Procurement system integration is the secret to managing multiple systems and manual tasks in your business. When you integrate procurement systems in your organization, achieving efficiency and enhanced visibility within your procurement operations becomes a no-brainer.

With that in mind- it’s important that your team understands the best practices to implement for your procurement team, along with knowing how to identify the use cases for it. We created this blog post to help you dive deeper into this topic.

How To Implement A Procurement System Integration In Your Company

Implementing a procurement system integration in your company requires careful planning and execution to ensure a smooth transition and maximum benefits. Here’s a step-by-step guide:

Assess Current Processes

Begin by conducting a thorough assessment of your current purchasing process, systems, and tools. Identify pain points, inefficiencies, and areas for improvement that could be addressed through integration.

Define Integration Objectives

Clearly define your integration objectives and goals. Determine what you aim to achieve through integration, such as improving efficiency, enhancing visibility, reducing maverick spending, or streamlining workflows.

Identify Integration Needs

Identify the specific systems and tools that need to be integrated to meet your objectives. This may include ERP systems, e-procurement platforms, supplier systems, contract management systems, and financial systems.

Select Integration Approach

Choose the most suitable integration approach based on your company’s needs, resources, and existing infrastructure. Options include point-to-point integrations, middleware solutions, API-based integrations, or cloud-based integration platforms.

Develop Integration Plan

Develop a comprehensive integration plan that outlines the steps, timeline, and resources required for implementation. Define roles and responsibilities for key stakeholders involved in the integration process.

Choose Integration Tools

Select the appropriate integration tools and technologies to facilitate data exchange and communication between systems. Ensure compatibility, scalability, and reliability of the chosen tools.

Test Integration

Conduct thorough testing of the integration solution to identify and resolve any issues or discrepancies. Test data accuracy, system functionality, and performance under various scenarios to ensure smooth operation.

Train Users

Provide training and support to users who will be using the integrated procurement system. Ensure they are familiar with the new processes, tools, and workflows to maximize adoption and effectiveness.

Implement Change Management

Implement change management strategies to manage resistance to change and ensure smooth adoption of the integrated system. Communicate the benefits of integration and address any concerns or challenges raised by stakeholders.

Monitor and Optimize

Continuously monitor the performance of the integrated procurement system and gather feedback from users. Identify areas for optimization and improvement to further enhance efficiency, effectiveness, and ROI.

By following these steps and investing in careful planning and execution, your company can successfully implement a procurement system integration that drives greater efficiency, visibility, and value across the organization.

What Are The Types Of Integrations Use Cases For Procurement Systems

We strongly recommend that you do this exercise along with your IT team so that they can guide you with the feasibility of each of these scenarios.

If that is not feasible then have it documented and send it to your team for further analysis.

We are going to divide integration use cases into three main areas

1. Master Data

Master data is the core data or core business objects, Examples include supplier data, customer data, and budget data.

Master data is generally maintained in the ERP/ Accounting system and is required to be used in the transactions of the procure-to-pay system.

The other way to think about master data is the data that is not created in the procure-to-pay or purchasing system but is required for it to work.

2. Transaction Data

Transaction data is the individual transactions that are created in the purchasing systems. Examples are requisitions, approval purchase requests, orders, and invoices. This is not a comprehensive list but you get the idea.

3. Feeder Systems

We created a separate category for systems that are feeding other purchasing transaction data to your purchasing system. These are not master data but other systems which are feeding data to the purchasing system.

For example, It is very common for services companies to have separate work order systems which are used by engineering teams. There is often the requirement to order materials as a part of the work order.

In that case, the order requirement or requisition is created in another system and then the same requisition is transferred to the purchasing system for approval and generating the purchase order.

4. Information Distribution

Companies who have a central data warehouse for management reporting would require the different data to be sent to a single data warehouse so that required reports can be created.

The requirement is generally defined as periodic data export in a CSV format.

What Are The Requirements For Each Type Of Integration?

Let’s break down the requirements for each type of integration based on the integration use case type, frequency of change, source system, and target system:

Point-to-Point Integration

• Description: Point-to-point integration involves establishing direct connections between specific source and target systems to facilitate data exchange.
• Requirements:
  • Clear understanding of data mapping and transformation requirements between source and target systems.
  • Ability to handle real-time or near-real-time data transfer between systems.
  • Scalability to accommodate additional integrations as needed without significant overhead.
  • Robust error handling and monitoring capabilities to ensure data integrity and reliability.
• Frequency of Change: Low to moderate, as changes in data mapping or system interfaces may require updates to integration configurations.
• Source System: Typically involves specific business applications or databases where data originates, such as ERP systems, CRM systems, or proprietary databases.
• Target System: Involves specific destination systems where data is transferred, such as financial management systems, inventory management systems, or reporting tools.

