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2018 Gartner Cool Vendors in Procure-to-Pay Applications

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SPEND Charactersitics

Low/High numbers provide a indication of typical value ranges	Low	High	Client Input

Annual Indirect Spend
Sourcing Addressable Spend %	50%	75%
Preferred supplier savings on an average	5%	9%
Average negotiated early payment discount rate	2%	4%
Percentage of Invoices paid early	4%	11%
Average Days Payable Outstanding	20	60
Budget overspending (% of spend)	5%	5%
Value of Indirect Inventory
Inventory Turns	1.5	6.5

PROCESS Charactersitics

PO-related

Annual number of POs issued
Estimated PO Costs (Req through approval to PO)	$25	$45
Req to PO cycle time - days	5	9
Percentage of Addressable Spend Bought on Contract	25%	55%
Percentage of Spot Buy Orders Multi-Quoted	5%	25%
Typical savings from competitive bidding	7%	12%
Percentage of Emergency orders (Expedited)	2%	5%
Typical % premium for Emergency orders	10%	20%

Activity Metrics

Requester Minutes spent per Order Request generation	5	30
Buyer Minutes spent per PO	10	30
Mgmt Minutes spent per Approval	5	10
Buyer Minutes spent per PO follow-up	5	30

INVOICE-related

Annual number of invoices (Touched)
Estimated Invoice Processing Costs	20	45
Annual number of invoices (No Touch)	15000	195000
Invoice processing cycle time - days	3	7

Other

Percentage of Orders Auto Released from Inventory	10%	25%
Annual number of spend reports generated	20	100
Cost of generating a spend management report	150	600

Activity Metrics

AP Minutes spent per Invoice	10	30
IT Minutes spent per Report request	60	240

OPERATIONAL Costs

Annual Cost of Capital
Requester (Burdened Rate/Hr)	20	45
Buyer (Burdened Rate/Hr)	25	55
Buyer Mngr (Burdened Rate/Hr)	35	75
Approver (Burdened Rate/Hr)	45	90
Accounts Payable (Burdened Rate/Hr)		100
IT Ad-Hoc Report Generation (Burdened Rate/Hr)	150	400

Summary

MASSIVE SAVINGS
Demand Mgmt	$
Contract / Compliance	$
Purchasing Effectiveness	$
	$

HYPER-EFFICIENCY
PO Efficiency	$
Invoice Efficiency	$

	$

CASH FLOW
Working Capital	$


	$

Annualized Total:

$

Start Year
Start Month
Months - Start to Go Live
Months - Value RampUp

YoY Spend Increase

YoY Rate of Inflation

	$
	$
	$
Total	$

Year 1	$
Year 2	$
Year 3	$
Total	$