Pulling out the designer bathplug will expose everyone’s duck islands

Like most people, the e-Procurement Guru reacted with a mixture of amazement and cynical sighs to recent news of extravagant expenses claims by our MPs.

But what’s particularly interesting is a running theme among the shame-faced politicians … to blame ‘the system’ rather than admit to personal greed.

Of course, things only started to change when ‘the system’ … a procurement system of its own unique kind … became visible to everyone via the media. But what if the House of Commons had a state-of-the-art, purchase-to-pay (P2P) system? And how could all the clever tools and spend analysis capabilities be used? Now, at this point, we started to have some fun, albeit tongue-in cheek … For example, maybe the Commons expenses team could have identified their precise spending on bathplugs, plasma screens and horse manure. Next, they could have consolidated suppliers and negotiated more favourable open contracts – perhaps even reducing prices by as much as 30%!

All possible. But joking aside, where a P2P system could really add value would be to allow visibility to all stakeholders (including the public!) and to enforce compliance. This is where the new-look MPs’ expenses system is sure to be headed. Less colourful. But fewer column inches to worry about. Plus significant savings for the public.And that’s the bottom line. Visibility + compliance = less maverick spending = savings.

But without the correct P2P system in place, it’s too easy for wasteful expenditure to go undetected, year after year. Where did all those budgets go?

Lastly, to put our politicians’ demands into perspective, take a look at the exotic backstage perks allegedly demanded by our honourable rock and pop stars. Makes those House of Commons lunches seem rather modest.

Rule 3: Giving suppliers visibility of their invoice in progress

Unlike many other retailers, Amazon has not yet been hit hard by the consumer credit crunch. In fact, its fourth-quarter profits rose by nine per cent, having enjoyed its best Christmas ever.

Aside from its broad product range and outstanding user interface, what consumers really appreciate is its tracking mechanism - it’s hugely reassuring to check your account and see the words ‘item dispatched’ next to your order with a predicted delivery date. But being able to check the status of a transaction easily can be life-critical if you’re a supplier. In today’s cash-strapped economic climate, it can make all the difference to cash-flow, business survival and fingernails.

The ‘disaster scenario’ that suppliers dread is waiting weeks for payment – only to then call to discover the invoice has been either misplaced, entered incorrectly on the system or is waiting to be checked because it fails to tally with the original order.

At the same time, what purchasing organizations really don’t need is hundreds of anxious suppliers phoning up each day to plot the progress of every payment. Thankfully, there is a pain-free solution to all of this … that takes us back to the Amazon example.

Imagine being able to visit a web site where you can ‘flip’ purchase orders into electronic invoices automatically, so there’s no room for errors at the payment end? And how about streamlining the payment process, so ‘human approval’ is quick and easy? And what if everyone – buyers and suppliers – can track payments online, 24-7 so they know exactly when payments are being made?It’s an approach that the London Borough of Enfield, helped by EGS, and many other organisations are now adopting, fully aware that it will ease the financial pressures faced by their valued suppliers. If you want to improve supplier relationships – and reap the rewards of their greater loyalty and better service – then improving the efficiency and visibility of your payment process will work wonders. There are few things that focus the mind so sharply as fast payment. Especially now.

And it means there’s a better chance your favourite suppliers will be around provide the goods and services you need tomorrow.

Rule 2: Make e-invoicing easy for ALL suppliers

Here are some facts that will put this issue into context: There are approximately 20 million European businesses. Of these less than one million have greater than 250 employees. The rest are small companies. Over one third of the total 30 billion invoices per year within the EU involves a small company, yet they have to date been neglected by many of the recent e-invoicing initiatives.

In addition, there is still widespread beliefs amongst SMEs that e-invoicing is tricky, unsafe and disliked by the tax office. The dematerialisation of the invoice into HTML, PDF or XML with transmission across the Internet can appear a big leap from printing and posting. Not surprisingly the tried and tested practices remain hard to replace.

Actually, e-invoicing doesn’t have to be difficult, is more secure than ordinary post and can be the tax man’s preference if implemented correctly. At EGS we work with many large buying organisations to ensure that even the smallest suppliers can simply, safely and legally issue electronic invoices. Those suppliers unable to create structured e-invoices on their own can generate and send e-invoices using other EGS services, including:

• A paper to electronic transformation facility where their printed invoice is scanned, the image analysed by optical character recognition software and the output file validated against purchase order and master data records before being transmitted to their customer
• A purchase-order-flip facility, which simplifies the on-line creation of an invoice using data taken directly from the purchase order. This done via a browser at EGS's supplier portal
  

This really is a win-win for both parties:

The buyer achieves the efficiencies associated with full end-to-end e-invoicing from all of their suppliers.

