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CFOs increasingly crave a single suite

Finance professionals have named working with one all encompassing application (a suite) for all procurement activities as one of the key trends of 2024. CFOs increasingly want to work with one integrated platform for Procurement and Business Spend Management. In this article, we will explain why they feel this urge.

The main reason is increasing pressure from laws and regulations, John Schouten states. He is the Director of Product Management at ISPnext. As evidence for his claim, he points to the European CSRD (Corporate Sustainability Reporting Directive). The CSRD requires large organisations to report on the impact of their business activities on both people and the environment. "For this reason, large organisations want to monitor their suppliers and the suppliers of those suppliers."

John Schouten ISPnext

Accessing data

This irrevocably leads to a closer collaboration between Finance and Procurement, Schouten foresees. "Making the supply chain transparent is primarily the responsibility of the Procurement department, but reporting on ESG aspects often lies with Finance. After all, the report becomes part of the financial statements. This means that both departments have a strong interest in recording unambiguous data and being able to easily access it."

According to John Schouten, this is why both the CFO and the CPO crave a single suite for Business Spend Management. “It is actually a prerequisite for proper ESG reporting. In addition to data being stored in various places, working within one data application also means there is one truth. And that truth is easily accessible.”

Suuplier risk management

A similar development is taking place in regard to risk management, Schouten explains. "The question Who am I doing business with? used to be a Procurement matter. But now - prompted by CSRD regulations - Finance will increasingly get involved as well.”

"There is an increasing need for certainty. For example, you don't want to buy materials that have been produced using child labour," he says. “You do, however, want to be able to impose your sustainability requirements on suppliers. You can tackle all these matters in the preliminary stage."

"Een BSM-platform opereert in de cloud en is juist gemaakt voor het flexibel uitwisselen van data met andere systemen, waaronder het ERP-systeem.”

John Schouten, Director Product Management | ISPnext 

Red flag

A BSM platform covers the entire procurement process, from Source to Pay. In other words, from finding and monitoring the best suppliers (Sourcing and Vendor Management) to agreeing and monitoring contract terms (Procurement and Contract Management) to delivery and invoice processing. "Information you receive from one department must be shareable with others.”

John Schouten gives an example of the status of supplier certifications. "If - for whatever reason - a red flag is raised somewhere, it should be visible to other departments as well. This way we can ensure nothing is ordered from that supplier and no invoices are paid until things are in order. In the meantime, the platform can provide alternatives."

Not a replacement for ERP

"A BSM platform functions alongside an ERP system, it does not replace it," Schouten clarifies. On the other hand, an ERP system is not suitable for all procurement activities. “An ERP is insufficient for the entire domain of Business Spend Management. Important elements of Sourcing and Contract Management are barely manageable in an ERP. Benefits in terms of risk management, compliance and cost savings will not be attained.”

In addition, the user experience of an ERP system leaves much to be desired. "An ERP excels at processing transactions and storing a lot of data," Schouten explains. "But little attention has been paid to the user experience. Moreover, an ERP contains a lot of static data which is not up-to-date. Exchanges with external systems are problematic which makes information enrichment difficult as well. A BSM platform operates in the cloud and is made for the flexible exchanging of data with other systems, including the ERP."

One-stop shop

When it comes to rules and regulations, the European Digital Operational Resilience Act (DORA) is also relevant. DORA aims to improve IT risk management and the resilience to cyber threats for financial organisations in particular. “That’s another reason I prefer working with one provider rather than multiple providers of standalone partial solutions," Schouten argues. "When you work with one application for all procurement activities, you also only have to deal with one release cycle instead of all kinds of separate ones.”

Tight labour marketarbeidsmarkt

Naast regelgeving en risk management is de oplopende werkdruk een derde reden voor CFO’s om te streven naar een overkoepelende suite-aanpak. “Er is een enorme krapte op de arbeidsmarkt. Dat speelt in diverse Westerse landen. Het is al langer bekend dat de werkdruk met name in financiële functies enorm hoog is. Dat dwingt organisaties om te zoeken naar wegen waarmee ze de mensen met kennis en ervaring optimaal kunnen inzetten.”

Digitalisering is daar in zijn ogen op zichzelf nog geen afdoende antwoord op. “Het hebben van één gebruikersinterface voor alle inkoopactiviteiten maakt het werk van de financial wel gemakkelijker. De grote winst ontstaat als de input in het ene proces bruikbaar is in het andere proces. Dat vraagt om een holistische aanpak in plaats van symptoombestrijding op deelproblemen.”

Making money

At the end of the day, CFOs, like CPOs, just want to make money for the organisation, Schouten concludes. "Sharing information between different processes within the same platform provides insights you would never have with stand-alone solutions. And those insights will allow you to do smart things. You will soon see that in spending, there is a huge potential for savings.”

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This article was produced in collaboration with Dutch B2B Magazine- Vakblad DEAL!.

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