Jessica: Hello and welcome to the WNS business insights podcast series. This podcast series brings you the latest trends and concepts in your industry and in the field of outsourcing so that you can make your outsourcing programs even more successful. I am Jessica Reinelt, your host for this podcast with Daniel Wollenberg, head of global transformation practice at WNS, a leading global business process outsourcing company. Daniel has a unique perspective on outsourcing with over 20 years of experience in both the ITO and BPO markets along with the perspective as both a seller and buyer of services.
In today’s episode, we will discuss with Daniel his point of view regarding which clients can accelerate realization of ‘procure to pay’ transformation and why is it important right now.
Hi Daniel and welcome to the WNS business insights podcast series.
Daniel: Hi Jessica. How are you doing?
Jessica: I am good. Thank you. Daniel, you have often stated that the characteristic of the organization suggests the type of ‘procure to pay’ solution that the company should adopt. Can you explain why you say that?
Daniel: Absolutely Jessica. What we mean by that is that the type and characteristics of the organization specifically whether they are a mid market organization or a multi national differ and hence their P2P outsourcing opportunities differ as well. For example, in a multi national, typically you are looking at several different types of opportunities geared towards operational improvements as well as spend in spend analytics as well as compliance and adherence to the structures.
In a mid-tier client, what you are primarily looking at is less operational intensiveness and definitely geared towards more the spend and categorization of that spend in going after that higher level value within the organization.
Jessica: Given the heavy focus on cost reduction in these trying economic times, what do you believe is the best approach for addressing ‘procure to pay’ and how does the company actually realize the benefits in a quick but controlled fashion?
Daniel: That’s a very good question Jessica. I will start with one demographics versus the other. From a multinational standpoint, typically you are looking at four discreet areas. We’re looking at gap areas, typically we are going to have significant investments in transaction based platforms. We are looking for enablement solutions such as in each workflow, in place management that really support that over arching process flow.
We are looking for control solution that provide visibility across the operational and the financial aspects of those platforms and we are looking for analytics that drag the operational changes as well as ‘how to value.’
For example, we were working right now with a firm that had actually five different ERP systems plus an ancillary of close to 15 different systems of support procure to pay. In addition, they lie in 40 countries, and they have up to 4 different operating companies. So you can imagine that they end up with a very complex opportunity to leverage the gaps in between these platforms as well as address the specific workflows versus the traditional process trying to collapse these into a common platform. The tendency there is to plug in or to lower the capital expenditures while reclaiming the benefits at the back end and unfortunately, that doesn’t really pay very well for a client given today’s economic times.
Jessica: Wouldn’t additional spending on ‘procure to pay’ be contradictory to the goal of cost reduction? How would you recommend companies procure to pay solutions when the end goal is to reduce capital expenditure?
Daniel: I think that’s a very good question Jessica and we hear that quite a bit from our clients. First and foremost, if the focus is on more than traditional approach of collapsing process, operating models as well as systems, the capital expenditure is at the front end and the benefit is at the back end typically in that kind of a roadmap.
Our recommendation tends to be the focus on a holistic view of the road map where pointed solutions in an incremental fashion. What we mean by that is look at those areas that we definitely have to find as gaps specifically geared towards high touch transactions into low touch exception processes. So, effectively the spend, when we are implementing these point solutions, tends to be in alignment with the benefit that is realized. Here, the third thing is that while we are doing that you can actually look at analytics in concurrence with that, that allows you to get a significant or an exponential payback as you are deploying the operational improvements within your shelf.
Jessica: Why should companies invest in procure to pay solutions now. Why not just lock down the hatchet and ride off the storm?
Daniel: Well Jessica, that’s a very good question. The opportunity risk exposure has never been higher than they are today. With the economic pressures and the cost pressures within the organization the exposure within the executive ranks and the support within those is very high right now. The opportunity to focus on something that’s more inward in nature versus growth based is a high regard with the executive ranks. So we have internal support. Externally, suppliers have never been more open to unique aspects around the structuring of the relationship. And you can shift this pretty quickly to a business outcome based option. So the suppliers are more conducive to this. Case in point would be the automakers right now in North America that never had more opportunity to work with the suppliers to negotiate better relationships and better structures from a procure to pay standpoint.
Last would be the maturity of the markets based on the providers of business process outsourcing, someone like WNS, have really matured the way which they can come to market and provide an end to end solution not only from the operational aspects and the improvements of those operations but also from an analytics and capabilities to leverage standard risk analysis. So the reality is that you have this window of opportunity primarily from the cost and economic factors that over time will start to close again as the economic situation improves.
Jessica: Well thank you Daniel for an insightful conversation. I am sure we will be hearing a lot about outsourcing and on procure to pay transformation in the future. For more information on ‘procure to pay’ transformation or other business insights on how you can improve your business performance, visit us at www.wns.com/financeandaccounting.