement policies.
By replacing manual and paper-based processes or outdated legacy technology with modern procurement software, overspending and any unauthorized or wasteful expenditure simply cannot take place. You can start capturing savings and ROI from a procurement software investment in as little as three months post deployment.
These benefits combined all lead to cost reductions and sustainable savings.
Procurement software buy-in simplified
Getting procurement software buy-in from key stakeholders can be daunting. But by highlighting the holistic, efficient approach to spend management and its ROI, the benefits that your business stands to gain, simply can’t be dismissed or ignored.
Cloud procurement software like Fraxion is trusted worldwide to automate and proactively manage spending processes. Get in touch with a product specialist for a business needs analysis and custom demo to further understand the benefits of procurement software.
To discover the cost saving and efficiency enhancing features you need to consider when evaluating procurement software, download our eBook, The 2021 Buyer’s Guide to Procurement Software.