Source-to-Pay (S2P) should be viewed as a strategic approach to optimise every step of the procurement journey. As the name suggests, it covers the entire procurement process, including identifying requirements, sourcing and onboarding the right suppliers, negotiating terms, creating contracts, placing orders, receiving the goods or services, processing invoices and making payments.
Implemented correctly, the right approach to a tech-enabled S2P transformation can unlock greater value from procurement, with lower organisational costs and more opportunities to pursue new sources of value. It’s typical to see sustainable savings of at least 2%–5% of addressable spend from successful S2P transformations. They can also strengthen compliance, improve collaboration and trust, enable better data, forecasting and visibility of spend, and help to unlock the potential benefits of AI.
Unfortunately, however, too many businesses fail to reap the anticipated advantages from their S2P transformation, with the result that investment and resources are wasted and the full benefits remain unrealised.
At KPMG, we work with organizations of all sizes and across all industries on a diverse range of S2P transformations. In our experience, there are four key areas to focus on to get it right first time:
1. Bottom out the business case
Building a clear and compelling business case is the first step. You need to be clear why you are investing in an S2P transformation and what you want to go out of it. It can be tempting to home in on the top line financial details, that is, the cost of the acquiring and implementing a system, and the savings it will – in theory – deliver.
However, a robust business case needs to cover more than just the upfront financial costs. It also needs to address the change implications – what savings could the transformation bring about and, crucially, what else will we need to change within the business to realise these savings? This is often more around the impact on people and processes, rather than the technology side. There may be new training that’s required or new roles to be created. How will these elements impact the projected costs and savings?
There will be implications for your existing systems, too, which must be carefully planned and considered. Will the new S2P system fit neatly into the existing structures, or will they need changing to accommodate it, or will it even replace them entirely?
For each value lever, the business case should provide an accurate view of the baseline (as-is) performance and realistic benchmarks of what can be achieved post implementation (to-be). And it needs to consider how and when you will track each line item (both savings and costs).
2. Picking the right partner
Choosing the right implementation or transformation partner is critical to success.
There are generally two options:
- A systems implementation partner will predominantly focus on getting the technology deployed. It’s up to the business to do whatever else is required to get optimum value from the new system.
- A transformation partner – like KPMG – will take a more holistic view of what’s required to deliver the business case and project objectives, considering issues like people, process, tech, data, governance and controls. This not only includes the technical implementation of the system, but also optimising the S2P operating model and delivering high-quality change management and training to drive adoption from the business and suppliers.
Understand the value a potential partner can bring through its specialist knowledge, previous experience or leading practice methodologies. And verify it through references and testimonials from previous clients. This approach leaves less to chance and increases the likelihood of a successful outcome.
This includes the specific people who will work on your project, not just the partner firm itself, as well as ensuring clarity on roles and responsibilities between all parties (customer, partner, tech vendor). Getting all three parties aligned will deliver best value.
3. Dive into delivery
Make sure everyone involved clearly understands the project objectives and business case from the outset. This will help decision making and should stop people trying to replicate existing processes in the new system, and instead move to a more standardised and leading-practice way of working.
Don’t underestimate what’s required from the internal team, either. An S2P transformation is an important project, not a side-of-desk job. Internal team members are critical for bringing the business on the change journey. Ensure you have a lead from procurement, finance and IT involved in the delivery team; people who are senior enough to be able to take a strategic view and not get distracted by tactical details. Strong governance and empowerment is key to this, to ensure decisions are consistently made for the right reasons, in line with the business case and project objectives.
To maximise user uptake, scope out the user adoption and change management journey. You need to understand the change impacts and define what associated communications and training is required to help users manage those impacts. This could include a variety of mediums, e.g. intranet resources, short videos, training sessions.
Don’t forget suppliers – a key part of the overall success of the business case relies on suppliers being successfully onboarded and creating easy to find and relevant content in the system. Aim for a significant proportion of suppliers and content to be ready for the go-live to ensure user groups have a positive first experience.
4. Look at the long term
The transformation doesn’t stop when the system goes live. Allow some stabilisation time before benefit tracking starts in earnest and ensure post go-live support is available, visible and effective, so the change is sustained and continuous improvement takes place.
Keep communication channels open with users to facilitate feedback and help identify any issues that need to be addressed. It is often the case that relatively low effort interventions can heave a disproportionately large impact.
Remember that like most software systems, an S2P system is not static. There will be regular updates and releases throughout the year bringing new functionality and innovation that needs to be monitored and implemented. There will be a constant flow of new users and new suppliers to be onboarded and content to be created or refreshed. Some drop off in intensity is inevitable, but without a robust support model and sufficient ongoing focus, the full benefits of the transformation may never be realised.
