Every few years, the moment comes when no one wants to discuss in the boardroom. A notification from the IT supplier that the ERP software you use is End-of-Life. It doesn't matter which package it is, the clock starts ticking from then on. The question then arises: do you first implement an ERP system or a Source-to-pay (S2P) solution?
The order determines not only the timeline, but also the ROI, the quality of integrations and the pressure on the organization. Below, we clearly list three strategies.
Strategy 1
Deploying S2P before ERP: maximum ROI with a long ERP horizon
Maximize early returns by transforming procurement before ERP goes live.
With this approach, you implement the S2P solution on your current ERP environment. You build the integrations temporarily and set them up again later when the new ERP goes live. This strategy works well for organizations where the ERP process is still far away or where the business case for procurement is urgent.
Benefits
✓ Fast ROI: payback period is approximately 1 year, ROI up to 5x
✓ Savings fund the ERP (1.5 - 2% on spend)
✓ Short implementation time: 5—8 months
✓ Early insight into supplier data and processes
✓ Phased change management
Disadvantages
✗ Rebuild integrations later
✗ Data structures may not be optimally aligned
✗ Risk of technical debt with the new ERP
✗ Two transformations in a row require endurance
This strategy is the best choice when the ERP process takes 2 or more years, the procurement pain is great, or the business case for procurement is urgent.
Strategy 2
Implementing ERP before S2P: a stable foundation, but pay attention to the opportunity cost
First build a stable foundation, and then roll out the procurement solution.
The classic approach: ERP is the backbone of the organization. Once that is stable, you build the S2P processes and integrations accordingly. Integrations are only set up once. Organizations with a strong finance-driven transformation agenda often choose this order.
Benefits
✓ Build integrations only once
✓ Stable data model as a foundation for S2P
✓ Less long-term technical debt
✓ One consolidated change management wave
Disadvantages
✗ Years of loss of procurement ROI during waiting time
✗ Maverick spend and compliance risks remain
✗ On average, ERP processes take longer than planned
✗ Missed opportunity: S2P insights improve ERP design
✗ Procurement stays at the back of the priority row
This strategy is the best choice if the ERP goes live within 12 months and the current S2P processes are functioning acceptably.
Strategy 3
Deploying S2P and ERP simultaneously: fastest route to full integration
Realize early value and optimal coordination by starting both processes simultaneously.
This strategy has the most ambitious approach. You start the S2P and ERP implementation simultaneously and coordinate the designs. Crucial here is that you start the S2P design during the ERP design phase, not after. You need tight program governance and open communication between both teams to execute this successfully.
Benefits
✓ Early in the process, value creation and future-proof integrations
✓ Collaborative design prevents rework
✓ Insights from S2P improve ERP design
✓ Fastest way to a fully integrated environment
✓ One combined change management approach
Disadvantages
✗ High pressure on organization and resources
✗ Risk of delay if routes are out of sync
✗ Requires tight program governance
✗ Higher initial costs due to two parallel routes
This strategy is the best choice when the organization has sufficient capacity, the ERP process is just starting and procurement is a strategic priority.
Conclusion: There is no universal answer
The right order depends on three factors: how far the ERP process has progressed, how urgent the pain in procurement is, and how much capacity the organization has for parallel transformations. Practice points unequivocally in one direction: waiting for the ERP costs money and that money can be calculated.
Our approach is based on three principles:
First understand context, then choose. What ERP landscape do you have now? Which S2P processes are mature and which are not? Where are the pain points? In the sourcing process, contract management or AP automation? That analysis determines the route that we will ultimately take.
Focus on transformation. Technology is only part of the project. Change management, process design and organizational assurance - that determines whether an implementation actually delivers value.
Personalised advice Based on these points, we from S2P & More provide advice for your specific situation.
Do you want to know which strategy best suits your organization? S2P & More helps organizations in many sectors such as manufacturing, governments, education, non-profit or business services to make the right choices.
Contact us for an informal conversation.
