e-Procurement

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.

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?

Over the years I’ve had some great ideas. I’ve had some pretty dumb ideas too. I’ve followed through on some – both the good ones and the dumb ones but most, I have to admit, have been left as just ideas. But it still gives me great satisfaction when I get to see one of my great ideas executed perfection – by someone else. A number of years ago, I had the great idea that smart phones could be used as purchase to pay tools. I wrote about it here. The problem of process compliance in some situations like construction sites it that it has, historically at least, been difficult to put IT solutions in place. Purchasing Cards have been tried but rather than helping to support a robust purchase to pay process they tend to remove the process entirely – the “Nuke” option. But now, everyone carries a smart phone and it’s perfectly feasible to put purchasing software in the hands of everyone, regardless of their working environment. It’s not just possible – it’s delivered, and a few weeks ago, I had the great pleasure to speak to Patrick Hopkins, CPO at Coca Cola Bottling Company to understand how they’ve implemented a Coupa solution to do just that.

It’s funny when you read some vendors’ marketing material claiming to be at the bleeding edge of technology when the audience knows full well that what they’re talking about is well established, "business as usual" stuff. Take this example explaining how business is just beginning to discover the internet:  “It wasn’t so long ago that the Internet was viewed as just a playground for consumers with little-to-no-value for businesses. But it’s a completely different story today. The Internet has come a long way, baby” Guess when that was written? 1998? 2003? No. Actually, it was written a few weeks ago by Ariba’s Rob Mihalko aka Rip Van Winkle. The internet isn’t new. E-Procurement isn’t new. Supplier networks aren’t new. Neither is e-invoicing or supply chain finance. They’re all old, well established business tools. So what happened to innovation in P2P?

Ever since I read Hell’s Angels by Hunter S Thompson, I’ve always found the image of bikers compellingly attractive. And so I’ve not spared any cash when it comes to getting my own image right. When I’m wearing my black Rukka Merlin jacket with matching water-proof Gore-Tex, armored leather jeans and my Schuberth C3 Pro helmet with built in antennae, even though I say it myself, I look the business. All I need now is a bike. I remember from my teenage years, as I suspect will many others, the sad soul with the helmet and no bike. Pursuing the biker dream with not enough money for the full package, he missed the point. Having a helmet doesn’t make you a little bit of a biker. It makes you a little bit of an idiot. Making only a partial investment isn’t always an incremental step towards a complete solution. Often it’s a waste of money. And that’s what e-procurement is if it’s implemented in isolation – a complete waste of money.

The European Commission has declared some ambitious targets for e-procurement. They reckon that €2 trillion can be saved and they intend to get government organisations using purchase to pay best practice to deliver these savings by 2016. These targets are of course way too ambitious. What’s more, the Commission is going about it in completely the wrong way. They may be ambitious and their methods may not be perfect but I’m impressed and delighted at what they're doing.