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venture capital and procurement

Protecting Your Investment: The Role of Procure-to-Pay Solutions in Venture Capital Success

By Procurement No Comments

In speaking with countless VC and other investment groups, the same question comes up every time, “What can I do to protect the success of my investment?”. 

It’s a world rife with risk, no doubt – but also major returns.  To understand where one can find balance and a sense of security, let’s dig in.

 

The High-Risk Nature of Venture Capital Investments

Data from PitchBook revealed that approximately 3,200 venture-backed firms in the U.S. have closed their doors, with these startups having raised a staggering $27.2 billion.

This figure underscores the inherent risks associated with venture capital investments, where the failure rate is high, and the financial stakes are even higher.

While many investments fail, the success of a few can offset these losses and generate significant returns. This balance of risk and reward is a fundamental aspect of the venture capital model.

However, beyond the allure of potential high returns lies the critical issue of investment risk management.

Market, operational, technology, and financial risks pervade venture capital investments, with factors like market changes, product or service relevance, competition, and the startup team’s capabilities significantly influencing the success or failure of these investments.

The Importance of Operational Risk Management and Due Diligence

Operational risks, in particular, highlight the importance of effective spend management within the invested companies. An incomplete management team or a startup lacking in operational experience and focus can lead to poor financial management, including inefficient spend management. This inefficiency not only jeopardizes the startup’s success but also the VC’s investment.

To navigate these risks, venture capital firms employ comprehensive due diligence processes. These processes aim to evaluate the financial stability, market position, legal compliance, and operational capabilities of potential investments. The goal is to identify and mitigate risks, including those associated with poor spend management, before they can impact the return on investment.

The Challenge of Spend Management in Startups

Spend management is a critical operational component that often gets overlooked in the fast-paced environment of startups. However, the consequences of neglecting this area can be dire.

Ineffective spend management can lead to uncontrolled expenses, wasted resources, and ultimately, financial instability. This not only affects the startup’s growth potential but also exposes the venture capital firm to greater financial risk.

The Solution: Procure-to-Pay Systems

Enter procure-to-pay solutions like SAP Ariba™ Buying and Invoicing. These systems act as a safeguard for venture capital investments, ensuring that the funds are utilized efficiently and effectively. Procure-to-pay systems streamline the purchasing process, from procurement to payment, enhancing transparency and control over expenditures.

How SAP Ariba Can Protect VC Investments

1. Enhanced Spend Visibility: SAP Ariba provides a clear view of a company’s spending activities, enabling better financial planning and analysis. This visibility helps VCs ensure that their investments are being managed wisely, with funds allocated to strategic areas that drive growth and value.

2. Controlled Procurement Processes: By standardizing procurement processes, SAP Ariba reduces the risk of maverick spending and ensures compliance with financial policies. This control is crucial for startups, where every dollar spent needs to contribute to the company’s strategic objectives.

3. Efficient Workflow and Approval Processes: The automated workflow and approval processes in SAP Ariba reduce the time and effort required to manage purchases. This efficiency prevents bottlenecks and ensures that funds are deployed rapidly and effectively in areas where they are needed most.

4. Strategic Supplier Management: SAP Ariba’s Business Network consists of over 10M vendors, turning every purchase into an opportunity for savings and efficiency. This strategic vendor management helps in negotiating better terms, improving supply chain reliability, and reducing costs.

5. Risk Mitigation: This isn’t just about saving a few dollars; it’s about setting a standard for financial diligence that protects your investment at every turn.

 

By implementing a robust procure-to-pay solution like SAP Ariba, venture capital firms can significantly reduce the financial risks associated with their investments.

These systems ensure that the startups they invest in have the tools and processes needed to manage their finances effectively, thereby safeguarding the investment and maximizing the potential for a successful return.

 

 

To learn more about how SAP Ariba™ solutions can provide insurance on your investment, click here.

SAP Ariba Buying and Invoicing Tips

SAP Ariba Buying and Invoicing Tips

By Procurement No Comments

Having been an SAP Ariba customer, employee, and now SAP Ariba BPO partner, I have seen many of the pain points of the implementation of this module.

Granted, this list is only three of the major roadblocks we at Premikati have come across, and there are many more challenges that are company specific that we will address via this medium in the near future.

Alas, for now – let’s hit the top 3:

1. Have a solid change management strategy and plan.  

When initiating a top down project, without buy-in, you are at risk for people not adopting the new processes, technology, and communications.

This lack of buy-in decreases your early adoption level and end user acceptance of the new technology and processes – therefore diminishing your success and what should be – a rapid ROI.

