09 Aug 2017 Are e-procurement solutions necessary anymore?
In the early days of e-procurement – the 1990s – the solutions that were emerging were transformational and to understand why, we need to recall what the procurement landscape was like then.
For a start, people didn’t have computers on their desks and if they did, they were often ‘dumb terminals’ that would perform specific functions like internal email – external email was actually quite rare. People kept paper diaries and to place orders for indirect goods, paper purchase orders were used that would be posted or faxed to suppliers. Authorisations were done using signatures and so there would often be delays. Often, all of the orders were managed by a purchasing teams whose skills would range from routine administration to professional procurement.
Purchasing in this way is quite expensive from many points of view. Even routine requirements like stationery were being fulfilled by a specialist team. Delays in suppliers made it tempting to go off policy (if you knew what the policy was) and buy from non-preferred suppliers. Compliance to policies and procedures was low so as internet enabled computers became more common in the office, a tool to automate the purchasing process was very attractive. Purchasing teams disappeared in favour of procurement specialist who could add value rather than simply administer the process. Compliance increased as users were led to the right products and suppliers via catalogues and the time to delivery of goods was reduced.
E-procurement was a no brainer in the 1990s but today in 2017, the work environment is very different. The world is internet enabled and it’s straight forward to log into a supplier website and request goods on account. Policies and preferred suppliers lists can be communicated much more simply using intranet resources and good corporate behaviour taught easily with e-learning tools. Speed is not a compelling reason to implement or upgrade an e-procurement system today – everything is fast already. Some would argue that the only key benefit that e-procurement delivers today is compliance and that’s about peoples’ behaviour, not technology. Even with the technology, people go off piste so why not simply train, enforce and police good corporate behaviour instead of installing expensive software?
This is a question I’ve heard many times in many contexts over the years. It is a healthy challenge to the stance that many take which is to assume that whatever the question, the answer is the current technology flavour of the month. In the 90s the answer was always the internet. Then it was SaaS, then more recently Cloud and today it’s likely that blockchain will be one of the answers. It is right to question a knee-jerk tech-based reaction to a problem and when it could be that a simple process improvement or new control could resolve issues more quickly and for less money.
So is it possible to enforce compliance to P2P policy without an e-procurement solution? Yes it is, but not in any sustainable way. People are generally good corporate citizens and will comply with policies whenever they can but people involved in purchasing indirect goods usually have a day job that is more closely related to their organisation’s core business and over time, the day to day business imperatives will take precedence over purchase to pay policy and compliance levels will gradually fall back.
It’s quite right to point out that e-procurement does not resolve compliance problems – only changes in behaviour can change that. However, when implemented correctly, e-procurement is a powerful enabler of good corporate behaviour. It makes it easy to comply and easy to police compliance to help those who continue to struggle.
Far from being less relevant today, e-procurement is more relevant than ever and it’s consistent with the way we live our lives outside of work. As solutions become increasingly more sophisticated and user friendly, they are also becoming less and less visible. Like the national grid or the the mobile telephone network or the internet, we use it every day but we take it for granted. We don’t think about it as we use it. We don’t even know how it works. We can comply to policies and procedures without even knowing what they are.
So, are e-procurement solutions necessary anymore? Although the business landscape has changed very significantly in many respects, e-procurement has become part of the business fabric. Like the internet, it’s just there – we don’t have to think about it but just because it is less visible does not mean it is any less important.
Pete Loughlin can be found on twitter @peteloughlin