In today’s rapidly evolving business landscape, hospitality organizations increasingly turn to SaaS Procure-to-Pay (P2P) solutions to transform their procurement operations. However, a critical mistake many companies make is focusing primarily on functionality rather than value when selecting these solutions. This approach often leads to disappointing outcomes, with organizations implementing feature-rich solutions that fail to deliver meaningful business impact.
The Functionality Trap
Traditional software selection processes rely heavily on exhaustive feature checklists and technical specifications. Procurement teams typically develop detailed evaluation matrices, assigning weights to hundreds of features and scoring vendors based on their ability to check each box. While this method may appear comprehensive, it often misaligns the selection process with the organization’s strategic goals. Standard RFP questionnaires offer a high-level view of a solution’s capabilities, but rarely provide insight into how the technology will be embedded into operational workflows. As a result, these processes frequently fail to demonstrate how the solution will deliver tangible value or measurable return on investment for the organization.
According to recent research by Busch (2024), the average organization uses less than 60% of the features available in their procurement technology. This disconnect between available functionality and actual utilization represents significant wasted investment and missed opportunities for value creation.
How to Define Value in Procurement Technology
Value in SaaS P2P solutions extends far beyond cost savings or technical capabilities. As Handfield (2024) explains, it encompasses multiple dimensions:
- Strategic Value: The solution’s contribution to achieving organizational strategic objectives
- Operational Value: Improvements in process efficiency, cycle times, and compliance
- Financial Value: Direct and indirect financial benefits, including cost savings and working capital optimization
- Relationship Value: Enhancement of supplier and stakeholder relationships
- Information Value: Improved decision-making through actionable insights and visibility
- Transformational Value: The solution’s capacity to enable fundamental changes in procurement operations.
These value dimensions are interconnected and mutually reinforcing. Understanding these connections is essential for developing a comprehensive value assessment framework.
Resource-Based Theory
Resource-Based Theory (RBT) provides a robust theoretical foundation for value-based selection. According to Barney (1991), sustainable competitive advantage derives from resources that are valuable, rare, inimitable, and non-substitutable.
When applied to SaaS P2P procurement solutions, the Resource-Based Theory (RBT) framework suggests that organizations should evaluate solutions based on their alignment with strategic objectives and their ability to strengthen strategically important capabilities. This approach shifts the focus from simply fulfilling baseline functional requirements to identifying solutions that can serve as a source of sustainable competitive advantage.
The assessment should consider not only how a solution contributes to competitive differentiation, but also how the supplier relationship itself can become a strategic asset, one that is valuable, rare, inimitable, and non-substitutable. A strong P2P partner can enable access to unique expertise, continuous innovation, and embedded industry best practices that competitors cannot easily replicate.
In this context, a high-impact P2P solution should do far more than automate existing procurement workflows. It should empower the organization with innovation, scalability, adaptability, and the ability to evolve procurement into a strategic lever for value creation.
Key considerations include:
- Capability Augmentation: Does the supplier’s solution enhance your current operational strengths? For instance, can it improve procurement visibility, streamline compliance, or accelerate cycle times? Consider whether it empowers teams to shift from repetitive tasks to strategic procurement activities like supplier collaboration and spend analytics.
- Enablement of New Competencies: Assess whether the solution introduces new capabilities that were previously out of reach, such as advanced supplier risk management, AI-driven demand forecasting, or seamless multi-entity spend consolidation. These can fundamentally elevate your procurement maturity.
- Industry Alignment: Determine if the supplier has a proven track record of supporting organizations with similar structures, industries, or regulatory environments. This ensures the solution is tailored not only to general procurement needs, but also to your specific operational context.
- Cultural and Strategic Fit: Evaluate the supplier’s organizational culture and values. Are they committed to co-innovation, continuous improvement, and customer success? A supplier whose culture aligns with yours is more likely to support your transformation efforts effectively.
- Roadmap Synergy: Review the supplier’s product roadmap and development strategy. Are they investing in areas that align with your future needs? For example, if sustainability, data interoperability, or cross-border compliance are on your roadmap…
- Strategic Partnership Potential: Finally, consider the mutual strategic value. Will this supplier view your organization as a key partner, one whose needs will influence product development and service delivery? This kind of partnership can significantly enhance your ability to drive innovation and extract long-term value from the solution.
These perspectives ensure that solution selection is not just about solving today’s problems, but about building capabilities for tomorrow’s opportunities.
The Value impact on decision making
Organizations implementing value-based selection consistently achieve superior outcomes compared to those using functionality-focused approaches. A recent benchmark study by Hackett Group (2024) found that organizations using value-based selection achieved, on average, 40% higher ROI on their procurement technology investments.
Case studies demonstrate benefits including higher adoption rates, greater strategic impact, more successful implementations, and higher returns on investment. The comparative advantage of value-based selection is particularly evident in complex, dynamic business environments where adaptability and strategic alignment are critical success factors.
The Value-Based Approach: Implementation Challenges and Success Strategies
While the value-based selection approach offers clear advantages, such as improved strategic alignment and long-term ROI, it also comes with practical implementation challenges. These include:
- Difficulties in quantifying value, especially for qualitative or strategic benefits
- Stakeholder resistance due to unfamiliarity with non-traditional evaluation models
- Short-term decision-making pressures, which can prioritize cost over impact
- Capability gaps in change management and value realization practices
Successfully overcoming these challenges requires a combination of executive sponsorship, stakeholder education, and a phased, incremental implementation strategy. Organizations must also invest in building internal capabilities around change management and value measurement to sustain momentum.
To operationalize a value-based selection approach, organizations should consider the following practical steps:
- Establish cross-functional selection committees. Engage stakeholders from procurement, finance, operations, and key end-user departments throughout the tendering process to ensure a well-rounded, organization-wide perspective on value. This collaborative approach helps align solution selection with both strategic objectives and practical operational needs.
- Develop outcome-focused RFPs. Shift the emphasis from feature lists to desired business outcomes, performance indicators, and use-case scenarios.
- Evaluate vendors based on proven value delivered. Prioritize case studies, customer success metrics, and reference checks over marketing language and generic capability claims.
- Implement value tracking and optimization processes. Establish mechanisms to monitor value realization after implementation, including the use of KPIs, benefit realization dashboards, and regular performance reviews. These tools help ensure the solution is delivering the intended strategic outcomes and is being effectively adopted by internal stakeholders across the organization.
By embedding these strategies, organizations can make value-based procurement not just a guiding principle but a repeatable and measurable process that drives meaningful results.
Conclusion
The shift from functionality-focused to value-based selection represents a fundamental reorientation of how organizations approach procurement technology. By focusing on value creation potential rather than feature lists, organizations can select SaaS P2P solutions that deliver a sustainable competitive advantage rather than merely automating existing processes.
In an increasingly complex and dynamic business environment, the ability to select technology solutions based on their value creation potential may well become a defining characteristic of successful organizations. Value-based selection offers a pathway to this success, enabling procurement to fulfill its potential as a strategic function that creates sustainable competitive advantage.
Author: Leo Costa, Solution Consultant