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Focused on optimizing procurement processes, minimizing costs and helping organizations get the goods and services they need, source-to-pay (S2P) applications are integrated sets of solutions used for sourcing, contracting, requesting, procuring, receiving and paying for those goods and services across an enterprise.
As organizations work to integrate and connect their software systems, S2P is one solution that can help them achieve those goals. According to Gartner, S2P solutions typically are sold as cloud-based software as a service and allow organizations to manage all of their sourcing and procurement activities within a single integrated solution.
For example, a user can utilize an S2P platform to view a purchase order and see the contract that the purchase is related to, the e-sourcing event that led to the contract and downstream documents such as receipts, invoices and payments.
“These solutions are modular in nature allowing customers to activate the functionality that is relevant for their needs,” Gartner adds. “The integrated nature of these solutions allows for data to easily flow across the source-to-pay process providing needed visibility to upstream and downstream documents.”
Budgets Remain Steady
In their new State of Source-to-Pay Digitization 2024: Navigating Supply Challenges, Embracing Innovation report, Ivalua and Ardent Partners explore the current Source-to-Pay (S2P) technology market landscape establishing a valuable benchmark for the industry. While the results of the survey show wide adoption of S2P, most organizations have only digitized a subset of the full S2P process.
For example, adoption is higher for core P2P technologies such as electronic payments (79%) and e-procurement (51%), showing a focus on transactional processes. At the other end of the spectrum, big data management solutions (17%) and optimization-based e-sourcing (15%) have low current usage but greater planned adoption.
“Going forward, 30% of respondents expect an increase in S2P operations’ technology budget for 2024 compared to 2023, while 13% anticipate a decrease,” Ivalua said in a press release. The companies refer to the most successful users as "S2P Innovators,” and say that these organizations demonstrate the value that technology can play in helping scale a procurement operation and maximize its performance.
The report’s findings also reveal various benefits for procurement organizations that are using S2P, including efficiency (57%) and improved productivity (49%). Some of the issues that are holding companies back from realizing these and other benefits include poor data quality and/or access within the technology. Organizations are also grappling with lack of integration both between S2P technologies and third-party systems (34%) and across different S2P processes (33%).
"The disconnect between the need for high-quality data and the current reality of poor data management and process integration creates a significant hurdle for organizations aiming to extract the full value from their S2P technology,” Ivalua’s Vishal Patel said in the press release.
“Without clean, standardized, and readily accessible data and the elimination of silos across S2P, automation is limited, as is the effectiveness of AI and analytics.”
4 Steps to a Data-Driven S2P Foundation
In its report, Ivalua says that the roadmap to procurement’s future must emphasize data as a cornerstone. The company offers up these recommendations to companies that want to set up a data-driven S2P foundation:
- Master your data. Prioritize data hygiene; implement data cleansing initiatives to eliminate inconsistencies and errors in existing data sets. Establish clear data governance policies that ensure ongoing data quality and accessibility.
- Make data management capabilities as a core selection criterion. Look for S2P suites that offer robust data quality tools, seamless data integration across modules, and user-friendly interfaces for efficient data access and analysis.
- Create AI governance. Use clear guidelines on data ownership, access controls and security protocols for AI-powered tools. Prioritize data privacy and ensure compliance with relevant regulations when working with third-party data sources.
- Develop a Generative AI (GenAI) roadmap. Identify areas where GenAI can significantly improve processes and workflows, but also ensure that the data foundation is robust enough to support these advancements.