Middleware Integration

• Description: Middleware integration employs an intermediary layer or platform to facilitate communication and data exchange between multiple systems.
• Requirements:
  • Selection of a suitable middleware platform that supports the integration requirements of both source and target systems.
  • Configuration and customization of middleware to define data flows, transformations, and routing rules.
  • Support for various integration protocols and standards to ensure compatibility with different systems.
  • Scalability and performance optimization to handle increasing data volumes and transaction loads.
• Frequency of Change: Moderate to high, as changes in business processes or system interfaces may necessitate adjustments to middleware configurations.
• Source System: Varied, as middleware can connect with multiple source systems simultaneously, including ERP systems, legacy systems, cloud applications, and external data sources.
• Target System: Varied, as middleware can route data to multiple target systems based on predefined rules and mappings, including CRM systems, supply chain management systems, and analytics platforms.

API-Based Integration

• Description: API-based integration leverages application programming interfaces (APIs) to enable seamless communication and data exchange between different software applications.
• Requirements:
  • Availability of well-documented and standardized APIs for both source and target systems.
  • Development of custom integration logic and workflows to orchestrate data exchange and synchronization.
  • Implementation of authentication and authorization mechanisms to secure API access and data transmission.
  • Monitoring and management capabilities to track API usage, performance metrics, and error handling.
• Frequency of Change: Moderate to high, as changes in API specifications or business requirements may necessitate updates to integration logic and configurations.
• Source System: Requires access to APIs exposed by source systems, such as cloud-based applications, SaaS platforms, or external services.
• Target System: Requires access to APIs exposed by target systems, such as databases, analytics tools, or third-party services for data consumption and processing.

Overall, the choice of integration approach should be based on factors such as the complexity of data integration requirements, scalability needs, flexibility for future changes, and available resources for implementation and maintenance.

Each type of integration offers its own set of advantages and challenges, so it’s essential to evaluate them carefully to determine the best fit for your organization’s specific use cases and objectives.

What Happens When You Don’t Integrate?

This is where you define the scenario where the transaction data or master data is not integrated with your procure-to-system.

In that case, you are looking at options on how to manage the data synchronization without integrating the systems.

Priority

The reason you assign priority is that you can decide which integrations to pick up first. Also, in the case where you have budget or time constraints, you can decide which integration use cases to focus on.

Once you have the structure ready, populate it with different types of master data and detailed information for each type of data.

Following is a simple example of how it would look once completed. Please note that this is just an example, but you would need to change this based on your specific scenarios.

• Integration use case: Master data
• Name: Supplier master
• Description: Supplier master data including supplier details like name, address, payment terms etc.
• Change frequency: Daily
• Source system: Your accounting/ERP system
• Target system: ProcureDesk

What if we don’t integrate: The data needs to be manually updated and based on the number of changes it could require additional manpower. However, if the changes are minimal then we can manually update the records in both systems.
Priority: High

For example, here is a good list of different use cases across various categories. We have listed a lot of use cases here, so don’t get scared. The idea is to list whatever is applicable to you.

If 50% of these cases don’t apply to you then that is even better. The fewer integration cases, the simpler the integration and fewer resources required to maintain it.

By the time you are done completing the template, it should look something like this

If you would like to use this template, you can download the e-procurement integration use cases template.

What Are The Methods For Integration Procurement Systems With ERP/Accounting Systems?

We don’t want to get all technical on you now but the next step is how you plan to integrate each of these use cases.

Your IT team should be able to decide the method of integration between systems based on the frequency.

Here is a simple explanation of the two main types of integrations

1. File-based

As the name suggests, the integration is managed by exchanging data via files across both systems. The data is generally processed in a batch based on a defined frequency.

Where To Use It?

1. For data which doesn’t need to be available immediately.

2. For large data sets like catalogs etc.

Pros

1. It is easy to implement as most systems have the ability to upload data via files.

2. If the capability doesn’t exist, it is fairly easy to develop a routine to read a file and upload the data in the system.

3. It is less expensive than real-time integration because you need minimal infrastructure to support this type of requirement.

