The fear of change is evolutionary in humans. We’re taught to keep our routines and resist change to stay in control. But what happens when that fear gets in the way of progress?
In a lot of ways, this is the crossroads that the source-to-pay (S2P) industry seems to be approaching. After years of hearing that “end-to-end is king” and that it’s easier, more cohesive, and more streamlined to have a single solution to cover everything from sourcing through to payments – there are rumblings that there might be another way.
If not “end-to-end” then what?
A holistic ecosystem of ‘best of breed’ modules. That’s what. You may have seen this term being used by leading analyst firms as the new way of S2P, and you may have even seen it being banded around in the wider industry. According to the Deloitte 2020 Tech Trends report, the tech industry is seeing a similar approach taking place when it comes to the cloud, with enterprises increasingly adopting multi-vendor approaches across the board. But let’s break down what an ecosystem is and what it entails.
An open business philosophy driven by an open architecture and prioritizes modular expertise through co-existence. Ecosystems encourage a “best of breed”, modular approach that enable organizations to benefit from the latest and greatest finance and procurement innovations at each stage of the S2P process - all unified around a central core of data visibility. In other words, if you have a core solution with impeccable integration capabilities, you can use it as the foundation of your ecosystem. And then any specialist solution that you feel will best suit your organization’s needs can effectively “plug in” to your core. This gives you a truly unique setup of solutions that meets all your business needs without having to sacrifice functionalities which so often happens in end-to-end solutions.
When an ecosystem approach makes sense
Sure, there was a time when a “one size fits all” vendor approach did make sense. But the industry has matured to learn that if no vendor truly offers a full S2P suite that is best-in-class across all modules— coupled with the known lengthier integration times than this way just doesn’t seem all it’s cracked up to be. Spend Matters have gone so far as to say, “You shouldn’t start with the assumption that a single S2P suite is the right choice. Some suites are very light on functionality in some areas and some suites are so-called ‘frankensuites’ made up of multiple acquired solutions with limited integrations.”
The Deloitte report mentioned earlier also adds another layer to the argument, stating that an ecosystem approach, enables companies to assess the strengths and weaknesses of several vendors before committing for the longer term, helping organizations to optimize costs, avoid vendor lock-in issues, and avoid the shortcomings of an end-to-end approach.
So, what are some of the other disadvantages of a single approach to S2P:
Lack of depth across all functionalities in-module, due to the broader approach and focus of the solutions
Challenges integrating with multiple and existing solutions
Longer time to upgrade and roll out innovations due to complex end-to-end considerations
Most end-to-end suites originate from one area of the S2P process and are therefore not specialized in all areas like supplier management, risk management, and contract lifecycle management
Often challenging to share data due to fragmented back-end databases
Now is the perfect time for an S2P Ecosystem
The benefits are clear. And maybe you are starting to see why the idea of an end-to-end suite isn’t necessarily the best option when it comes to S2P automation.
Many organizations might be apprehensive to get started with their S2P automation project or make the move to a business ecosystem, especially amid a global crisis. Additionally, you may feel your company is not in a place where they can afford to dedicate time and resources to a transformation project. But that’s where this approach excels. We all know Covid19 has highlighted why digital transformations such as automating your S2P can support business agility and continuity and adopting a business ecosystem approach to S2P you can support this focus on agility in tumultuous circumstances by phasing your investment strategy.
According to industry analyst Gartner, some common starting places for your investment could be:
Other things you might want to think about that we are looking at with our customers include:
Evaluate the data required in an ecosystem to ensure core information can be captured and shared between partner module
Pick a strong solution to act as this ‘central core’ so that analytics can be overlaid on top of the data providing comprehensive insights
Discuss and prioritize rolling out the modules in a phased manner
Be crystal clear on what the objectives are and build the modules around you
Decipher what functionalities are required at each stage to optimize user experience and agility
Good enough is no longer good enough
At the end of the day, a full S2P suite is no longer “good enough.” Instead, it’s time to adopt an integrated approach, an S2P ecosystem that provides a central location for all the unique plug-ins and applications that best fit your organization.
Change is uncomfortable. But in every other aspect of business, doing something uncomfortable ultimately leads to growth. Organizations are facing a time where it’s becoming more and more important to digitize operations, automate processes, transform to the cloud, and modernize how they do business. So why not do it in a way that is unique to your business needs and covers all the functionalities you need?
For a little inspiration, check out Gartner’s report “Win Big in P2P – Start with high-value, low-risk applications and build out” and learn how you can phase your S2P initiatives through quick wins and still achieve the necessary ROI.