Volume 10, Number 14 -- April 13, 2010

Purchase-to-Pay Vendor Sets Up Shop in U.S.

Published: April 13, 2010

by Alex Woodie

Organizations that are looking to streamline their purchasing and invoice reconciliation activities by adopting purchase-to-pay (P2P) processes may want to consider b-pack, a French developer of P2P and purchasing software that has enjoyed success in Europe over the last decade. The company recently established a North American office in Atlanta, Georgia, to sell and support its P2P software, which is delivered as a service over the Web, or installed locally on System i and other servers.

The phrase "purchase-to-pay" and the ideas behind it began in the 1990s, when the smartest minds in business and technology decided that everything needed to be moved to the Internet. As it turned out, not everything is suitable for the Web, as is evidenced by the scads of dot-com companies with harebrained business plans, like Webvan or eToys, which bombed out following the burst of the dot-com bubble in 2000.

But for every five screwy Internet ideas, there was one good one. Nobody questions whether Internet-based business-to-business (B2B) processes will be adopted, because it's already become a mandate for survival in a global marketplace (see: sending EDI messages over the Web, also called AS2).

The same holds true for P2P. P2P refers to a discipline that centralizes and automates the processes involved in buying and paying for a good or a service within an organization, including requisitioning, purchasing, receiving, paying, and accounting for the purchase. "Req to check" is another phrase that refers to the same thing.

Organizations adopt P2P because it saves time and money--sometimes a lot of money. While ERP systems were designed to integrate and automate the things that businesses do on a regular basis, it turns out that most ERP systems do a poor job automating the purchasing lifecycle and associated workflow activities, says Julien Nadaud, chief executive officer, president, and founder of b-pack.

The P2P Advantage

According to Nadaud, employees trying to accomplish all of the requisite tasks involved with buying a product or a service within an existing ERP system will find themselves navigating multiple modules, re-entering data, and picking up the phone to call suppliers when inevitable problems arise. And because the processes live in different ERP modules or programs, work does not flow easily from one to the next, and managers lack a central view that tells them exactly where they stand and how much they owe suppliers and vendors at any given moment.

The b-pack solution is a drop-in replacement for assorted purchasing activities often managed through ERP. Employees interact with b-pack's Web-based screens and use the b-pack workflow to move among the various stages of the P2P process. Integration with backend ERP systems and databases is handled via APIs, Nadaud says.

By offloading purchasing and related activities into b-pack's software, Nadaud says customers can often reduce the cost of processing invoices from about $100 per invoice to as low as $30. You can see how large companies processing 100,000 to 1 million invoices per year could save large sums by automating the P2P process.

Much of that savings is often realized during the final stage of the P2P process: reconciliation. "When you get an invoice and try to match that [with a product or a service], you often get some problems because don't have the right PO [purchase order], or the numbers are different," Nadaud says. "You get a lot of disputes with invoice management."

By contrast, reconciliation is easier when the process has been centralized in a P2P system such as b-pack's. "When you get to the end, meaning the invoice reconciliation, everything is there, so you just have to match the packing slip or the PO with the received invoice," Nadaud says. "By doing all of that electronically, you reduce the time people are spending on this process. You reduce this in a tremendous way."

Another advantage of P2P is the capability to get real-time information out of various disparate back-end systems. Companies that use different ERP systems within their organizations--or have multiple installs of the same ERP--often lack the visibility into current purchasing activities that impact accounts payable within 30 days. The capability to communicate electronically with partners is another advantage of the P2P cycle.

Preparing for Growth

The b-pack P2P software has been adopted by about 80 companies in Europe, primarily France, and now the company is looking to make a splash in the United States, the world's largest market for enterprise software.

To prepare for this growth, the company set up a North American headquarters in Atlanta. Nadaud, who also has experience working with nuclear reactor safety systems, is currently living in the Georgia city to get the operation up and running. A second b-pack office is located in New York City.

The company has adopted a flexible go-to-market strategy that includes selling its software as a service (SaaS) via the Amazon Elastic Compute Cloud (EC2) infrastructure. The software, which includes PHP and C++ components, can also be installed locally on practically any server, including System i servers.

System i shops make up about one-third of b-pack's current customer base; in fact, the company's first P2P customer in 2000 was an iSeries-Lotus shop, Nadaud says. In particular, many of b-pack's European System i customers are running Lawson Software's M3 (formerly Movex) i/OS-based ERP system, which is very popular across the pond. SAP shops also make up about 30 percent of b-pack's customer base, with Oracle and other assorted ERP packages making up the balance.

The P2P vendor has a lot of experience with the System i server, and even offers a special driver for integrating with the platform's EBCDIC data format. Just the same, b-pack customers usually run the P2P software on an outboard Linux server, although some run the whole package (database, application, and file server) on the i/OS platform.

The cost and length of b-pack implementations can vary widely, depending on the level of integration and customization. Basic implementations can take about two months and cost about $18,000, while full-scale installs for large companies can take up to a year and cost close to $1 million. For more information, visit www.b-pack.com.

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