Cons

1. It is not real time so users usually have to wait, in most cases the next day for the data to be available.

2. Since the information is not real time, it needs to be continuously monitored to ensure that all records are being processed.

2. Real-time

Real-time integration enables systems to talk to each other in real time and exchange information or data to enable business processes.

Where To Use It?

Real-time integration is useful or preferred for scenarios where you need to provide immediate feedback to the user.

The other scenario where this is very helpful is where you need data in another system for the process to be completed.

Pros

1. It enables faster business processes because there is no delay in exchanging information. For example, You need PO in your ERP system for further processing

2. Users can get immediate feedback in case there is a problem with the data as compared to file-based where users have to wait till a fixed time to see if there were issues with the data.

3. Since the users are getting real-time feedback, it is easier to correct data and ensure that the transaction is completed.

Cons

1. It is expensive to implement if the standard web services are not available.

2. It needs additional infrastructure to support integration. Especially when you are connecting a cloud-based system to a system behind the firewall.

Prioritizing Your Integration Use Cases

Now you know the pros and cons of different types of integration, the next step is to identify a preferred integration method for each of the integration use cases.

Remember the integration use cases from the previous exercise where we identified individual use cases.

Now we need to mark a preferred integration method for each one of these cases.

The three options are:

• File-based
• Manual – data to be synced manually. In this case, you need to identify which team would be responsible for ensuring that data remain in synch across different systems.
• Real-time

After the exercise, you should see a table like this

If you would like to use this template, you can download the e-procurement integration use cases template.

4 Ways Integration Adds Value To Your E-Procurement System

Integrating your e-procurement system with other business systems can provide numerous benefits that enhance efficiency, effectiveness, and value. Here are four key ways integration adds value to your e-procurement system:

Strengthens Relationships With Preferred Suppliers

• Integration allows for seamless communication and collaboration with preferred suppliers, fostering stronger relationships.
• Real-time access to supplier data and performance metrics enables proactive supplier management and strategic decision-making.
• Streamlined procurement processes, such as electronic bidding and order management, enhance transparency and trust between buyers and suppliers.

Utilize Automation Capabilities

• Integration enables automation of initial tasks that are manual, such as requisitioning, approval workflows, and purchase order automation and processing.
• Automated alerts and notifications keep stakeholders informed of key procurement events, reducing delays and improving responsiveness.
• Integration with inventory management systems facilitates automatic inventory replenishment based on demand forecasts and consumption patterns.

Gain Control Of Spend Management

• Integration provides comprehensive visibility into spending across the organization, including procurement data from multiple sources.
• Centralized spend analytics and reporting tools enable better cost control, budget tracking, and identification of cost-saving opportunities.
• Integration with financial management systems facilitates accurate tracking of expenses, allocations, and accruals, ensuring compliance with budgetary constraints and financial regulations.

Accelerate Procurement Cycle Times

• Integration streamlines the procurement process, reducing cycle times from requisition to delivery.
• Automated approval workflows and electronic signatures eliminate bottlenecks and delays in the approval process.
• Integration with supplier catalogs and e-marketplaces enables faster sourcing and selection of products and services, reducing time-to-market and improving agility.

What Are The Benefits Of An Integrated Procurement System?

An integrated procurement system offers a wide range of benefits for organizations seeking to streamline and optimize their procurement processes. Some of the key benefits include:

• Enhanced Efficiency: By consolidating procurement activities into a single platform, organizations can streamline workflows, reduce manual tasks, and eliminate duplicate efforts, leading to greater operational efficiency.
• Improved Visibility: An integrated procurement system provides real-time visibility into procurement activities, spending patterns, and supplier performance, enabling better decision-making and strategic planning.
• Cost Savings: By standardizing processes, leveraging volume discounts, and optimizing vendor  relationships, organizations can achieve cost savings through better negotiation, compliance management, and spend control.
• Enhanced Compliance: Integrated procurement systems can enforce compliance with internal policies, regulatory requirements, and contractual agreements, reducing the risk of non-compliance and associated penalties.
• Better Supplier Management: With centralized supplier information, performance tracking, and collaboration tools, organizations can effectively manage supplier relationships, drive innovation, and mitigate risks.
• Increased Agility: An integrated procurement system enables organizations to adapt quickly to changing market conditions, customer demands, and internal requirements, enhancing agility and responsiveness.
• Data-Driven Insights: By capturing and analyzing procurement data, organizations can gain valuable insights into spending patterns, supplier performance, and market trends, enabling informed decision-making and continuous improvement.
• Streamlined Collaboration: Integrated procurement systems facilitate collaboration and communication between different departments, stakeholders, and suppliers, fostering alignment and teamwork across the organization.

