Things you thought you knew about e-procurement that you don’t #1 – e-procurement will save money
It is a commonly held belief that by implementing e-procurement you will generate substantial savings. Unfortunately, it is not as simple as that.
When trying to collate evidence to make a savings case you run into a morass of numbers which seem impressive but also seem to resist validation. Dig further and you will likely see something else. The process of implementing e-procurement, when done properly, forces you to examine your existing processes and practices, and this provides the data that enables you to control your expenditure and put in place better contracts, controls and processes.
Here’s the truth – there is no direct causal link between e-procurement and savings, but there is a correlation. It is the Business Change which delivers the substantial savings. What the technology does is lock the benefits into place and make them measurable, sustainable and repeatable.
It is the broader benefits case which is the more important. When asked about the benefits they derived from a move to eProcurement, a group of Elcom’s customers identified the following:
– Better management information and automated record keeping.
– More efficient P2P processes
– Improved contract compliance
– Searching electronic rather than paper catalogues
– Quick and easy to use
– Fewer returns and fewer invoice queries
– Reduction of ‘maverick’ spend
– Increased control of expenditure
– Resource savings from collaborative contracting
– Shared approach to supplier management.
These are the basis of the benefits case that should be developed rather than a simplistic savings based business case.