The procurement function has become widely recognized as a source of sustainable competitive advantage and now holds a key seat at the strategy table of many forward-thinking enterprises. This is especially the case in IT-intensive sectors where changes in market conditions and rapid adjustment of strategies require the ability to continuously plan, execute and re-balance deployment of capital across wide-ranging programs and portfolios.
Mastery in this environment is founded on a consistent understanding among all stakeholders of the basis for investment decisions from the standpoint of projected outcomes. This requires a new class of solutions to bridge the gap between sourcing platforms, ERP ecosystems, and PPM execution products. To support full lifecycle investment management and continuous optimization, today’s best-in-class procurement organizations have a need for up front capture and post-execution validation of benefits mapped back to key investment decisions.
Traditionally, procurement has found itself central to execution of investment commitments required to realize projects and associated benefits. That’s why it’s not surprising that today’s procurement-driven enterprise is being called on to do more to help ensure clarity in decision making and fidelity to strategy. This requires standardization and governance that is beyond the capabilities of spreadsheets and slide decks. This requires a consolidated platform view of business case management that harmonizes cost and benefit information between line-of-business, IT, finance and procurement/sourcing perspectives. A best-in-class business case management platform will provide a single source of truth for those tasked with approving investments and those held accountable for benefits, while institutionalizing and automating the process.
Often, procurement is required to assess options between differentiated providers for the same approach, e.g., a new SaaS application available from a number of vendors. Increasingly, however, procurement requires the means to analyze the most cost effective/risk adjusted solution for addressing a strategic objective among several alternative and distinct approaches, e.g., upgrading an existing system, sourcing a new provider of a packaged solution, engaging to develop a bespoke solution, etc. This requires the ability to rapidly understand and distinguish between baseline costs that would be incurred regardless of approach and costs specific to each alternative, how these costs would be incurred—CapEx, one-time, recurring—and the impact on timing and extent of benefits realized. Frequently, these alternatives must be viewed in the context of a larger program or portfolio to provide clarity on which is the optimal approach that best aligns with strategy.
Bringing a platform approach to business case management—single source of truth and automation of funding requests and benefits realization—compounds the impact of category management frameworks by helping drive fidelity with respect to category strategy objectives from the decision-making process through to alignment of costs and benefits at the chart of accounts and even subledger level. In addition, an effective benefits tracking solution can capture and align non-financial benefits—tangible and intangible—along with important metrics not included as credit/debit ledger entries, e.g., cost savings. This approach facilitates the post contract monitoring function that procurement is increasingly being asked to provide.
In its role at the hub of investment decisions around a continuous planning framework, a business case management platform can provide procurement with the balance of collaboration and governance required to ensure efficient and effective investment decisions as part of the sourcing process. A platform approach delivers the unique ability to explore alternatives, ensure alignment, and institutionalize commitments to costs and benefits, all with the ability to rapidly respond to market opportunities or accelerated evolution of business strategies.