Why Is Procurement System Integration Important?

Procurement system integration with ERP or other accounting systems needs attention due to the following reasons

Cost And Complexity

In today’s day and age of cloud computing, it is not difficult to integrate any system on the cloud. Yes, it is easy if you are integrating with other cloud systems.

For example, If you are integrating your system with another cloud platform like Salesforce.com, it is very easy, cost-effective, and needs less ongoing maintenance.

We are sorry to break the news, but we can say with 99% certainty that you probably have to integrate your new purchasing system with an old ERP or a homegrown accounting system.

The less standard the system, the higher the cost and complexity for integrating with your system. In this case, you probably have to have a third system which is helping you bridge the gap between your new cloud-based purchasing system and your accounting system.

So the more integration touchpoints, the higher the cost and higher the complexity.

Keeping it simple makes a lot of sense here, hence the need to evaluate different integration touchpoints you might need and whether each one of them is required.

Ongoing Management

Integration is not a one-time activity, it needs to be maintained on an ongoing basis. So who will be responsible for managing it?

Is it your internal IT team, or the vendor?

Depending on the integration method you have chosen and a number of integration touchpoints, the need for ongoing maintenance could be very little effort or a continuous effort for monitoring and enhancing it.

So while designing your requirements, keep in mind the need for ongoing maintenance.

Middleware Consideration For Purchasing System Integration

It is important to understand what middleware would be used to integrate the cloud-based procurement system and your ERP system.

The reason we mentioned the cloud-based system is that most of the vendors offer cloud-based solutions. There are still some vendors who offer on-premise solutions but if you already have a lean IT team, then the last thing you want is to burden them with yet another system to manage.

Of Course, there are additional hardware requirements which increase cost.

There are multiple cloud-based middleware solutions which are available in the market and that save some effort for ongoing maintenance,

But you still need to define the business logic for moving the data from one system to another.

Keep the use cases limited to keep cost and complexity low

Before we get into a discussion on the different integration touchpoints, make sure you have your IT counterpart involved in this discussion. As procurement wants to be involved early in the RFP process, IT wants to be involved early in the design process so that there is no surprise for them.

Five Factors To Determine A Robust Integrated Procurement Solution

To determine a robust integrated procurement solution, consider the following five factors:

Factor #1: Compatibility and Scalability

• Ensure that the solution is compatible with your organization’s existing systems and technologies, such as ERP, CRM, and financial management systems.
• Assess the scalability of the solution to accommodate future growth, increased transaction volumes, and evolving business needs.

Factor #2: Customization and Flexibility

• Look for a solution that offers customization options to tailor purchasing flow, data fields, and user interfaces to your organization’s specific requirements.
• Evaluate the flexibility of the solution to adapt to changing business processes, regulations, and industry standards over time.

Factor #3: Integration Capabilities

• Assess the solution’s ability to integrate seamlessly with other systems and applications across the procurement lifecycle, such as supplier management, contract management, and inventory management systems.
• Consider the availability of pre-built connectors, APIs, and integration frameworks to simplify integration efforts and reduce implementation time.

Factor #4: Compliance and Security

• Ensure that the solution complies with relevant regulatory requirements, industry standards, and data privacy regulations, such as GDPR or HIPAA.
• Evaluate the solution’s security key features, including data encryption, access controls, audit trails, and compliance monitoring, to protect sensitive procurement information from unauthorized access or breaches.

Factor #5: Vendor Reputation and Support

• Research the vendor’s reputation, industry experience, and track record of successful implementations within your industry or sector.
• Assess the vendor’s level of customer support, including availability, responsiveness, and expertise, to ensure timely assistance and resolution of issues during implementation and ongoing use.

ProcureDesk: Your Integrated Procurement Solution

An invoice payable software is only as effective as its integration with your accounting package.

With ProcureDesk’s automated sync feature, bid farewell to manual data entry headaches and other manual interventions.

Once invoices are approved and matched, our system seamlessly sends them to your accounting package for payment.

Stay informed with automatic syncing of payment terms and statuses, ensuring your team has real-time visibility into payment processes.

Moreover, ProcureDesk offers direct integration with payment systems like Bill.com, simplifying your payment workflows even further. Explore our Bill.com integration capabilities for enhanced efficiency.

