Five Questions Mid-Market Procurement Organizations Should Be Asking

Sean Sollitto
Sean Sollitto

All companies in the middle-market space are not created equal. Some are fast growth companies that quickly progress through the mid-market. Others are preparing for mergers or acquisitions, while still other companies are comfortable in the mid-market and intend to stay there.

Five Questions Mid Market Procurement Organizations Should Be Asking

All of these companies vary in many ways, but one challenge they all likely face is implementing procurement solutions and processes to save money and fund future growth. 

Within the past year procurement solutions have evolved to meet the needs of the mid-market. This core set of questions will help you determine if your organization is ready for a mid-market procurement solution.

1. How does mid-market procurement differ from enterprise procurement?

Mid-market companies, or those with annual revenue between $100 million and $1 billion, have very different procurement challenges from their large enterprise counterparts. These small to midsize enterprises typically have a less developed procurement organization and rely on individuals within the business to perform purchasing duties. In most cases, finance and AP teams are tasked with managing these activities alongside their own day-to-day responsibilities. Limited or out-of-date procurement tools contribute to slow, manual processes and lack of control.

Large enterprises with complex organizations and processes require specific tools designed to fit their IT and Finance systems landscapes. Solutions designed to work for the mid-market are now becoming available as software vendors realize they can’t just repackage their classic tools for this unique market. In our experience assessing hundreds of mid-market companies’ procurement needs, we have identified the following five pain points that are addressed through the right procurement technology solutions:

  1. A large "tail-spend" of unmanaged suppliers
  2. Inefficient, manual and error-prone purchasing processes
  3. Unmanaged spend across many unauthorized spend channels
  4. Largely manual AP process
  5. An inability to be strategic due to a lack of visibility into spend

While most mid-market organizations recognize the need for procurement improvements, they do not have the resources, budget or time to engage in an enterprise procurement technology solution. Typically, the Procurement and IT teams are small and simply do not have the capacity to support a large technology deployment.

These organizations are just beginning to recognize that by controlling spend and managing their supplier relationships they can increase savings and streamline processes by removing inefficiencies. This is accomplished by implementing change throughout the organization across people, process, and technology to better manage expenses, contracts and spend.

2. How can we scale and digitize our business by eliminating extra work and simplifying the buying experience for our employees?

Every initiative needs to provide a return on investment. By leveraging the proper tools, employees can get back to doing the activities that provide greater value to the organization. We frequently see users engaged in administrative activities instead of procurement activities such as strategic sourcing and category management.

A mid-market procurement solution has a standard set of approval flows and core functionality with minimal configuration that helps “free up” resources from manual administrative tasks. Once deployed, organizations can begin to address a number of topics, including:

  • Mobile shopping and approvals
  • Vendor consolidation and strategic sourcing
  • Tracking spend against contracts
  • Standard PO processes for all suppliers
  • Automated invoicing
  • Invoice exceptions identified upon invoice submission
  • Standard reporting
  • Focusing end users on their jobs, not securing goods and services

This approach allows an organization to rapidly deploy a system and begin standardizing processes. During that time they can also begin to collect feedback from end users as to what additional functionality they would like to see. With a successful implementation, we see other departments begin to request interdependent functionality, such as:

  • Advanced approval workflows
  • Collaborative sourcing events
  • Automating contract approvals
  • Standardizing travel and expenses
  • Managing and tracking contract labor
3. How long should a mid-market technology solution deployment take?

Planning and deploying a procurement solution for a mid-market organization is no small feat, considering typical enterprise system deployments can take up to one year. These large enterprise deployments include months of discovery meetings and time allocated to creating customized process workflows. In our experience, mid-market solution deployments bypass excessive discovery and customization cycles by deploying standard procurement best practices specific to an industry. Realistic deployment times for mid-market systems have been slashed from that standard 52-64 weeks down to 10-14 weeks.

While there are a few functions that can be configured, it is important to remember the mid-market offering is a prebuilt and configured tool. You may ask, “Can we do < fill in the blank >?” The answer to this question is always, “Yes, we can do that in the next phase.” This phased approach will allow you to capture immediate benefits and prioritize where to focus your energies in your procurement road map.

Another component to achieving this rapid deployment is to be prepared. Resourcing a project such as this will require a few key individuals who will be actively engaged in supporting the project. Take the time to understand the deployment plan and which departments will be involved. Project RACIs should be discussed and understood up front. Your team will need to be ready to participate in the project, with the largest focus on the master data and IT organization. Procurement and AP will be involved in reviewing the configuration to ensure it meets their needs.

4. Will spend transparency be improved with a mid-market solution and if so, how?

One of the fastest wins with the implementation of a mid-market solution is the ability to track where corporate spend is going and who is responsible for generating those requisitions.

When your employees buy with a P-Card through online retailers or directly with local vendors, your visibility is limited. Even if you have a PO, spend reports are a manual effort and tend to become a low priority for your finance team. Imagine having all of your spend on POs that match invoices, and being able to see exactly who bought what, when they bought it, and from which vendor and which contract. All within 14 weeks. Would that deliver value to your organization?

The mid-market solution offers a set of preconfigured reports providing the ability to drill into these details. This data provides the ability to target additional categories for strategic sourcing, allowing you to control even more of your spend. As your organization matures, so does your procurement system – the more you know about spend patterns, the more spend you can drive to the right channel.

5. How much does a mid-market solution cost compared to an enterprise solution?

The good news is that there is now a solution that allows you to quickly manage your spend, improve cash flow, and provide control and compliance without adding unnecessary complexity. And it is right-sized to meet the needs of your business as you scale for growth.

Mid-market solutions leverage standard, industry specific configurations and out of the box best practices. Pre-configured systems with everything your organization needs to realize value quickly are now the standard. Nitor Partners, working with your organization, streamlines the deployment timeline and delivers at a significantly reduced cost. Basic procurement systems can be deployed for a tenth of the cost of large enterprise systems, with advanced functionality and integrations available.

You may be asking, "So, is this for me?"

The first step to procurement system success in the mid-market is to be clear about what your organization truly needs to realize value. For some, it may just be an external marketplace that allows your employees to quickly buy items on a spot-market. For others, it might mean automating AP by reducing the number of invoice exceptions. Many organizations decide they need a catalog-based tool that groups all their buying channels into a single, consumer-like purchasing portal. Whatever your organization needs, rest assured that there are technology solutions available that will meet your needs without the price tag, deployment timeline and complexity of a classic large enterprise solution. As with any adventure, it’s best to engage with an experienced guide. Nitor Partners has a track record of success with this approach and can help your organization embark on this journey. You owe it to yourself to find out how you can realize value in 14 weeks with Nitor Partners’ mid-market solutions.

Sean Sollito

Principal, Nitor Partners

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