What to Consider When Choosing a PO System 2021

06 August 2021
What to Consider When Choosing a PO System 2021

These days Purchase Management Systems are no strange things to many businesses. Such systems help putting everything you need for procurement management into a central place. They save time, improve operation efficiency, and provide a level of business insights.

There're quite a few such systems around, but how do you select the right one for your business? Below are some key aspects you may need to consider in the selection process.

How Are You Going to be Charged?

Most services charge by the number of uses. It can get rather expensive if you have a large team and want every team member be able to access the system. It seems especially not value-worthy if many of the team members only need to occasionally raise purchase request. The compromise is not to let everybody have access, but instead use shared accounts. The downside of this approach is that you will not be able to keep record on who actually did what. It can be confusing when trying to find out who took what action, and is not typically good for organisations that need to meet robust audit requirements.

Other services charge by usage rather than the number of users. They embrace clients with much more inviting numbers of users. Some systems, such as Approvol, even allow for unlimited number of users. This way you only get charged by your real usage of the system, such as the numbers of new POs or Invoices each month, rather than idle user accounts. Not only do you not need to compromise on audit clarify, but also no one in the team will feel left out, which is good for team morale as well.

Do You Need to Migrate Existing Data to the New System?

You most likely already have historical data in other systems or forms, such as spreadsheets. It'll be worthwhile to migrate such records into the new system so that you can keep all your data in one place. It's not just for making it easier to reference history data in the future, but it'll also save you time and cost to maintain two systems moving forward. It's important that you check how the new system handles data migration, if it does it at all.

Does the new system have complex data structure you need to prepare the data migration for? Do you have to get everything migrated prior to creating new transactions? Or you can migrate in stages after the new system is in use? Does it allow certain data such as suppliers to be imported but reject others such as history POs? If you are stuck, is there support available to assist you with the migration process? Last but not least, is there an additional cost to use data migration feature or service?

How is the Usability & User Experience?

Some systems are rich in features but at the same time difficult to use. Poor user experience does not just have negative impact on the success of new system rollout, but also slows you down when you try to get through daily tasks. Logical flow and intuitive user interface that make the system easy to use can really make a difference.

Is it easy to raise or approve a purchase request? Is it easy to find what you need using the search function? Are you notified with the events that you care about ?

The only way to find out is to take advantage of a demo and a trial if any is available. Test it out yourself to get a real feel on how the system flows.

Do Approval Rules Work for Your Business?

One of the advantages of using a purchase management system is that it helps to put controls in place. Business rules are hard to enforce with manual process, but becomes compulsory when configured into software. Different systems come with different ways of applying rules & constraints. Some rigid, others flexible.

Carry out a review on how purchases are dealt with in your business at present, and summarise the key requirements. How many approval levels do you need? Do all spending streams need the same number of approvals? Do you want purchase requests sent to all approvers in one go or in a progression manner? Do you need approver specific authorisation limits? Book a demo to see if the new PO system can support your requirements. Make sure the approval rules can be configured in a way that fully presents you business needs, while also being clear and logical so that they're easy for users to be follow.

How Are Purchases Linked to Budgets ?

Most purchase management systems have some levels of budget feature built in. The are introduced typically in order to facilitate limits & controls when approving purchase requests.

Some systems do so in a simple way that only requires you to assign budget limits based on a budget stream or a department. It certainly is simple, but you'll miss detailed real-time reports on how POs consume budgets at different levels.

Other systems provide more granular control by allowing you to build up complete budget sheets with detailed budget items. In this case, you can link a PO to different levels of budgets - a budget stream, a department, a category, or even to a budget item from a budget sheet. This enables budget control at all the levels should you need it.

Ask your software vendor which type and level of budgets you can define and use in the system to see if that meets your budget control requirement.

Do Analytics Save You Time & Give Your Enough Insight?

Another great benefit of employing a purchase management system is that you can utilise its analytics and reporting feature. It can significantly save you time on producing regular spending and budget reports. Analytics give great insight on how your procurement is running and how your budgets are performing, which helps you to identify process improvement and cost saving opportunities.

Have a look at the typical analysis and reports required by your operation. Budget vs spending, department comparison, category distribution, top suppliers, delivery status, PO payment conciliation, unpaid invoices, anything else? Do a comparison between what you need and the analytics offered by the new system and make sure you choose a system that can save you time and give you those important business insights.

Does It Link to Accounting Packages?

Procure-to-pay process involves invoices. Invoices records are required in order to report PO payment values and status. Some systems also offer invoice authorisation features that you can use it to manage invoice approvals. If there is an issue with an invoice, you don't want to put it into payment run, and the authorisation feature comes in handy. However, it might seem a duplicated effort to raise invoices in both the PO system and the accounting package. Therefore, it is ideal that you PO system can export invoice data that can be imported into accounting package without manual adjustments.

Typically, your PO system should be able to export invoice items with their supplier code, currency, exchange rate, nominal code, tax code, and so on. Compare the data format required by your accounting package to the one exported from the PO system. Make sure the two are compatible so that data can flow smoothly between systems.

How Does It Handle Changes & Exceptions?

The world is not perfect - sometimes we change our mind and need to deal with exceptions. You might need to revise a PO after approval. Does the system allow you revise a PO with version tracking? Or, an invoice might come in with an item that was not on its order. Does the system allow you to accept it within predefined tolerance, or let you append a new item onto the invoice while still matching to the PO? An approver is away from office at short notice and there are purchase requests await approval. Does the system allow remote access, or can it assign another approver with ease? These are some of the changes and exceptions that need to be handled in a clear & trackable manner, otherwise over time the messy data will cause great confusion. Think about the changes & exceptions that might happen in your business, and raise those with prospective software vendor to understand how them will be handled.

What About Confidentiality & GDPR?

Purchase orders are commercial document and therefore it can bear commercial confidential information. In some cases POs and other data in the system also bear personal data, so there could be a GDPR risk if data is not treated appropriately.

Most systems promote transparency, but they should also take care of confidentiality robustly. POs under certain budgets (such as HR) should only be accessible on a need-to-access basis. There should be also a facility to mark certain POs as confidential, so that only permitted users can access them. It's strongly recommended that you exam confidentiality protection features of a new system thoroughly in order to avoid any difficult situations or consequences caused by confidentiality breaches in using the system.

How About Down Time & Security?

After the excitement of announcing a new system to your team, you don't want to face unpleasant complaints of system downtimes. More importantly, your need to know that your data is secure against any unauthorised access. A good system design is important, but it also is largely down to how the system is deployed. Nowadays, it's common that such systems run on cloud platforms. Top platform providers like Amazon AWS and Microsoft Azure operate on much sophisticated and secure infrastructure. That's why all big organisations and government bodies world-wide use their service. It's important to ask the vendor how and where the system is deployed, and the uptime track record of their platform.

Summary

Purchase management systems are a useful tool to save you time and improve efficiency. It can and will be a vital part of your operational process, so it's important to examine a potential system thoroughly before enrolling it into your business operation. Our advice is to consider your key requirements and match them up with the system you are evaluating. Do book a demo and take a trial if possible to see the system in action, so you can be sure it will be suitable to your business.

Approvol is a solution for efficient budgeting and purchasing management. If you considering employing a modern purchase management, contact us today to request a demo and find out more.