The supplier speeds up their bill presentment, gets online visibility of the progress of their invoice in their customer’s authorisation and payment processes and has access to comprehensive records and reconciliation data

This should make every happy – even the VAT inspector.

Next time: we will look at rule 3 - give suppliers and buyers visibility of the electronic invoice approval process.

Rule 1: Sell the benefits to suppliers - don't assume if you build it they will come

We all know that persuading suppliers to participate in e-procurement is in itself a change programme. Let’s face it; your supplier base is probably a mixed bag ranging from multi-national suppliers through to one-man bands, and convincing this range of suppliers to change the way they work is no mean feat.

Like anybody else Suppliers need a reason to participate and having someone dedicated to supplier change is essential. A good structured communication plan is essential, and engaging those suppliers at the correct time is vital, and timing that communication crucial. Suppliers can be keen, but if they don’t see the return in investment in orders being generated they become pretty well turned off.

Any organisation today needs to reduce expenditure, and buyers need to ensure that they are not increasing supplier costs of doing business with them, but ensuring that any changes they instigate offer some benefits.

One example I came across the other day was with a photographer who by doing business with their local authority was reluctantly faced with e-enablement, and the thought of having to raise electronic invoices was a complication he didn’t need. The outcome is that he has seen a month on month increase in cash flow and can actually sends the invoice from his blackberry whilst out on location, as he stated “brilliant – so quick and efficient”, and now takes just 20 minutes a month instead of a day.

Next time: We will look at rule 2 - make it easy for suppliers of all sizes and all levels of technical ability to generate and send you electronic invoices.

The golden rules for getting suppliers to adopt eInvoicing - Introduction

They have recently introduced “Park by Phone” in my local town car parks. It sounds great. Pay for your parking by mobile phone, no need to carry change, receive an alarm 10 minutes before your time expires and pay for more time remotely.

Being curious about technology, I asked the traffic warden how she knew who had paid. She proceeded to show me how, on a mobile device, she could call up a list of anyone who had paid by phone in the car park we were in. The list revealed that no-one had paid by phone – everyone was still buying tickets at the machine. Not to be defeated she pulled up the list for a car park nearby where phone parking was “really popular”. The list revealed that only one person had paid by phone. Two car parks – capacity 400 – both full – only one person had paid by phone – hmmm!

How often have we seen ideas which are great on paper and which are executed crisply from a technological standpoint, fail because the really important link in the chain, the end-user, didn’t get it? Remember Hutchison’s Rabbit, a mobile revolution in the 1980s which withered on the vine because no-one used it? I am sure everyone reading this could think of as similar example.

This is a very current issue in e-procurement. Several companies have technology that does the job well on both the e-procurement and e-invoicing front. EGS is one of these. However the winners, particularly in the e-invoicing space, will be those companies who are able to get suppliers to join their eco-system. On the face of it the proposition is compelling for suppliers. No more paper invoices to create; invoices are received and processed instantly by buyers and payments are made faster. Surely suppliers should be beating a path to our door – but they aren’t. There are several reasons why not but one of those is that suppliers already have an invoicing method that works, so many see adopting e-invoicing as a cost.

We have spent a lot of time focusing our minds on this subject. We call it “supplier adoption” and it is a complex subject – too complex to tackle in a single blog entry. But complex or not, it is a nut that we must crack to be successful.

We have developed a list of “Golden Rules” that we believe we have to make work in order to maximize supplier adoption. In a series of blog entries of the next few weeks we will look at each of these rules in detail.

Next time: We will look at the first of these rules which examines selling the benefits of e-invoicing to suppliers.

If you can't innovate - we can

I attended the Regent conference in London last week. Always a high profile affair with the great and the good from the world of IT in attendance. This year we even had the pleasure of Jeremy Paxman as our compere. Great fun for the audience - but speakers got a grilling from him that wouldn't have been out of place on Newsnight.

Jon Moulton of Alchemy gave an entertaining talk about IT in a recession. He believes that companies don't innovate in a recession because they are focusing all their energy on survival. I think this is true to an extent, but take issue on this as a generalisation.

Companies innovating for themselves may see this activity as less important in a downturn. But many companies outsource much of their IT activity. If you are paying for it, you don't expect your service provider to stop innovating on your behalf.

Tens of thousands of users across many companies rely on EGS's "on demand" platform for their e-procurement and electronic invoice processing. Because our proposition is fundamentally a cost reduction one, we are seeing more pull from our customers than ever. Our development team are as busy now as they have been at any time in the last 5 years building innovative new features for our customers.

Perhaps Jon Moulton's hypothesis would be better expressed as "Companies want to innovate in a downturn but choose not to because they have to deploy their money and resources on staying alive". Sounds to me like a very good reason to look for an outsourcing partner or a managed service.

And finally......like Jon Moulton, I was intrigued by sponsors Barclays Bank's gift to delegates of an empty Barclays carrier bag. A fitting metaphor for the parlous state of the banking industry.

