Make built-in P2P budget management data part of your purchasing workflow.
Of the many topics that came out of the webinar we did with Ardent Partners, CPO Rising 2018: The Age of Intelligence, the idea that “you’re only as good as your data” is one of the most compelling. There are many aspects to exploring that idea. It doesn’t necessarily have to be some high fallutin’ thought leadership viewpoint, either; in fact, [inlinetweet prefix=”” tweeter=”” suffix=”#P2PBudgetManagement”]a powerful example of data visibility can be something as workaday as simplifying purchasing by integrating P2P budget management right into your procurement solution functionality.[/inlinetweet] Easy is good, right?
The idea that you can replace budget enforcement with budget empowerment is something that stakeholders at every level can get behind. Senior managers don’t want to waste time being budget police, and users don’t want (or generally need) someone always looking over their shoulders at spend compliance. By incorporating the procurement budget and spend tracking details right into the purchase requisition/approval workflow, everyone can see at a glance what the spend management parameters are.
What’s in your budget?
As we used to say in flight school, situational awareness is a beautiful thing. [inlinetweet prefix=”” tweeter=”” suffix=”#SpendCompliance”]Having a full view of budget data – spent, processing, earmarked and available – as users are making catalog selections is really a spend compliance enabling device.[/inlinetweet] This graphic is from our modular procurement solution on the Determine Cloud Platform:
Naysayers will contend that seeing how much budget is left will only encourage spending more, but in our experience it leads to people making smarter, more considered decisions. Combined with our Optimizations functionality, which shows price comparisons for the same items from different suppliers, it’s really another way to boost procurement savings. And anyway, approval controls are built in, so no one’s going to take your budget off the rails.
How integrated P2P budget management empowers procurement.
During an in-depth product demo webinar on Budget Management Aligned with Procure to Pay with Determine’s Senior Sales Engineer Gene Travers, we showed how having a single source of data on the Determine Cloud Platform seamlessly integrates budget management with P2P — as well as contracts, invoicing, finance and every other modular solution (we covered linking SIM+CLM to mitigate 3rd-party risk, too). This goes beyond traditional contract-based budgets — IT, MRO, etc. — to include top level consolidated budgets, capex, opex and project level. The easiest way to explain this is through a basic purchase requisition process:
In an actual situation, a purchaser sees only as much information as they are granted. In this case, purchasing laptops, the user can see the P2P budget breakout for IT — both overall and hardware.
If those laptops are associated with a particular project — say, a construction or departmental expansion project — then purchase requisitions can be associated with a particular project. The budget allocation then becomes automatically linked to the overall project budget.
Once the purchase requisition is made, the approver(s) defined in the workflow receives an email and/or an alert through the Determine App for Android and iPhone (what we call the 10-second approval process). That person will likely have a much more expanded and detailed view of the procurement budgets associated with those laptops – the data integration feeds it all in automatically, in real time.
In the graphic above, that requisition will hit the purchasing contract budget, capex budget, project budget and the overall consolidated budget. Again, complete situational awareness that empowers the approver to make an informed decision.
Who gets approval authority in that budget workflow, or what Determine calls Approval Rules, is incredibly flexible in our procurement solution. Along with rule type, such as PO, you can specify who sees it and when, how long they have to act on the information, geographies impacted, amount – whatever your organization needs to define based on your own processes.
Alerts provide a built-in failsafe capability, or simply a way to create reminders around particular procurement budget milestones. These are simple to create and associate with a particular budget or event, also with enormous flexibility in defining what the trigger(s) is/are. It’s exactly the same as your credit card company sending you a text when purchases over a certain amount are made, or your wireless provider alerts you to a specific level of data use.
In our example, the approver wants to know when a certain percentage of budget is used. Who receives those alerts can also be defined easily – along with the users themselves, alerts can go up to 10 levels of management escalation.
Finally, integrated data across procurement budgets simplifies and speeds reporting — the information is live, so reports created at any given moment reflect actual reality. Whatever timing/user/business line/etc. parameters are set, reports can be downloaded or fed directly into an analytics tool, like Determine Spend Analytics. Better budget control leads to better budget analysis and creation, increasing process efficiency.
So, if you’re only as good as your data, then your procurement spend, savings and effectiveness is dependent on the quality of your budget data. It’s all about knowing all the available information in real-time so you can empower better decisions at every level.
If you like the demo webinar on demand, contact us to schedule a personalized demonstration of how data integration can empower you on the Determine Cloud Platform.