Business Case for P2P System

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Full Business Case

Description: Purchase to Pay and Source to Pay- E Procurement Software

Details Context

The implementation of an organisation wide P2P software to achieve the following objectives:

  • Reduce unnecessary and improper purchases
  • Ensure only accurate invoices are paid
  • Improve the efficiency and workflow for procurement and accounts payable
  • Ensures compliance with corporate policies
  • Maintain clear visibility of the cost pipeline and impacts on budgets
  • Provides dashboard reports and management information to achieve VFM
  • Streamline the sourcing process, capture information in a central repository, suitable for both centralised and decentralised procurement
  • Spend analysis and information on committed spend with real time data capture

Business requirement- Identifying the need

An integrated P2P system allows the end user to minimise the admin time related to the raising of PO’s, matching invoices, dealing with adhoc queries. A streamlined process allows users to concentrate on their day to day activities core to their role.

P2P can deliver the following outcomes:

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  • Improves handling or orders, budget authorisation, goods receipting and payments.
  • Reduce the risks of fraud and duplicate payments through automated workflow
  • Automate the purchasing process and ensure compliance
  • Eliminate the need for manual matching of invoices
  • Reduce coding errors
  • Integrate with sourcing or source to pay
  • Obtain visibility of contracts based on rules and alerts ( if the contract management module is included)

Fees

  • SaaS Licence
  • Volume of transactions ( may influence fee)
  • Professional services fee/ Implementation
  • Total cost over X years

Executive Summary

The paper outlines the benefits of implementing a new integrated e procurement system comprising of modules for sourcing ,P2P, and contract management.

The procurement function seeks approval to secure the funding for the new project, The proposed solution will help employees at all levels of the organisation to buy goods and services without too much undue effort or delay caused by the purchasing process.

E procurement software will support the procurement policy to minimise the tactical purchasing process and free up end users time. The procurement function will use technology to offer light touch tactical support and free up their time to review high value and strategic contracts.

Other benefits to be realised include software for a formal quotation process for low value transactions, and a sourcing module for ITT’s. The software mandates all spend to be controlled through a single repository, linked to the finance system to track budget versus committed spend by pulling data through different systems.

Identifying the Business Need

  1. Technology is taken for granted as being integrated into our daily lives and we expect our workplace to provide systems to make it easier for us to do our job on a daily basis. Users expect the company they work at to leverage technology platforms
  2. Senior management want control and spend visibility.  Implementing the right software means the procurement function can provide spend information at a click of a button, export committed accounting information and monthly management information to capture real time data.

Strategic Context

The company has strategic goals to grow the business by X % within the next X years. The back office function requires the acquisition of goods and services within a short time scale, and end users need to make the acquisition as efficiently as possible with minimum delay. By controlling spend using a technology platform the procurement function can fully support business objectives with a lean team. 1 FT Procurement employee should influence circa 10M spend. The total number of FTE in the procurement function should be multiplied by 10M.

Options

  1. Buy a licence for an integrated Source 2 Pay System (full implementation in year 1)
  2. Buy a licence for an Integrated system with pilot implementation ( subsequent roll out completed by the company to reduce consultancy cost)
  3. Do nothing ( continue to work manually)

Justification for Option to proceed with implementation of new software

The justification for the implementation is on the basis that current manual tracking of third party expenditure is insufficient and not fit for purpose. The procurement function is focused on reactive tactical measures with no capacity to free up their time for a more strategic approach. The organisation has failed to realize real cashable savings on controllable spend. Access to relevant information and spend visibility is the key to successful cost reduction.

Risk Analysis (examples)

Risk TypeInitial ImpactLikelihoodCurrent RiskMitigating Actions
Available resources, change fatigue, too many projects happening in other parts of the organisation, budgetary constraints, staffing changes within the department and loss of knowledge transfer
Initial Impact =il scored between 1-5
Likelihood =L scored between 1-5
Current Risk =il XL
Confirm PMO resource, IT resources, pilot roll out rather than big bang, robust business case, state strategic objectives and business benefits, ROI, full handover in the event of staff changes

Cost Benefit Analysis

Savings AreaToolSavings Calculation
Avoidance of unnecessary purchase, lower prices by capturing the same requirement once during the sourcing process, reduced delivery cost, early payment discounts reduced payment of duplicate and improper invoice, improved spend data promotes competitive sourcing and focus on spend categories, reduced cost of PO handling and invoice processing, reduced audit costs reduced organisation wide purchasing cost, reduced cost of non supplier performance
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