Data quality and controlling in purchasing – the impact on service procurement

The importance of the Controlling and Spend Analysis category among e-tools in procurement is taking the lead. This is one of the results of the current BME barometer "Electronic Procurement 2019", which records the trends and moods in the procurement sector every year. At the same time, a lack of internal data transparency and structuring followed by inadequate or a perceived lack of standards continue to top the list of obstacles to digitalization, according to the study.  Apparently, in practice, data quality is still a hindrance in terms of controlling. Something that isn't recorded at the front can't be measured at the back.

• ERP system is the leader in purchasing controlling
• Those who do not sow cannot reap
• Data transparency and data structuring
• Make SAP the leading data source

ERP system is the leader in purchasing controlling

The trend study "Procurement of complex services – towards more quality in digital processes?", which we commissioned in 2018, sheds light on the particular situation in service procurement. When asked which systems are used for purchasing controlling in service procurement, the ERP system (e.g., SAP) is clearly the frontrunner. 84% of all respondents use it for reporting and controlling.

MS Excel spreadsheets and MS Access are used by 42 percent of companies. AVA programs, the classic construction software, take on the role of the reporting source for 26 percent. The BME Barometer seems to confirm this when evaluating the selected usage models for e-tools. On-premise solutions generally dominate – but are most pronounced in the area of controlling and spend analysis with a rate of 70.6 percent.

If BI applications set up their own information silos in one business department, these can be used quickly and flexibly for evaluations within the department, but from a company-wide perspective, they undermine the comprehensive evaluations of the ERP system.

Those who do not sow cannot reap

In practice, setting up KPI systems and strategies for service procurement is usually a tricky business for purchasing. In contrast to direct material purchasing, part numbers and changes in material costs cannot be used for controlling purposes. All the more reason to focus on credit-side information from posted G/L accounts and cost centers as well as the evaluation of invoice and order items in order to achieve savings or optimizations.

Differentiated controlling is only possible if master and transaction data from the operational procurement process is also available in a correspondingly detailed form – ideally in real time. If SAP is to be the "leading" data source, all details of a purchase order for services must also be recorded in the system. Posting the order in the form of an aggregated total (1 SU) and an attached item list as a PDF does not meet this requirement.

Data transparency and data structuring  

According to the BME Barometer 2019, a lack of internal data transparency and structuring, insufficient or missing standards, and inadequate internal requirements top the list of obstacles to further digitalization in purchasing – all three aspects directly affect data quality and have a corresponding impact on controlling.

According to a key finding of our trend study on service procurement, almost 70 percent of the companies surveyed use free text, i.e., a non-standard, to describe their requirements. It is therefore not surprising that the most promising approaches to optimizing service procurement are seen in the development of master data and item lists (44 percent).

Especially in the case of construction services, an area that often represents a high purchasing volume in companies and poses a high level of processing and handling effort, the GAEB format commonly used in Germany offers an established system for standardized service descriptions in the form of multi-level item lists. In principle, GAEB-compliant item lists can be mapped in SAP, but working in SAP is too inconvenient and complicated, which is why the vast majority of companies avoid working with services and item lists in SAP today; there is no GAEB interface.

Consequently, in practice, the predominant method for awarding construction services is the detour via a purchase order item ("1 SU") with an attached item list as a PDF. As a result, billing in SAP can only take place via aggregated totals or percentage amounts, but not via quantities and services rendered at service line level. Transparency, control options and evaluations fall by the wayside.

Make SAP the leading data source

The FUTURA method provides a remedy. It completely eliminates the restrictions that arise in the procurement of services due to SAP's lack of support for item lists in GAEB format. It not only simplifies handling when creating item lists in the GAEB standard, but also focuses on ensuring that these can also be used and further processed by the stakeholders in subsequent processes through process integration with an interactive triggering of SAP, e.g., for service entries by suppliers. Structured and standardized item lists thus become a consistent basis for planning, purchasing and billing.

• Documents (purchase requisition, quotation, purchase order, contract, service entry) with GAEB-based item lists are automatically created in SAP for further processing and evaluation
• Services are billed online by confirming the services rendered at service line level, reducing order commitments in "real time"
• Data quality is increased in SAP, as the system is automatically "fed" with all required data (documents)
• This data quality is essential for differentiated and transparent reporting and allows for targeted management and controlling in the SAP system

FUTURA Cloud offers a user-friendly interface that can be used to interactively control or operate the SAP system remotely – the service procurement processes are interconnected with the SAP system. As all details are exchanged with the SAP system, the resulting data quality underlines SAP as the digital core. This is entirely in line with the digitalization of processes for the provision and usability of central data.