Build a bottom-up, value-driven business case for automated procurement to deliver processes


Build a bottom-up, value-driven business case for automated procurement to deliver processes

William W. Potter/

My last article covered the steps needed to identify the right technology and design a realistic transformation roadmap. This article will look at the process of building your business case from a non-financial perspective. My next piece will be on finance. It’s important to remember that a business case that focuses only on high-level financial issues is unlikely to be signed off and approved. On the other hand, a business case that covers all aspects of your proposed changes and provides a bottom-up assessment of value is much more likely to happen. A solid assessment will help you steer the transformation project during implementation.

Building your business case

At this point in the process, you know what you want to do, with whom, and by when. The next step in the process is to compile everything you know into a business case document and then get approval from your management team and/or board members to invest in the project. Interestingly, this step is often considered the most stressful part of the whole process. Where to start? What documentation do you need to prepare? How will it be received? What additional questions will your leaders ask? Do you have a compelling enough story? Will your proposed changes be approved?

Despite the focus and importance of a business case document, it is usually an oversimplified step that ends up focusing on the numbers rather than what honest valuation practitioners are looking for. usually. Your business case is not a spreadsheet. Finances are an important element in business, but they are not the only element.

Your business case must address three general points to be validated and help you manage your transformation project:

Trust – Your business case should be strong enough to earn the trust of your leaders knowing that you are speaking with integrity – it should be an honest assessment of the proposed project. Determine the factors that can speed up or slow down the project and define the financial and delivery estimates of the project that your governance creates – this should create a clear path with solid monitoring and evaluation points that will ensure that the project delivers on its promises. Have a solid plan that outlines key “conversion” metrics that need to be achieved and corrective actions that can be implemented.

Your business case should include the following:

An evaluation of change management

Any business case should include a detailed assessment of the impact your project will have on your team. You must describe the “human factors” that support the implementation of your project while hindering it. To do this, consider the following:

Your company’s ability to change your current culture and value system, including the extent of changes already underway or planned Leadership styles and the distribution of power that exist in the organization An understanding of transformation projects and Prior Changes The attitude of your middle managers toward the proposed changes, as they will be important in driving adoption by end users.

Any business case should draw a very clear and distinct line between the proposed project and one or more of your organization’s strategic goals. Then, link to the conversion that will provide your recommended changes. It is important to gain management support for the project and obtain their approval for any expenditures. It needs to be more detailed around digital transformation than just ‘X align Y goals because it’s a digital project. So how do you display the required level of detail?

Review your corporate and departmental strategic plans. If they are not present, meet with your leadership team and ask them about their top strategic priorities Then identify the specific results of your project that will support those priorities Align your success metrics and project timeline with the strategic plan general of the company and/or service.

Test your results with some key stakeholders to make sure they make sense – this also helps seed your project idea with these stakeholders.

Accept the risk

Risk is a very important part of the decision-making process in any business, so you need to show that you’ve done your homework and understand the risks associated with your project in three key areas:

Project Risks – What are the risks involved in delivering Project Risks of Inaction – What are the business risks the company faces when it does not deliver the project ROI Risks – What are the risks of not achieve the expected return on investment.

For each risk, you need to identify the likelihood, impact, risk rating and mitigation strategy, and an owner. Project risks should arise from your project planning process, as these risks are usually highlighted in the business case. Areas that are often overlooked are downtime risk and return on investment risk.

The risk of inaction

Downtime risk refers to the actual business risk a company faces when it changes its procurement and accounts payable processes. Every business faces these risks, the question is how high these risks are, based on the systems and processes you already have in place. There are 10 common business risks you need to be aware of throughout a company’s collections and accounts payable process:

Fraudulent invoicing – the risk that you issue an invoice that you shouldn’t Supplier Non-Compliance – This covers a range of supplier-side non-compliance risks The type of documentation/processes you need to maintain in place. The risk here is that you start working with a supplier who does not have the required documentation or that the supplier’s existing documentation is out of date. This may include compliance with: environmental, social and governance (ESG) requirements, modern slavery, insurance, industry accreditation and industry rating Duplicate invoices – the risk you pay the same supplier bill twice. Tax Compliance – the risk that you may not be able to comply with relevant tax reporting/laws due to issues with your data or processes. Non-Conforming Spending – Risk of unauthorized business spending on products/services. Authorization Expenditures – Risks where you are unable to demonstrate authorization of company expenditures for products/services consistent with your financial policies and procedures. Incorrect entry of billing data – the risk that you do not enter billing data correctly, leading to financial disputes with suppliers Conflict of interest – the risk that company spending decisions are made without a clear assessment of the conflict of interest (e.g. contract award at Contract Lifecycle Risk – this risk includes a range of contractual risks such as: adverse and/or potentially damaging contract terms agreed without proper assessment contract risks, loss of contract documentation, contract approval by unauthorized employees and inadvertent contract Supplier relationship – This risk relates to issues that may arise in the process of paying for your purchase and which may harm your relationship with your suppliers. These may include factors such as: Late, delayed or missed invoices, due to manual tracking High cost of service, due to manual ordering process Missed or misplaced orders Business Interruption – This risk is an interruption of business operations for payment related to your key collection potential, as key personnel have key knowledge of manual processes. Risk to return on investment

If you’ve been able to follow the process thus far, you should have a clear idea of ​​how and when your proposed project will deliver value, all of which will be determined by a series of assumptions. Return on investment risk is the risk that these assumptions are not met.

For example, if you calculate that reducing your invoice processing costs will cause suppliers to adopt more automated invoicing channels, what if adoption is slower than expected? What mitigation strategies can you put in place to ensure the assumptions are close to reality?

I recommend reviewing all areas of expected benefits:

Facilitation of the invoicing process Processing benefits Procurement benefits People benefits Efficiency benefits

then conduct a risk assessment based on these areas to identify potential, impacts and a mitigation strategy.

In our experience, articulating the non-financial aspects of a business case goes a long way to building trust, demonstrating your expertise, and giving your executive preference for the financial aspect of the business case. In my next part, I’ll look at how to add these key financial elements to your business.

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