A small dash of technology but a large helping of expertise

Last week we were invited to host and moderate a “Learning Lab” session at the SharedServicesLink.com conference on Electronic Invoicing held in London. We spent 3 hours with a number of companies who are on the brink of implementing e-procurement or e-invoicing solutions. We kept the session very practical drawing on the decades of experience our team have of deploying such solutions across our customer base.

A very interesting thing happened at the end of the session. A member of the audience took one of our team to one side and told him that he had evaluated our technology alongside several other companies a few months earlier. There was nothing to distinguish one company’s technology from the others. They all had much the same features. For reasons he was unable to remember EGS was not taken forward to the short list. But here is the really interesting part. He told our man that having listened to us for 3 hours that afternoon, he was so impressed with our knowledge and our practical advice, that he was not only going to put us back on the short list, he was going to put us to the top of it.

We thought this was interesting. We have always had complete confidence in our ability to deliver what we promise, when we promise. What was most significant about this and what this customer believed set us apart, is that our accrued expertise and domain knowledge enables us to help organisations make the big decisions. That doesn't come out of a box or from clever developers. It takes years to accrue.

So the lesson learned is that it is not always about the technology. Much of our value is the expertise that we bring with the technology.

Are you a "must-have" or a "nice-to-have"

Recently at EGS we have been trying to look into the future. No not a sudden conversion to astrology - we have been reviewing our product road map as we try to decide what the next generation of our e-procurement platform will look like. As ever we are driven by our customers on this. We are lucky to have a very active user group which has no shortage of ideas. Our job is to sort the “nice-to-have” ideas from the “must-have” ideas. The definition of those categories got us thinking.

Last week a few of us attended the UK’s networking event of the year – Entrepreneur Country. 300 invited businessmen from all walks of life descended on the Institute of Directors to share ideas, view demos and hear presentations. You won’t be surprised to hear that the current market conditions were a recurring story of the day.

And it was here that the theme of “nice-to-have” and “must-have” appeared again. It struck me that a year ago at similar events all the buzz was around companies like Blyk (cheap mobile service with ads), Flurry (mobile email) and Buddi (GPS pet tracking). None of these companies make you money or even save you money – they just make life a little easier. Great fun when times are good, but when times are difficult you can easily do without them. Surely the definition of “nice-to-have”.

At Entrepreneur Country there was a lot of interest in EGS and the savings our services deliver. One of the key speakers described EGS thus: “EGS….if ever there was a company to work with in a downturn”. As I reflected on that I thought to myself, what would happen if you turned off EGS’s service to our customers? The simple answer is at worst their entire supply chain would fail and at best it would cost them a lot of money in a number of ways. Surely that is the definition of “must-have”

So as we build our Development Roadmap for 2009 our challenge is clear. Keep building “must have” tools into our “must have” service.

And finally....... The Entrepreneur Country dinner saw over 100 people sumptuously fed and watered at The Mint Leaf on Haymarket. Now the food there is “must have”!!

How to procure temporary staff electronically

At EGS, all of our customers are implementing some type of corporate service for the provisioning of temporary staff. The use of electronic procurement tools is key no matter which flavour of managed service you select.

We estimate that UK business spends over £25bn per year on temporary labour. We know that the procedures associated with the provision of temporary specialist staff have to date been paper intensive, relying heavily on signatures and paper audit trails. The reconciliation of invoices remains a time-consuming, imprecise manual task leading to delays in payment with high risks of errors and fraud.

The more innovative of EGS’s customers are now achieving major savings by replacing the paper-based practices with an integrated, closed-loop process comprising of the three central electronic P2P procedures:

1. Order Placement, which provides the base document for financial authority against which timecards can be approved and invoices presented. The requirements for specialist workers are complex, but not impossible to capture in a structured purchase order format. Contrary to often cited concerns, when correctly implemented e-ordering speeds up the procurement process and can be used for even the most time critical of requirements, such as, sourcing emergency social care.
2. Receipting, or in this case, the authorisation of timecards. The compiling, routing and authorisation of timecards is particularly well served with internet accessible workflow. Why would you do it any other way?
3. Invoicing - no need for consolidated invoices (they never did reduce work, anyway). Invoices are kept simple and delivered electronically. If the purchase order is in place and the timecard authorised, the invoice can be automatically matched and sent on its way for timely payment. As the PO is approved and timecard is fully auditable, Buyers can safely “self-bill” if they choose.
   
   And, of course, management information is then available. We all need the flexibility of temporary resource to supplement our permanent staff through the peaks and troughs in workload and unanticipated absences. However, without the visibility and control that comes with e-procurement your temporary staff may well be costing you much more than you think.
   
   And you thought e-procurement was just for buying stationery!!