CFOs increasingly crave a single suite

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."

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.”

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."

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."

"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."

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.”

Besides regulation and risk management, rising workload is a third reason for CFOs to push for an overarching suite approach. "There is a huge tightness in the labour market. This is playing out in several Western countries. It has long been known that the workload is extremely high, especially in finance functions. This is forcing organisations to look for ways to optimally deploy people with knowledge and experience."

In his view, digitisation alone is not yet an adequate answer to this. "Having a single user interface for all procurement activities does make the financial officer's job easier. The big gain arises when the input in one process is usable in another. That calls for a holistic approach rather than symptom management on partial problems."

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.”

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