What's next for P2P?
Reviewing successes of the last few years and upcoming trends
Ellen Leith, PPN speaks with Beate Hausmann and Nic Walden from The Hackett Group
The last two years have been particularly tumultuous for P2P teams – how have you seen them respond?
Beate: Covid-19 and the supply chain challenges really allowed leading teams to see the benefit from digital operations and has pushed others to accelerate their digital transformations. Even the USA has seen a strong conversion to electronic processing from paper cheques and invoices.
Nic: It’s been rough for everyone, but most teams have managed through. To our credit the shift to WFH and hybrid working has not resulted in a productivity hit – some teams even reported performance increases! More recent invoicing complaints relate to import/export regulations!
Do you think digitisation projects have accelerated?
Beate: Absolutely, although everything is speeding up. Hackett research shows P2P leaders rank digital as their number 1 priority for the coming years and we expect this trend to strengthen as businesses respond to additional challenges from cost pressures, geo-politics, and regulation. Data and information management have become recent focus areas to improve business decision-making whether it be process dashboards or risk management.
Nic: Re-engineering supplier onboarding and due diligence are other attention areas, along with supplier self-service portals, improving requisitioning, and AI for invoice coding.
What about RPA? There seems to be some debate about its future in the upcoming years?
Beate: many P2P organisations use RPA today and this is projected to continue to grow especially in tactical areas like integrating process and data between legacy platforms. As modern tools are rolled out we can expect to see RPA use decline.
Nic: RPA was all the talk 4-5 years ago, but has the tech lived up to expectations? It is quicker to deploy than traditional solutions but I’m not sure we’ve see a significant increase in process automation? I mostly hear from clients that its usefulness is limited to specific areas, like master data, invoice data conversion, or payment processing.
But it’s not a level playing field is it – why are companies in such different positions as regards technology?
Beate: There will always be winners and losers as top performers invest hard work and dedication to achieve their goals. We encourage to take a structured approach to progress towards a digitally enabled future, to identify opportunities and then lead change with confidence. Critical success factors include practices like: leadership buying into the digital vision, credible business cases, pre-requisite resources to drive the digital change and new roles and skills to utilise new digital tools, scale pilots to broader adoption, and use of agile change methods.
How does becoming more digitised play into other areas, like ESG?
Nic: Modern procurement, like finance, is becoming much more data and insight driven. Procurement have picked up many new responsibilities like managing supply risk or ESG. Each require data, intelligence and insight for decision making which of course requires digital tools with information feeds and automation.
Do you think procurement as a function is less digitised than finance?
Beate: I would agree but procurement is catching up. Traditionally procurement may have focused on commercial negotiations while Finance have had their accounting systems for many years helped by centralisation of Accounts Payable. But there is still a lot of room for improvement, take straight through processing!
What can be done to join the two areas more cohesively?
Beate: Strengthening process ownership is one opportunity, with a renewed focus on shifting the end-to-end to a broader S2P design and ownership. Working on channel strategy and tail spend management are topics that would benefit both teams.
What do you see as some of the biggest risks and challenges right now?
Nic: I’ll pick macro conditions and talent. Any recession brings a strong cost focus likely to the detriment of performance. We’ve worked hard to improve complex areas like touchless processing and payment on time - these gains should not be given up easily.
But challenges often offer areas of opportunity too – what should CFOs and CPOs be looking out for?
Beate: We need to get stakeholder centricity to the next level, to design P2P services from the end user point of view rather than a narrow process view. Take the “customer journey” where we design through the eyes of the customer, understand and address pain points. Do we need as many approvals, can we provide a transaction status info, are systems intuitive and easy to use? what role does tech like chatbots/virtual assistants or on-screen user guidance have to play?
And what about talent retention?
Nic: Developing people has been overlooked for too long, perhaps in the expectation automation will take over. Tight labour markets have helped people move on to better and more rewarding roles. Any high-performance solution needs to consider talent.
Beate: I can only emphasise this point. Companies are forced to address the skills needed, what career progression exists, and do we hire or develop in house. Many well-known organizations are investing in large scale talent programmes covering technology, data, creativity and innovation, customer focus, and change orientation.
Do you think hybrid is here to stay?
Beate: Bit of a mixed bag and we see work routines vary widely. Most employees that had been working remotely are now spending more time at employer facilities. I would recommend a flexible approach and listening to employees.
Thank you, Nic and Beate – any further thoughts to share?
Nic: Looking ahead, it seems there are further challenges ahead – we’re not out of the choppy waters yet.
Beate: Agreed and because of this we need to take a close look at some ancient policies and restrictions, monitor the technology market and ensure a continued focus on talent.
Beate Hausmann is Director and Global P2P lead, and Nic Walden is Associate Principal, European Procurement Advisory Practice Lead at The Hackett Group, a leading strategic advisory and consulting firm.