FAQs

What Is An Integrated Procurement System?

An integrated procurement system is a sophisticated software solution that consolidates and streamlines all aspects of the entire procurement process within an organization.

It serves as a centralized platform where various procurement functions, such as sourcing, purchasing, supplier management, contract management, and electronic invoicing, are seamlessly interconnected and automated.

In essence, an integrated procurement system acts as a one-stop-shop for managing all procurement activities, from requisition to payment, while fostering collaboration between different departments and stakeholders involved in the entire procurement process.

By integrating disparate systems and processes into a unified platform, organizations can achieve greater efficiency, transparency, and control over their procurement operations, ultimately driving cost savings, improving compliance, and enhancing overall performance.

What Is The Integrated Approach To Procurement?

The integrated approach to procurement involves adopting a holistic and strategic mindset towards the procurement process. Rather than treating procurement as a series of isolated transactions, an integrated approach seeks to align procurement activities with broader organizational goals and objectives.

In this approach, procurement is viewed as an integral part of the overall business strategy, with a focus on maximizing value creation and minimizing risks throughout the entire supply chain. This includes collaborating closely with internal stakeholders, such as finance, operations, and product development teams, as well as external partners, such as suppliers and vendors.

Key elements of the integrated approach to procurement may include:

• Strategic Planning: Developing procurement strategies that align with organizational objectives, market trends, and stakeholder needs.
• Vendor Relationship Management: Cultivating strong and collaborative relationships with key suppliers to drive innovation, mitigate risks, and optimize performance.
• Risk Management: Identifying and managing risks across the supply chain, including disruptions, quality issues, and regulatory compliance.
• Performance Measurement: Establishing metrics and KPIs to monitor the effectiveness and efficiency of procurement activities, and using data-driven insights to drive continuous improvement.
• Technology Enablement: Leveraging technology, such as integrated procurement systems, analytics tools, and e-procurement solutions, to streamline processes, enhance visibility, and drive innovation in procurement practices.

What Are The Different Types Of Integrated Procurement System?

There are several types of integrated procurement systems, each designed to address specific needs and requirements of organizations. Some common types include:

• ERP-Integrated Procurement Systems: These systems are tightly integrated with Enterprise Resource Planning (ERP) systems, allowing procurement processes to seamlessly interface with other business functions such as finance, inventory management, and human resources.
• Cloud-Based Procurement Systems: Cloud-based procurement systems are hosted on remote servers and accessed via the Internet, offering scalability, flexibility, and accessibility from anywhere with an Internet connection. These systems often provide e-procurement integration capabilities with other cloud-based applications and services.
• Vendor Relationship Management (SRM) Systems: SRM systems focus on managing relationships with suppliers, facilitating collaboration, communication, and performance tracking. They may integrate with procurement systems to streamline sourcing, contract management, and supplier evaluation processes.
• E-Procurement Platforms: E-Procurement platforms enable electronic procurement processes such as requisitioning, sourcing, purchasing experience, and electronic invoicing. They may integrate with ERP systems, financial management systems, and supplier networks to automate and streamline the purchasing flow.
• Integrated Spend Management Systems: These systems provide comprehensive spend visibility and control by integrating procurement data from various sources, including purchasing systems, expense management systems, corporate credit cards, and supplier invoices.
• Source-to-Pay (S2P) Suites: S2P suites offer end-to-end procurement solutions that encompass the entire procurement lifecycle from sourcing and contracting to purchasing and payment. These suites typically include modules for spend analysis, sourcing, contract management, procurement, and supplier management, all integrated into a single platform.
• Custom Integrated Procurement Solutions: Some organizations may opt to develop custom integrated procurement solutions tailored to their specific needs and requirements. These solutions may involve integrating multiple off-the-shelf software applications or building custom software modules to meet unique business needs.

The Bottomline

Ensuring a seamless integration between your procurement system and ERP/Accounting system is paramount for the success of your procurement tool. Having a comprehensive integration checklist offers numerous benefits:

Firstly, it allows you to prioritize your requirements, ensuring that critical aspects of day-to-day operations are addressed effectively.

Secondly, it helps you avoid surprises during implementation by identifying potential challenges beforehand.

Lastly, well-defined procurement system integration requirements enable you to establish clear timelines for implementation, promoting efficient project management.

By following an integration checklist, you can streamline your procurement implementation process and increase the likelihood of success. Here’s to a successful procurement journey!