Maverick Spend in a Decentralized ERP Landscape
A business-services company has grown through acquisition and now runs three ERPs. Indirect spend is $310M. Procurement has nine category contracts, but 41% of invoices arrive without a PO and 28% of spend is off-contract. Business units say the catalogs are incomplete and buying is slower than using a corporate card. Accounts payable processes 1,900 invoices per month manually with 11 FTE, and the CFO wants a 15% reduction in AP processing cost plus 5% procurement savings. A previous mandate requiring POs for all purchases above $500 was ignored after two months. Procurement reports to the CFO but has no authority over business-unit buyers.
1. Diagnose why the PO mandate failed. What would you do differently in the first 90 days?
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The mandate failed because it addressed policy, not behavior or usability. The company has three ERPs, incomplete catalogs, and no fast path for small purchases. When buying off-contract is easier than complying, a $500 threshold creates workarounds. AP also accepted invoices without POs, so the control was never enforced.
In the first 90 days:
- Build a spend cube across the three ERPs and identify the top 20 suppliers by spend and invoice count.
- Interview business-unit buyers to find the top five friction points.
- Fix catalogs and pricing for the top suppliers, and add a guided-buying or punch-out path.
- Pilot in one business unit with a named executive sponsor.
- Publish a baseline for PO compliance, off-contract spend, and invoice touchless rate.
Do not reissue a blanket mandate until the easy path exists. The goal is to make compliance faster than the workaround.
2. Prioritize interventions by impact and feasibility. Where should the team focus first?
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Rank by spend covered and effort:
- High impact, moderate effort: catalog and punch-out enablement for the top 20 suppliers. If they represent about 55% of $310M, that is roughly $170M of addressable spend.
- High impact, higher effort: default PO creation in the ERPs and invoice matching tolerances. This attacks the 41% no-PO rate, about $127M of invoices.
- Medium impact: a controlled card or tail-spend solution for purchases under $2,500, where a full PO process costs more than the item.
- Lower priority: ERP consolidation. It may be necessary eventually, but it will not deliver the CFO's 15% AP cost reduction within a year.
Sequence the work so the first two interventions produce visible wins in one business unit, then scale. Track touchless invoice rate as the primary operational metric.
3. Design governance and metrics to sustain compliance without over-controlling low-value spend.
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Use a tiered control model. Above a defined threshold, require a PO and receipt; below it, use a card with category limits and monthly review. Create a category council with finance, AP, IT, and business-unit representatives to own catalog gaps and exceptions. Procurement should publish service-level commitments: catalog cycle time, supplier setup time, and exception resolution.
Metrics:
- PO compliance by business unit and supplier
- Catalog hit rate and search-to-order conversion
- Touchless invoice rate and days to pay
- Off-contract spend as a percentage of addressable spend
- Exception volume and aging
Review monthly with the CFO and quarterly with business leaders. The point is not zero exceptions; it is a fast, visible exception path so maverick spend becomes a conscious decision rather than a default.