Hype to hope to disappointment and finally acceptance and adoption – electronic procurement has experienced an extremely interesting lifecycle. During the early 2000s when it was fashionable to add the word “electronic” to every initiative, procurement automation appeared on a number of corporate agendas.
A plethora of electronic procurement solutions cropped up in the marketplace and organizations were rushing to implement these in hopes of achieving tremendous cost savings, enhanced spend management capabilities and improved supplier relations.
Unfortunately, not every adopter of e-procurement saw the anticipated benefits materialize. Over the years, organizations have learned a big lesson; technology is not the be-all-and-end-all of an automation initiative; it is just an enabler. The key to a successful e-procurement program lies in the redesign of the procurement process and a strong strategy to leverage the available technology to meet each organization’s specific business requirements.
PayStream’s recent survey of procurement professionals from over 350 U.S.-based businesses reveals a renaissance of interest in Web-enabled procurement solutions – especially applications that have been enhanced by purchasing cards, approval workflow technologies and integration with online vendor catalogs.
Usage of Electronic Procurement Solutions
PayStream’s survey revealed that more than half (61%) of the companies that participated in the survey are currently using an electronic procurement solution. Almost half the adopters have been using their e-procurement solution for over five years.
Figure 1: Where does your organization stand when it comes to the usage of an electronic procurement solution?
Another 13 percent are evaluating e-procurement solutions for implementation over the next six months. What are the driving forces behind organizations’ need to implement or improve an electronic procurement solution? Almost a third (66%) of the companies surveyed stated that the biggest factor driving them down this route was the need to improve compliance – whether it was with contract terms, negotiated prices or regulatory requirements. This was followed by the need to lower costs, accelerate the requisition-to-order cycle and reduce maverick spend. In today’s economic climate, it is not surprising that every organization is looking for ways to drive costs out of the equation.
What is Holding Electronic Procurement Back?
Given that electronic procurement delivers tangible results, what is the reason more companies have not implemented a solution to automate their procurement process? According to our survey, the biggest barrier to the adoption of e-procurement is resistance to chance. Senior management’s belief that “current processes work” even though they may not be the most efficient is hampering e-procurement initiatives that more than a third (35%) of companies surveyed.
This was followed by a lack of understanding of solutions currently available, which was stated as a reason by 28 percent of organizations. In order to educate companies and help them overcome this hurdle, PayStream is developing a Technology Insights Series report titled “CFO’s View of Electronic Procurement” which will be released later this year.
Keep watching this space for more information on electronic procurement based on our survey results – challenges, benefits, best practices and gaining supplier acceptance.
