Sourcing and Procurement Operations integration with Project Management

  • Release version: Xanadu
  • Updated August 1, 2024
  • 4 minutes to read
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    Summary of Sourcing and Procurement Operations integration with Project Management

    The Sourcing and Procurement Operations integration with Strategic Portfolio Management's Project Management streamlines the process of linking purchase orders to projects. Enabled by theProject Costing for Sourcing and Procurement Operations plugin (snspendppm), this integration automates cost tracking by associating purchases directly with projects, eliminating manual steps and improving financial visibility for project-related procurement.

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    This plugin requires several dependent ServiceNow applications and system plugins to be installed separately, including Sourcing and Purchasing Automation, Finance Common Architecture, Procurement Case Management, and others. Additionally, administrators must manually assign the IT Project User role to shoppers and the PPM user role to procurement specialists to enable project visibility during procurement activities.

    Key Features

    • Project Association during Checkout: Shoppers and project managers must indicate if a purchase is for an existing project and select the project, which auto-populates the purchase reason with project and demand details. This applies at both the entire purchase and individual product levels, except for credit purchases.
    • Purchase Request and Order Line Enhancements: Purchase request and order line forms can be configured to display the associated project and cost plan fields, linking procurement transactions to specific projects and demands.
    • Automated Cost Plan and Expense Line Creation: When a purchase order is created for a project, a corresponding cost plan is automatically generated. Upon invoice payment, expense lines related to the project are created, enabling real-time tracking of planned versus actual costs.
    • Lifecycle Impact: If a demand converts to a project, procurement records update to reference the project instead of the demand. Closed demands or projects are excluded from selection during checkout, and cost plans/expense lines are not generated for them, though existing cost plans continue to receive expense updates until invoices are paid.
    • Sourcing Requests and Off-Catalog Purchases: When requesting pricing or quotes for products without existing pricing or not listed on the catalog, users must specify if the purchase is for an existing project, linking sourcing requests with project and demand details to maintain alignment.
    • Email Notifications: Demand or project managers receive notifications on purchase order creation, updates, or cancellations that impact project cost plans, enhancing communication and oversight.

    What This Enables for ServiceNow Customers

    This integration allows ServiceNow customers to:

    • Seamlessly connect procurement activities with project financial management, reducing manual effort and errors.
    • Automatically track and reconcile planned and actual costs at the project level, improving budget control and transparency.
    • Maintain procurement compliance by enforcing project association during purchase requests, sourcing, and checkout.
    • Gain better visibility into project expenditures through enhanced forms and notifications, supporting more informed decision-making.
    • Ensure roles and permissions are properly assigned to enable project-related procurement workflows.

    Overall, this integration enhances project cost management by tightly coupling procurement processes with project financials, enabling organizations to better manage spend and project budgets within ServiceNow.

    Eliminate manual efforts of linking purchase orders to projects by integrating Sourcing and Procurement Operations with Strategic Portfolio Management's Project Management.

    The Project Costing for Sourcing and Procurement Operations plugin (sn_spend_ppm) provides this integration. This plugin has dependency on the following applications that can be purchased separately:
    • Sourcing and Purchasing Automation
    • Source-to-Pay Common Architecture
    • Finance Common Architecture
    • Common Service Delivery
    • Procurement Case Management
    • Source-to-Pay Workspace
    • Supplier Common Architecture
    • Playbook Experience
    • Document Templates
    • Common Vendor Core
    The plugin also has dependency on the following system plugins that need to be installed separately:
    • External User Self-Registration
    • Finance Applications - Common Dependencies
    • Fiscal Calendar
    • GraphQL Plugin
    • Insert Multiple Web Service
    • PPM Standard
    • Process Automation Designer Core
    • Process Automation Designer for App Engine
    • Scoped Application Restricted Caller Access
    • Signature Pad
    • User Criteria Scoped API
    • Vendor Core
    Important:
    Your administrator must manually assign the IT Project User, which is a licensed role, to your shopper for them to view project details during checkout. Also, as part of the Source-to-Pay pricing initiative, your administrator must manually assign the PPM user role to your procurement specialist.

    With this integration, project managers or shoppers can associate a purchase with a project, which provides the reason for making the purchase, but also automatically creates cost plans and expense lines for that project. This enables project managers, shoppers, and procurement specialists to easily track planned costs each time a purchase is made for a Project Management project, and realize actual costs each time an invoice is paid for a Project Management project purchase.

    Impact on checkout and purchase details

    When this application is installed, you must answer the additional question Is this a purchase for an existing project? during checkout. If your answer is in the affirmative, you must select your project from the list to proceed with the checkout.

    Each project name is associated with a demand number, both of which are then auto-populated in the Purchase Reason field. You can add more information in the Purchase Reason field if you want to. On completing your checkout, these details are displayed on the purchase details page.
    Note:
    • If this purchase isn’t made for an existing project, you must mention the reason for purchase in the Purchase Reason field to proceed with the checkout.
    • During full checkout, you can select a project for the entire purchase or individually at the product level.
    • You can’t select a project for a credit purchase.

    Impact on purchase request line and purchase order line tables

    When a purchase request is created, you can configure the Purchasing Details form layout on the purchase request line table to display the Project field. This field references the selected demand record. Similarly, when a purchase request line is converted to a purchase order line, you can configure the Summary Details form layout on the purchase order line table to display the same Project field.

    As part of this integration, whenever a purchase is ordered as part of a demand or project, a cost plan is automatically created in association with that purchase order line. You can configure the Summary Details form layout on the purchase order line to display the new Cost plan field. A Purchase Order Lines related list is also added to the corresponding cost plan record. On the Cost Plan form, the Total planned cost field is auto-populated based on when the purchase order had been generated. The Total actual cost field is populated based on invoice and expense line creation.

    For information on how to configure a form layout, see Configuring the form layout.

    Impact on invoice line and expense line tables

    When an invoice is created, and both the invoice and the invoice line are in the Paid state, an expense line is automatically created for the project. This expense line has an Invoice Lines related list reference.

    For more information on invoice creation, see Invoices.

    Impact of demand and project lifecycle on Sourcing and Procurement Operations flows

    When a demand is converted to a project as part of demand and project lifecycle:
    • The demand number isn’t available for selection during checkout.
    • When a purchase request line using that demand number is converted to a purchase order line, the latter references the project and not the demand number.
    • The cost plan references the newly created project and not the one initially selected by the shopper.
    • When an invoice is created, the associated expense line references the project and not the demand number.
    When a demand or project is in a closed state:
    • The demand or project number isn’t available for selection during checkout.
    • Cost plans and expense lines aren’t created for closed demands and projects. However, if a cost plan is already created for a closed demand or project, expense lines continue to be auto-generated until all the invoices are paid out.

    Impact on sourcing request

    When requesting pricing for a product that doesn’t have pricing available, you must answer the additional question Is this a purchase for an existing project?. If your answer is in the affirmative, you must select your project from the list to proceed with submitting the request. On successful submission, the project and demand details are displayed on the sourcing request record.

    As a shopper, you can compare the pricing for your purchase, select a supplier, and proceed to checkout.

    Impact on off-catalog purchase request

    When requesting a quote for a product that is not available on the Shopping Hub catalog, you must answer the additional question Is this a purchase for an existing project?. If your answer is in the affirmative, you must select your project from the list to proceed with submitting the request.

    Email notifications

    When a purchase order associated to a demand or project is created, updated, or canceled, the assigned demand manager or project manager gets an email notification about its impacts on the cost plans of the demand or project.