2. Develop a strategic supplier on boarding wave plan.

Start with matched SAP Ariba Network suppliers. They are already transacting over the network making for an easy connection.

Next, remember the 80/20 rule. Let’s get the suppliers you do the highest spend with on immediately. This will allow for quick visibility and spend control for the majority of your purchase orders.

Your next target should be strategic commodities.

As far as tail spend, remember that SAP Ariba Spot Buy will revolutionize the way you have dealt with the tail spend that everyone struggles with and should have been “turned on” immediately and effortlessly.

3. Develop a strong compliance message for your suppliers.

Require all suppliers to receive PO’s and submit invoices through the Ariba Network. With Light Enablement, the historical complaints about fees are simply invalid.

Companies who follow this recommendation experience quicker supplier enablement which in turn allows for increased visibility and control of your company’s spend.

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Premikati is a certified Woman Owned Management Consulting and Legal Process Outsourcing firm, and an SAP Ariba Silver Partner, that is specifically tailored to Procurement and Supply Chain.

Premikati Transforms Contract Management with SAP Ariba

Premikati Transforms Contract Management with SAP Ariba

By Press No Comments

Certified WBE outsourcing firm leverages cloud-based solutions to fuel efficient digital process that delivers savings and compliance

PALO ALTO, Calif., November 16, 2016 – The cloud is where efficient contract management is happening. But many businesses lack the technology and resources to get there. Premikati is out to change this, with some help from SAP Ariba. The business process outsourcing and management consulting firm today announced that it will leverage Ariba® Contract Management Professional to drive an efficient, digital process for managing contracts that delivers savings and compliance.

“We have seen clients of all sizes and industries struggle with contract management,” said Marisol Buczynski Buchanan, CEO of Premikati. “Lack of tracking with respect to items such as expiration dates, renewal terms/price increases, service level agreements, notice provisions, and even counter signatures is all too common. With SAP Ariba, we can help them overcome these issues.”

An SAP Ariba BPO partner, Premikati will use SAP Ariba’s technology to perform contract management services not only for large enterprises, but for companies under $500 million in annual revenue. And in doing so, it aims to eliminate many of the barriers that prevent them from pursuing digital strategies such as a lack of resources to implement and manage software. “We can have them up and running in two to three weeks at a very cost-effective price point,” Buchanan said.

Ariba Contract Management Professional is the industry’s leading SaaS solution for contract management. Uniquely designed to eliminate the paper and ink from the creation, execution, and management of any type of contractual agreement, the offering enables companies of all sizes to efficiently:

  • Automate and accelerate the entire contract lifecycle
  • Standardize and control contract development
  • Collaborate with all stakeholders
  • Strengthen operational, contractual, and regulatory compliance

“Contracts are the lifeblood of any organization and managing them effectively can deliver strategic advantage,” said David Johnston, Senior Vice President, Partner Ecosystem, SAP Ariba. “With SAP Ariba’s technology and Premikati’s contract management expertise, companies of all sizes can get on the road to automation and drive an efficient process that lowers both their costs and risk.”

To learn more about SAP Ariba’s contract management solutions and the value they can deliver, visit: www.ariba.com. Learn More.

About Premikati

Premikati is a WBENC certified WBE Management Consulting and BPO firm that is specifically tailored to Contract Management and Procurement. Premikati helps its clients with all facets of contracting and procurement strategy as well as outsourced Contract Management Services including the drafting and negotiation of contracts.   They employ procurement executives, attorneys, contract management professionals, Six Sigma Black Belts, and certified Change Masters with extensive experience either inside or consulting with the world’s top companies.

About SAP Ariba

SAP® Ariba® is the marketplace for digital business, creating frictionless exchanges between millions of buyers and suppliers across the entire source-to-pay process. Our market-leading solutions enable companies to simplify collaboration with their trading partners, make smarter business decisions and extend their collaborative business processes with an open technology platform. More than two million companies use SAP Ariba solutions to connect and collaborate around nearly one trillion in commerce on an annual basis. To learn more about the company’s offerings and the transformation they are driving, visit www.ariba.com. Learn More.

About SAP

As market leader in enterprise application software, SAP (NYSE: SAP) helps companies of all sizes and industries run better. From back office to boardroom, warehouse to storefront, desktop to mobile device – SAP empowers people and organizations to work together more efficiently and use business insight more effectively to stay ahead of the competition. SAP applications and services enable approximately 335,000 customers to operate profitably, adapt continuously, and grow sustainably. For more information, visit www.sap.com. Learn More.

 

 

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