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PROACTIS: The Best-kept Secret in Indirect Spend Management? - Part 2

Written By: Predrag Jakovljevic
Published On: October 5 2010



Part 1 of this blog series introduced PROACTIS, a UK- and US-based specialist vendor of spend control and e-procurement solutions with accredited partners worldwide. I had the chance to meet the company during my attendance of UNIT4’s UK user event in early 2010, where PROACTIS was an exhibiting partner.

The article then expanded on the company’s history, its procure-to-pay product offering, customers, and partners. Part 2 will analyze recent events, starting with the latest product developments. 



Mastering Intelligent Invoicing

Most recently, PROACTIS announced a partnership with Intelligent Capture (formerly Image Integrators) to extend its intelligent invoicing capabilities. Intelligent Capture is a UK-based document and data capture specialist, with a particular focus on automating financial processes with integration with finance, accounting, e-procurement, and enterprise resource planning (ERP) systems to minimize transaction time and costs.

I also encountered Intelligent Capture at the aforementioned UNIT4 user event, as another of UNIT4’s strategic partners and a sponsor of the event’s gala dinnerElectronic Invoice Presentment & Payment (EIPP) efficiencies are achieved through an extensive automatic identification and data capture (AIDC) capability that includes capturing paper documents via scanning and intelligent optical character recognition (OCR), PDF uploading, emailed information capture (e.g., when an email from a supplier comes with an attached PDF document), as well as capturing extensible markup language (XML) and electronic data interchange (EDI) files.

In a nutshell, Intelligent Capture’s key application automates Accounts Payable (A/P) processes by providing a platform that captures purchase invoices independent of the format they come in. The invoice documents are stored as scanned images and the invoice data is validated and cleaned before being processed and posted to procurement, finance, and/or ERP systems.

A key theme in financial departments at the moment is straight-through-processing (STP), which can only be achieved with an effective procurement system in place. The objective here is to have incoming purchase invoices that require as little subsequent manual matching and paying effort as possible. Intelligent Capture is a process-focused organization that benchmarks the A/P performance to provide metrics from its existing customers to the prospective ones (i.e., to prove the potential touted benefits).

The partnership with PROACTIS unifies and streamlines the whole purchase-to-pay process and ensures that, when an e-procurement system is put into place, the customer can benefit from a seamlessly integrated e-payables solution. PROACTIS users should also benefit from document and data transparency between PROACTIS and Intelligent Capture, with the ability to view the document by a simple click of a button from within the PROACTIS application.

PROACTIS Intelligent Invoicing

Electronic billing ensures that the companies spend the smallest possible amount of time and effort in dealing with invoices, whether they come in paper or electronic (PDF, XML, or EDI) formats. The Intelligent Capture announcement came on the heels of PROACTIS’ launch of an invoice receipt, matching, and processing engine dubbed PROACTIS Intelligent Invoicing.

The product offers an efficient way to process transactions by incorporating a next-generation ‘learning engine’ capable of building up a corporate (institutional) knowledge of finance codes, procurement classifications, value added tax (VAT), and other tax codes and reference fields. This built-in A/P intelligence takes the pain out of repetitively coding billing workflows and can be applied to future bills.

This intelligent invoicing capability significantly reduces the time and cost of coding invoices and is particularly useful in processing complex invoices such as utility bills. Namely, the system extracts information from complex and consolidated bills, applies multiple tests to check for accuracy (e.g., price and quantity discrepancies), applies coding from its aforementioned learning engine, and fires up workflows for addressing any identified errors. Typical benefits include saved time and money by streamlining the customer’s bill payment process and enabling informed management decisions.

Other Recent Developments

As mentioned in Part 1, PROACTIS is a public company whose financial reports are easily available. The company recently reported half-year results for 2010, citing both increased operating profit and cash generated from operating activities as compared to 2009. PROACTIS had revenues of £7 million in fiscal 2009 (ended July 2009), a 7 percent growth from 2008. The vendor also translated its profit into cash in 2009.

In fiscal 2010, revenues increased by 10 percent year over year due to solid organic growth (achieved 16 new name dealsin its half-year results). There was also strong customer loyalty with 42 upgrade deals from existing customers. Still, 2009 was a record year, with 44 new client wins and 52 upgrade deals from existing clients.

PROACTIS’ suite of products is called PROACTIS Spend Control and eProcurement. Within that suite there is a range of product modules licensed separately, e.g., sourcing, contract management, purchasing, invoicing, expenses, web storefronts, etc. There are some different versions of those modules written in different technologies. Namely, some modules are available on different product platforms, in accordance with the business requirements of the client.

