Webinar Notes: Direct Spend P2P: Too Complex to Automate?

This week’s webinar notes are from a October 15^th webinar sponsored and hosted by Nipendo and featuring Pete Loughlin (Purchasing Insight) as moderator, Pierre Mitchell and Jason Busch (Spend Matters), and Ed Berger (Nipendo’s VP of Sales). The webinar is available on demand in its entirety here.

Beyond the content (which was great) this event was an example of a panel-format webinar done right. There were minimal distracting visuals – just a listing of the main topics – which was a huge help because the content deserved complete focus. Nipendo was also wise not to scrimp on the moderator. Loughlin struck a careful balance of guiding and advancing the discussion while allowing the other panelists an opportunity to speak.

In fact, he opened the event with a question that got right to the point. True or False: the promises of eProcurement were never fulfilled.

Mitchell and Busch took (cordially) opposing positions which gave those of us listening in a great frame of reference within which to consider our own position on the question.

True: Mitchell saw the inability of eProcurement to adapt to direct products and complex services as an indication that the concept didn’t scale well as procurement got access to new categories of spend. The fact that some categories did not lend themselves well to full automation via traditional eProcurement resulted in either a lack of automation in those categories or a proliferation of specialty/custom solutions. The resulting lack of centralization, standardization, and visibility goes against everything procurement is tasked with.

False: Busch took the position that while procurement’s scope and goals might have changed over time, eProcurement solutions met their original objectives. They were originally implemented to automate catalog based and MRO spend, nothing more. (My take on this is that any broken promises were more a failure of procurement to revise objectives and requirements and re-evaluate solution capabilities than the result of the eProcurement solution’s inability to meet original objectives.)

Since I am a terminology nut (is there such a thing?) I appreciated Loughlin’s point about eProcurement becoming P2P (and Busch’s point that all too often the second P is not included in practice). The root of P2P’s trouble today seems to be in its inability to handle messy, real-world complexity. In this case, complexity is not a simple question of scale in either data or users. Automating direct spend requires support for a physical, multi-tier supply chain that works well on the manufacturer/supplier side as well as on the buy side. What is needed is not a new version of the P2P solution in place, but a solution that supports a completely new approach to direct spend, including all of the actors and activities involved.

There are two ways of assessing the capabilities of a P2P solution (whether the test case is direct spend or not). The first is to consider everything it CAN do – which is quite a bit. The second is to determine what it CAN’T do – uh-oh, also a lot. And what gets missed is less about the obvious transaction support than it is the nuances of a multi-tier supply chain complete with logistics complexities and maintenance requirements. Nuances that are difficult to fully anticipate pre implementation.

How would you answer Pete’s question about whether the promises of eProcurement were fulfilled? Would you give the same answer for direct and indirect spend? What decisions about being made in your organization today about how to handle direct spend going forward?

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