Performance analysis - often ignored but important addition to P2P

By Matthew Pike This email address is being protected from spambots. You need JavaScript enabled to view it.

Recently, I was asked to review a business case for a procure-to-pay implementation, and I found myself reaching for the ‘Insert-New Comment’ icon the moment I opened the document entitled: “Business case for the implementation of a Procure-to-Pay system”. Somewhat glibly, I added the comment ‘Consider changing to “Business case for achieving world-class performance across all Procure-to-Pay activities”’.

I say glibly, because this came after a conversation with the client in which I attempted to persuade them that they shouldn’t simply be looking at implementing a new system, but instead driving continuous and sustained performance improvement in every area of their P2P activities. Their view, in these austere times, was ‘let’s get the software signed off first, and we’ll worry about the rest later’.

Unfortunately, I fear that this client is taking, at best, the long route to success, and at worst, the short cut to failure. Indeed, the business case may not even get signed off if it simply considers the short-term benefits and costs of the project.

My argument is that a more compelling business case can be proposed if its central theme is continual improvement, driven by continuous analysis of performance, in each of the constituent processes of procure-to-pay, rather than focus on a simple cost/benefit analysis of the technology itself. In essence, business performance should decide the technology, rather than the other way round.

In the minutes I had to put my case to this client, I suggested a first step of identifying specifically where the greatest performance improvements (and savings) could be achieved. Then, I recommended that they set specific, realistic and challenging goals in each of these areas, rather than simply aim for ‘increased straight-through processing rates’ or ‘lower cost per invoice’. Whilst they are admirable goals, these wide-ranging metrics would not tell them specifically what they would need to do to improve.

I suggested that they should break it down and be more specific, to decide what ‘world-class performance’ means to them; for example ‘World-class performance = 70% of invoices received electronically’, ‘World-class performance = 32,000 invoices per FTE per annum’, ‘World-class performance = 0.1% of spend saved through early payment discounts’.

No procure-to-pay implementation gets off the ground without a business case, which helps to predict how well a system might perform. So why is there a reluctance to invest in Performance Analytics, which can tell us how well a system actually performs?

Only then, with their goals in place, could they decide how to get there, and only then should the technology come into play. An organisation with a focus on compliance may choose vastly different technology to one whose main goal is cost savings.

It felt like I was getting somewhere in my argument, until I suggested that the client’s technology investment should include ongoing performance analysis. After all, it is impossible to know whether you are hitting your goals unless you can easily get a snapshot of how you are performing against each of your benchmarks on a monthly or even weekly basis. Performance Analysis technology is not ‘passive’ technology; it serves a very real function. It enables the right decisions to be made to keep you on the continuous path to success. If a business case is built around continuous improvement, performance analysis is every bit as central to its success as the P2P automation technologies themselves.

My client baulked at the word ‘ongoing’; they felt that any continuous draw on resource or costs in the business case would introduce a risk to achieving business case sign-off. They wanted swift closure of the project, and the business case had to reflect this. For this organisation, the pressure was on to deliver their P2P implementation quickly.

In the end, I decided to delete my comment- ‘Consider changing to “Business case for achieving world-class performance across all Procure-to-Pay activities”’. Sometimes, you just have to take the long route to success.