Procurement software is a little like the heating and cooling system for your office. When you have a good system, nobody notices that they’re always comfortable, but when things aren’t right everyone’s miserable and productivity flounders. Clunky procurement software is actually worse because it makes your customers and vendors miserable too.
If you’re still using Microsoft Office to handle procurement, or struggling with the wrong software for your needs, you’re not alone. Bain and Company’s research showed that over 60% of companies needing workflow assignment or supplier relationship management were using either Microsoft Office or no tools at all at a cost of up to $86 billion in missed opportunities.
Another study from Topline Strategy Group reported in nextenders revealed a staggering loss for companies who chose to either ignore the time-saving elements of their software, or who failed to invest in the right software for their needs: 32.3 million wasted man hours.Choosing the right procurement software is less about a specific program and more about innovations in the procurement department that will work the best for your business. To quote ProcurePort, “There is no such thing as the best software on the market. There’s only software that works for your company and software that works against your company.” And companies are beginning to take notice. This chart shows digital procurement investments that are reflecting a growing understanding of ROI with usage:
Know What You Need
Before you start looking for new software, engage with the employees and customers who are using your current procurement software, and find out what’s working and what isn’t working. The people who are in the system regularly will have the best analysis and their insight is essential in knowing what your business needs. ProcurePort suggests asking employees what they like about the current software, what areas and features are unused, where can you increase efficiency, and how much support is needed through a system change.
Further valuable questions suggested by una include assessing where the procurement team is wasting the most time with current software, what key metrics they need to track, and which categories might offer more savings visibility with different software.
ProcureNow also talks about the rising importance of the User Experience when it comes to procurement software. It’s no longer acceptable to have an outdated system that doesn’t consider the end user. Procurement directly impacts most teams across an organization, so if the User Experience is poor, it’s felt across these departments. Many sources make comparisons to the ease of online shopping—procurement software needs to offer the same ease and usability.
In Stan Garber’s piece for CIPS, he claims that almost all (90%) of procurement software rollouts end in failure because companies are stuck in old-fashioned, simplistic views of procurement that don’t take into account the actual experience of the people who are using it. Companies must be able to positively conclude that the software will make a job easier while meeting the specific needs of the workplace in order to successfully rescue their procurement department from software that isn’t right for them.
Here are the top digital solutions identified by a Bain survey of 243 procurement professionals that show the areas you are most likely to find benefits from the right procurement software:
Procurement Software with Cloud Capabilities
If you need to centralize purchasing and record-keeping, increase agility, only pay for the services you use, and benefit from faster updates and implementation, look for cloud capabilities. ProcurePort also notes that this allows for “bit picture data analytics, and streamlined procure-to-pay (P2P) processes with contract integrations.”
Kissflow highlights some of the advantages of using procurement software with cloud capabilities: no large upfront investments and maintenance fees make it cost-effective, end-to-end integration capabilities “eliminate data redundancy, manual intervention, and offer a single version of the truth without any friction”, information flows through your organization seamlessly, it’s user-friendly, and you gain immediate access to visual reports that are easy to understand.
Online procurement software, or eProcurement, offers greater flexibility and instant access. Both are features that your business likely needs. For the people using cloud-based procurement software, ProcureNow reports they experience less anxiety and no longer face “busy work”. And while price should never be the deciding factor in a software purchase, software with cloud capabilities is a lower-cost solution. Using eProcurement software reduces requisition order cycles and costs and decreases extraneous spending while improving spend management.
Automation is Essential
Perhaps it’s helpful to note how a lack of automation can create problems. In ProcurePort’s list of the Worst Procurement Blunders of 2018, everything from a country failing to secure sufficient flu vaccines to a chicken restaurant running out of chicken could have been solved with better procurement software with automation. Humans make mistakes, and procurement is complicated at the best of times. Automation can flag things like impending shortages, unexpected increases in demand, and even improve communication with suppliers through logging every activity so the procurement department can run efficiently and proactively.
Spendesk’s article by Patrick Whatman recommends looking for these procurement automation features: “a workflow to handle purchase orders, receive approvals from managers and executives, and simple tracking that avoids the need for [manual] data entry.”
Switching to automation solutions gives employees in procurement the opportunity to focus on more important tasks. According to nextenders these include identifying savings opportunities, “securing more spend categories under contract, ensuring the acquisition of cost-effective products, and getting more bids per tender.” These activities are likely what your employees were hired to accomplish in the first place.
Procurement Software that Streamlines Reporting
One of the most important parts of procurement management outside of making payments is reporting. The best software provides real-time oversight, team and project budgets, and comparisons with previous periods.
Streamlined reporting compiles all transactions in a central database where you can see where departments fall within their purchasing and budgets, and both “leverage volume to reduce your costs, [and] spend analytics makes it easier to find cost reduction opportunities continuously” notes PurchaseControl. This is where taking that first step in learning what you need continues to help decide what procurement software solutions are right for you.
Over-purchasing and exceeding department budgets is one of the big procurement problems listed by Brittany Whitmore for Procurify that is solved with the right procurement software. You can use real-time reporting so financials are always up-to-date (and eliminate reliance on monthly reporting that fails to account for recent purchases). You can also access reporting on upcoming purchases, which makes inventory and spending reports far more accurate. In order to accomplish this, your procurement software must be able to be integrated with your accounting software.
Procurement Software Options for Your Business
Again, we want to reiterate the importance of focusing on innovation and solving your specific procurement needs when it comes to identifying the right procurement software for your business.
Patrick Whatman gives a good overview of nine options your procurement department might consider in his April 2020 article for Spendesk that includes highlights and ratings for each.
- Precoro for total purchasing control
- Promena e-Sourcing for easier RFQs
- TradeGecko for well-managed inventory
- Orderhive for procurement for eCommerce companies
- Oracle Procurement Cloud for full-scale ERP
- Spendesk for control over all company spending
- PurchaseControl for control over purchase orders
- Gatekeeper for contract and vendor management
- Veeqo for inventory management for retail brands
A big brand isn’t always the best solution. Gep Smart has a huge market share but a horrible user experience. Consider smaller software if it provides the solutions and flexibility you need. Other options include Procurify (reviews here), Xero (pros and cons here), and Deskera (pros and cons here).
Once you’ve narrowed down your options, ask for a demo of the software and have the team members who will be using the software on a regular basis evaluate it with the following questions from una in mind:
- Will it integrate with your systems?
- Does it meet the needs you’ve already identified?
- Does it meet business requirements for things like security and legal requirements?
- Is it easy to learn and use?
- How is customer support?
At the end of the process, you’ll only be successful if the software is actually used—and used well—by your procurement department. Their evaluation of how the demo works is essential in the final purchasing decision.
The right procurement software for your business will be easy to use by everyone involved, automate purchasing functions, track approvals, orders, and shipping, keep logs of communications with customers and vendors, provide real-time data on spending and budgets, and free up your procurement team members to do the jobs they were hired to do. It saves money, increases efficiency, and streamlines processes. So, even though the process of rescuing your procurement department from clunky software may take time and effort, the payoff is well worth it.