e-procurement in Europe – common sense made compulsory – but will it work?

e-procurement in Europe – common sense made compulsory – but will it work?

Finally the penny has dropped. Automating the purchasing process and controlling spend more closely by using modern technology reduces cost compared to following a manual or paper based process. This could save between 5% and 20% of procurement expenditure according to the EU commission.

That means that the EU could reduce its public procurement spend of €2 trillion and save a massive €100 million. And all this can be achieved in 4 years – apparently.

That’s a huge amount of money. 150 large hospitals could be built with that so it’s worth aiming for before anyone gets excited – and I hate to be the bearer of bad news – it isn’t going to happen.

Purchasing Insight logoThe EU is mandating the use of e-procurement and it wants to achieve this worthy cost saving by 2016. Their ambitions were announced a couple of weeks ago in a press release which explained the rationale.

“The Digital Agenda for Europe and the eGovernment Action Plan 2011– 2015 highlighted the importance of connecting e-procurement capacities across the Single Market” says the press release. “In the context of the modernization of the European Public procurement Directives, adopted in December 2011, the Commission has proposed to make e-procurement the rule rather than the exception, by making it the standard method of procurement in the EU by mid-2016.”

Commissioner Barnier elaborates: “It’s time to act. E-procurement represents a significant untapped potential for the EU economy. It can simplify the way procurement is conducted, reduce burdens and costs, increase the participation of SMEs and deliver better quality and lower prices. The sooner the transition is initiated, the sooner we will reap the benefits offered by e-procurement.”

Once bitten. Twice bitten.

It is absolutely the right thing to do and I wish the initiative success but this is a well-trodden path and the mistake of thinking that “e” is a panacea should not be made again. The language of the commission’s communications doesn’t provide much hope I have to say.

It is not the “e” in e-procurement that delivers savings – it’s the visibility, the control the measurement and the agility that captures cost reduction. e-procurement only delivers benefits when it is implemented as an enabler of best procurement practice. Taken out of the context of a proper procurement strategy and end-to-end purchase to pay landscape, it delivers nothing.