On the product development front, as part of the next generation of PROACTIS’ Purchasing & Invoicing solutions, the company also recently launched PROACTIS PurchasePoint, a Web-based portal (leveraging Microsoft .NET Framework). The portal offers Amazon- or Google-like search capabilities for content, which can be consolidated from many different areas (supplier portals, contracts, punch-outs to other sites, etc). In other words, an intuitive search capability allows users to put in a free-text requirement (i.e., “I want something”) without the use of templates, and without complicating the issue when connecting to multiple sources of content.

PROACTIS PurchasePoint is a unified buying engine to manage the whole process (i.e., quotes, tendering/sourcing, and connections to sourcing events) with a single workflow engine and with a front-end look-and-feel of what the user will likely want and need. Managing invoice receipts is easy and versatile. There are the following invoice receipt options: “snail” mail, document management systems, fax, e-mail, portal, purchase order (PO) conversion, self-billing, and purchase card (P-Card), PDF, etc.

The product can handle multiple orders at once, split PO line items, change order details, implement multi-stage receipting, and so on and so forth. The portal can also be used as a front-end (overlay) requisitioning engine, which in turn can connect to third-party applications. In summary, PROACTIS streamlines payables and is “lightweight” on A/P processes via the following capabilities:

As part of PurchasePoint, the aforementioned Intelligent Invoicing module handles the whole A/P process (receipts, matching, approvals, etc.) with advanced workflows and incorporates a learning engine to pick-up and assign procurement classifications, VAT codes, etc. All these features reduce test cycles and enable a higher percentage of STP, which is great for reducing the administration in processing and allocating utility bills.

Software Plus Value-add Services

In addition to offering pure purchase-to-pay software applications, PROACTIS offers a range of additional value-add services, logically starting with spend analysis. PROACTIS Spend Analysis is a consulting service that offers invaluable intelligence on spending patterns, compliance, and performance status to achieve corporate-wide savings opportunities.

Designed to unlock the data residing in the company’s back-end systems and provide critical insight, the service produces a baseline against which to continually measure the company’s sourcing, budgeting, and performance strategies. For more information on the value of spend analysis, see my 2009 blog series.

PROACTIS “pulls back” the cover on customers’ spending patterns to identify obvious savings opportunities. So it is more of a procurement review and benefits/opportunity analysis rather than a massive, boil-the-ocean data extraction, cleansing, and enrichment exercise. The vendor has also developed an online analytical processing (OLAP) tool to identify and present its findings, which is great for clients to consider performance management of these quick-hit areas.

PROACTIS also realizes that having gone through the hard work of a successful system implementation, it is easy to allow the system to become static and erode. Business process changes can take place at all levels and the impact can prove expensive. Thus, PROACTIS Business Process and Systems Optimization Services are designed to make the most of the enterprise’s PROACTIS investment.

To that end, a historic spend is analyzed by product category to determine, e.g. the proportion of suppliers accounting for 80 percent of spend, the top (strategic) suppliers, the average invoice value by category, etc. After this analysis, the goal is to identify potential benefits and propose a strategy, such as, e.g., contract and category target savings, consolidation (shared services) savings, which smaller suppliers should move to purchasing cards (from time-consuming paper documents), identification of risk (key suppliers), identification of the cost-reducing techniques and other benefits tied to the project phasing (similar to Emptoris’ recent endeavors), etc.

Know Thy Suppliers

PROACTIS is constantly looking to expanding its services beyond Spend Analysis. In particular, Supplier Segmentation Analysis should help companies categorize suppliers in accordance with their strategic importance. The objective is to ensure that investments and resources are directed to where they will deliver the greatest return. This includes analyzing the interdependence between the client and a particular supplier, the level of spend, the number of business units being served by the supplier, the strategic value of the supplier, and more.

The result typically involves stratifying suppliers into groups that represent the type of relationships customers should pursue, the allocation of time and resources they will apply, and an appropriate supplier engagement strategy (e.g. electronic trading on one hand or casual paper-based interactions on the other hand). In addition, customers should benefit from the roll-out of the contract terms and compliance with appropriate oversight, and from their ability to negotiate the best terms for the products or services being sourced.

Enabling Supplier Connectivity

Most e-procurement vendors offer a technology solution for supplier connectivity, e.g., plug-in integration into an open international supplier network (ISN), proprietary portals, etc. Think of Ariba, Perfect Commerce, and Hubwoo. However, this does not always serve the needs of multiple business users across diverse operations and does not ensure broad supplier adoption and consistent participation.

PROACTIS deploys a model that espouses a wider supplier collaboration strategy than point-to-point or many-to-many connectivity. In other words, the vendor also offers a supplier portal as well as supplier on-boarding and collaboration technologies, but with a different approach. Namely, PROACTIS profiles customers’ groups of suppliers and creates a strategy to reduce the amount of cost in the transaction.

