What Happens When Procurement, Finance, and IT Team Up

Within many organizations, procurement and finance have worked together for quite some time to create a joint journey for their source-to-pay process. Their goal? To transform their business into one that is more efficient and responsive to business and market changes.

But to achieve this goal, they also need to team up with IT because IT solutions, ultimately, are what enable this transformation journey. Technology is pervasive in the digital age, causing the lines between IT and the business to blur. It’s critical that line-of-business (LoB) executives be well versed in new technological possibilities, priorities, and IT solutions — and that IT executives understand business needs so they can provide the right solutions to address them.

By collaborating based on a shared understanding of needs and priorities, executives in IT, procurement, and finance can jointly define a set of top priorities and desired outcomes. They can then work toward these shared goals to effect change that’s tied to the company’s broader objectives, such as fueling growth, profitability, differentiation, or innovation.

To facilitate cross-departmental partnership and business transformation, some companies are rotating people among procurement, finance, and IT, or hiring tech-savvy millennials into the LoB functions. But the most effective way to effect change is to have C-level executives understand and embrace collaboration. Let’s take a closer look at why — and what happens when cross-departmental collaboration is central to a company’s operations.

When CIOs Work Closely with Procurement and Finance

CIOs want their IT organizations to be valued partners to the LoBs, supporting and securely managing business processes tied to strategic corporate objectives. However, CIOs also have a number of other priorities, including:

  • Maintaining control over their IT infrastructure
  • Keeping visibility into the IT landscape
  • Integrating solutions
  • Ensuring system stability, scalability, and security
  • Simplifying connectivity with business partners
  • Streamlining their IT landscape

These are important IT priorities that benefit everyone by enabling the agility, cost savings, security, and operational efficiencies companies need today. So while the functional LoBs such as procurement and finance have some power to choose their technology solutions, only the IT department knows how to run these solutions in the way that most benefits the business. IT must remain a critical partner in this process, actively involved in LoB software selections from day one to balance competing business and IT priorities.

But to do this effectively, CIOs need to understand the real needs and priorities of business stakeholders. Only then can they educate these LoB executives on IT priorities and effectively advise on solutions.

When Procurement and Finance Executives Collaborate with Their CIO

Procurement and finance, on the other hand, are focused on different goals:

  • Driving innovation and efficiency in their functions
  • Standardizing procurement and payment processes
  • Increasing spend under management
  • Ensuring compliance with contracts, processes, and regulatory requirements
  • Boosting the bottom line

Technology can help these organizations realize these goals — for example, by replacing paper-based processes with automated, integrated, and auditable workflows.

The ease of adoption with today’s cloud-based source-to-pay solutions means that LoB executives can aggressively invest in technology. But without the guiding hand of their IT organization, they may unknowingly select technology that is difficult to integrate with existing systems, unmanageably complex, or worse. Without an in-depth understanding of the IT environment, choosing a solution that will fit within that environment is extremely difficult.

With IT, procurement, and finance working hand in hand, however, organizations can identify the best solutions that meet their specific business needs and help the company achieve broader objectives, such as:

  • Standardizing and streamlining source-to-pay processes to lower costs and drive spend under management
  • Simplifying the user experience to drive adoption
  • Supporting the organization’s compliance requirements
  • Improving connectivity and collaboration with suppliers
  • Simplifying the IT infrastructure for greater agility and faster innovation

To get started on achieving these benefits, procurement, finance, and IT must work together to jointly build a robust business case, consistently define and monitor key performance indicators (KPIs), such as overall savings or percentage of spend under management, and collaborate on the solution blueprinting.

Finding Common Ground for Win-Win Outcomes

The arrival of the digital age; the evolution of business commerce networks (such as the Ariba Network); and the availability of end-to-end, cloud-based source-to-pay solutions have provided procurement, finance, and IT with a common ground. Savvy use of these technologies can result in a true win-win scenario for all parties.

For example, as discussed in the ePayables report “Higher Ground” from Ardent Partners there are interdependencies between the benefits of source-to-pay solutions (such as SAP Ariba’s source-to-pay solutions) for finance, procurement, and IT. This report states that “spend visibility is highly prized by procurement departments because it can unlock significant savings opportunities for the enterprise, and AP systems are frequently the best source for the spend data. Technology is the link between these ‘next-level’ generators.”1

The Ariba Network delivers on this value proposition by simplifying how companies engage with, monitor, and work with business partners; streamlining multi-enterprise collaboration; simplifying connectivity with suppliers; and enabling full visibility into their supply chain. Similarly, SAP Ariba’s suite of source-to-pay solutions supports the needs of procurement and finance while helping IT streamline systems and processes. It provides best-of-breed support for a simpler, smarter, and more connected source-to-pay process that spans spend analysis, sourcing, contract management, supplier management, and procure-to-pay. At the same time, SAP Ariba solutions are built on a proven cloud platform, ensuring system stability, data security, global availability, and ease of integration with a company’s existing IT infrastructure.

The benefits can be huge. For one customer using SAP Ariba solutions, accounts payable achieved 98% automation by implementing touchless invoice handling. Another customer reduced purchase order cycle times by more than 50%. Figure 1 summarizes the KPIs and benefits customers using SAP Ariba solutions typically realize.

Figure 1 — KPIs and benefits customers can achieve using SAP Ariba solutions (Source: SAP Ariba customer benchmarking)

Driving Innovation with Collaboration

Given today’s disruptive technology innovations, it takes a triple-threat power team to achieve sustained business success. When IT, procurement, and finance executives align around common goals, great partnerships can emerge, allowing them to leverage synergies to streamline the source-to-pay process, simplify supply chain connectivity, and drive ecosystem innovation. Learn more at ari.ba/collaboration.

1 Ardent Partners, “Higher Ground” (2015; http://payablesplace.ardentpartners.com/2015/07/the-epayables-2015-higher-ground-report-is-now-available). [back]