15 Oct 2012 e-procurement is a waste of money
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.
I was speaking recently to Ian Burdon about e-procurement Scotland – an exemplar of the use of e-procurement. He was explaining to me how Scottish government procurement was transformed. Detailed analysis of spend revealed opportunities to create synergies between different organizations buying and collaboration with suppliers generated savings previously unattainable. Hearing him describe how the transformation project worked, it sounded more like a strategic sourcing program than an e-procurement implementation. And that’s because that’s what it was – and more. It seems to me that the reason why the Scottish government is such a good example of how to implement e-procurement is that it wasn’t an e-procurement implementation. It was, and is, a great example of holistic purchase to pay.
E-procurement doesn’t deliver any savings. Neither does negotiating better pricing or payment terms. Spend analysis does nothing for a business. None of these things deliver any benefit on their own. E-procurement requires quality data and proper processes and trained users. Saving can only be delivered from renegotiated terms if users comply with purchasing policy and spend analysis is only of use if it is interpreted and acted upon properly. This is pretty basic stuff but businesses still treat e-procurement as some kind of panacea – a quick fix – or perhaps an incremental step towards procurement best practice. It isn’t. It’s a crucial component of procurement best practice but without the other crucial components – the people components, the process components and the strategy component, it is quite ineffective.
Pete Loughlin can be found on twitter @peteloughlin