The vendor does so by balancing between the strategic value of the supplier to the customer and the suppliers’ IT capability. In other words, catalog access to place a PO via the online portal may be appropriate for one group of suppliers, P-card for another, e-invoicing/EDI for others, fax and email for others, and so on and so forth.

Having millions of suppliers in the cloud does not necessarily tackle the whole supplier management challenge, especially across multiple geographic territories. How many of those suppliers view the “commerce cloud” as a serious trading mechanism versus merely cutting the cost of a few transactions? Thus, PROACTIS believes that the supplier efficiency opportunity (from paper documents to “zero touch” approaches) is driven by the supplier’s sophistication and the category of spend.

In summary, PROACTIS’ service capabilities are almost as broad as those of Ariba Global Services (AGS, largely stemming from former Freemarkets). The major difference is that PROACTIS is not involved in direct (manufacturing) materials sourcing and procurement and is not offering receivables (debt collection) exchanges.

A Major (Unexpected) Endorsement

For anyone wondering about why I am dedicating so much attention to an obscure regional vendor, perhaps it will be interesting to know that PROACTIS fared very well in Gartner’s 2009 report entitled “Critical Capabilities for Best-of-Breed E-Procurement Vendors.” PROACTIS has since noted that it has been increasingly entering larger scale enterprise deals.

Gartner conducted research and analysis of 14 best-of-breed e-procurement vendors on four major use cases. PROACTIS scored the highest in terms of overall functionality, beating such globally better-known brands as Ariba, Basware, Ketera Technologies, PurchaseNET, and Elcom.  The vendor also scored the highest in the “unified purchasing/e-procurement application” usage scenario.

Indeed, the breadth and depth of capabilities across the entire procure-to-pay cycle are making PROACTIS increasingly competitive against Tier 1 vendors such as Ariba, Basware, Oracle, SAP, and Emptoris. The completeness of the solution does not come with complexity, quite the contrary.

In addition to the aforementioned streamlined payables and “light A/P” principles, using PROACTIS’ purchasing module feels more like an Internet shopping experience, rather than involved buying. Namely, all it requires from the user is to conduct a simple search through available product lists, hosted catalogues, contracts, etc. Functionality includes favorite lists, side-by-side product comparisons, and workflows for quick quotes or assistance from buyers.

As mentioned earlier, the Intelligent Invoicing module offers sophisticated goods and services receipts handling with the ability to deal with over- and under-deliveries, unexpected items, returns for replacement (credits), etc. Optionally, users can leverage other features including P-Cards and Self-Billing, if required.

The Win/Loss Analysis

Other handy capabilities are so-called punch-out (i.e., links to external supplier web sites) and quick quotes (the ability to email and phone suppliers for quotes while browsing). Needless to say, workflows control approval processes throughout the system, and PO’s can be sent via snail mail, fax, email, or seamlessly via integration to back-office systems.

The product ensures better collaboration between the procurement department and the rest of the business with the features such as quick-quotes and connecting to pre-defined agreements, sourcing via the supplier portal, etc. Users can intuitively manage planned expenditures via the product’s support for earmarking of funds for projects and commitment (encumbrance) accounting.

Thus, PROACTIS is relatively easy to deploy and roll-out, and is open to customers’ existing IT assets and applications. As mentioned in Part 1, the choice of deployment options and the market leadership in the UK are other winning factors for the vendor.

On the downside, PROACTIS’ small size and low brand recognition are the often cited reasons why the company might lose in competitive situations. In some regions PROACTIS is not involved in a prospective deal at the right time due to its limited marketing muscle to reach out to market influencers, while big system integrators (SI’s) and consultancies are not promoting the product (in part due to its simplicity and reduced opportunities for consulting services). Moreover, the vendor might still not be available in some geographic regions (via partners), which also implies that it lacks functionality in terms of support and supplier enablement in those localities.

To be fair, there are some regions where the vendor has been deployed in spite of having no direct presence and partners. Some examples of PROACTIS customer going live in countries where the vendor has no presence are Korea, Japan, and West Guinea.

PROACTIS solutions can manage the services procurement process (e.g., temporary labor) from sourcing services with multiple bid factors, setting-up contracts and framework agreements, enabling the staff to request and call off services, and through to tying supplier invoicing and invoice approval routing into the completion of deliverables. Still, PROACTIS’ service procurement and contract management are not perceived as the strongest offering in the market, as compared to those from Emptoris, Ariba, IQnavigator, and Fieldglass.

Dear readers, what are your views, comments, opinions, etc. about the current economic climate in your region/industry and about your approach to controlling indirect (non-payroll) spend via sourcing and contract management? What are your best sourcing and procurement practices as well as experiences with particular spend management and e-procurement applications? If you are an Emptoris user, I would appreciate you sharing your experiences with the product and the company.
 
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