How do I Source for a Procure to Pay Application?

BY: Jim Moran, C.P.M., CPSM, CPCM, CCC-AP; Principle at JRM Supplier Consulting LLC

What is P2P?
According to Wikipedia, Procure-to-pay (also known as Purchase to Pay (P2P)) is a term used in the software industry to designate a specific subdivision of the procurement process. The P2P systems enable the integration of the purchasing department with the accounts payable (AP) department. Some of the largest players of the software industry agree on a common definition of procure-to-pay, linking the procurement process and financial department.
According to ISM, Procure-to-pay (P2P) process is the automation of transactions from the beginning to the end of the purchasing process. The P2P process includes electronic document flow and approval process beginning with forecasting followed by requisitioning, then enabled by supplier selection and PO generation which leads to receiving and ends with invoicing and payment.
How do I develop a case to obtain a P2P application?
Assuming that you as the supply professional, has received a request to begin the process of determining if a Procure to Pay project is feasible, you must first initiate a needs assessment in collaboration with the accounts payable team, the procurement team, the sales team, the IT team, the team responsible for receiving and the supply management function (specifically the forecasting and planning teams along with the warehouse management team). This group will most likely become your core project team. Additional stakeholder’s will need to be identified throughout the project and analysis of each stakeholder’s role, contribution and authority within the project will need to be identified. After the stakeholder mapping exercise has been completed, selection of the project champion (executive), project lead, functional leads along with your finance team member and your legal contact should be completed and documented.
In preparation for the needs assessments a benefit analysis should also be completed with input from the functional teams indicated above and finance. The benefits should focus on improved compliance, the efficiencies that can be gained, possible reductions in administrative costs, potential for obtaining improved spend data accuracy and improved cash management.
Once the benefit analysis is completed a business case can be developed in consultation with your finance department in order to finalize a project charter document.
As part of the needs assessment process, the cross functional team developed for the project should look to outline the current process and compare that process to the desired process and identify any gaps that are present. This can be done using 6-Sigma DMAIC methodology or any other valid quality mapping tool.
The resultant needs analysis should provide a report that outlines the critical needs and nice to have needs that can then be used to 1) identify potential providers to investigate, 2) identify and enable development of the appropriate questions to include in your initial RFI and/or final RFP questionnaire and development of a sourcing event evaluation checklist/scorecard for each team’s evaluation in order to select a group of finalists for final presentations/demos/site visits.
Once your project is approved, you can then begin the sourcing evaluation process using the data you have collected and your standard procurement methodology and procedures inclusive of an RFx process, source selection, contract negotiation and ongoing contract management as part of your governance requirements.