Author: Pete Loughlin

BaswareMobile-iPhone-Requisition"We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten." I wish I'd said that but Bill Gates thought of it first. It's an often quoted piece of Gates wisdom from his book The Road Ahead and anyone who has observed technology for more than 10 years will recognize this phenomenon. It was a decade and a half ago that we overestimated e-procurement. We said it would eliminate maverick spend, encourage compliant behavior, provide better spend analytics that would facilitate better decisions and save money. The user experience of buying in business would be as easy and intuitive as home shopping. That vision didn't materialize - not immediately in any case. It was harder than we thought. The technology infrastructure we were using wasn't up to the challenge and the theoretic results that we put so much store in didn't play out in practice. That was then and this is now. We overestimated what could be achieved in the short term but did we underestimate the long term view? Sure we did. Reading the press release from Basware this week launching Basware Purchase it's like reading the predictions of 1997 - the same promises, this time being delivered, but in 1997, we never thought we'd have a full functional procurement app in our pocket.

The business case stacks up. The technology is proven. There’s a potential to save literally $millions. So why are finance people scared of e-invoicing? Those who have been on the electronic invoicing journey will be familiar with the issue. There’s no objection to e-invoicing per se. The benefits are recognized and the finance and AP teams want to be good corporate citizens but they just can’t bring themselves to do it. “We need to ‘see’ the invoice” they say. “But the ‘invoice’ is the electronic file”, I reply. “Yes” they agree, ”we know that. But we need to be able to see it – even an image of it as it would appear on paper would suffice but we do need to be able to see it”. They are not being stupid and they are sincere in their concerns. It’s one thing to extol the benefits of eliminating paper but paper invoices are important documents for audit purposes. An auditor may be happy on one level to examine reports from a finance system to understand what is going on but at some stage they may well, and often do, ask to see the underlying legal documents. The actual invoice. And even before the auditor arrives, finance people may want to see actual invoices to get information that would not be included in the electronic invoice itself. Ship from, ship to, bill to addresses for example or hand written addendums. The inability to perform such examinations presents a real objection that has to be overcome for an e-invoice program to be successful.

I don’t write much about Ariba. We don’t say much about SAP or Oracle either. They’re old news and there isn’t much to say that hasn’t been said before. Besides, there are better analysts like Jason Busch who understand the intricacies of the functionality of procurement software to a much greater extent than I do. But there is one aspect about Ariba that really intrigues me and that’s their pricing model. Unlike many other commentators, I don’t have an issue with Ariba’s supplier pricing model - in principle at least. There’s a price and there’s the value that’s added and you can’t look at one without the other. A high price is perfectly appropriate when there’s proportionate value added. But in my view, there’s something very wrong with the model that Ariba has chosen to adopt especially when you look at it as it relates to e-invoicing.

e-invoicing sounds to most like a boring bit of back office business but in Latin America, the issue of e-invoicing and in particular the issue of getting it right is a little bit more on the edge. Getting its wrong can have serious and dramatic consequences which is why it good news for Tradeshift to have partnered with the leading solution provider in the region, Invoiceware International, to deliver guaranteed compliance.

There are lots of reasons to do e-procurement but most of the stated reasons are not the real reason at all. Indeed, most of the reasons stated for implementing e-procurement are impossible to deliver. But there is one very good reason to implement e-procurement and oddly, the functionality that delivers it is usually not available from the e-procurement vendors.

I've been working with e-procurement in a wide variety of guises and in many different organizations for nearly 20 years. Before the widespread use of the internet there were some proprietary on-line purchasing systems that were, by and large, the same as a modern incarnation of a web based e-procurement system. And they all have one thing in common - they don't work. To be fair, they're getting better but still, most implementations are an expensive set of broken promises. It's not always the technology that's at fault - sometimes it's the promises that are wrong - expectations are set unrealistically. Or its the functional design that's wrong - business requirements ignored or misunderstood. And it's such a shame because e-procurement was such a good idea. So what's gone wrong?