14 Jun 2012 World class or half assed? The current state of e-procurement
I can buy something from amazon in just a few clicks. I feel confident that I’m getting a good price and I feel safe because the product I’ve selected has good reviews. The whole amazon experience has encouraged millions to change the way they shop. The purchasing process (as we like to think of it – it is more accurately a sales process), has been refined and iterated over the years, so what’s gone wrong with the B2B version – e-procurement?
The e-procurement vendors’ sales and marketing material will tell a very different story. They’ll explain how corporate purchasing could be but it won’t tell you what, in 9 out of 10 cases, it is really like.
Catalogs are fundamental to e-procurement. They present users with the information that they need to make purchasing decisions. Whether it’s a simple piece of stationery or a complex piece of IT, a full set of specs and options as well as a picture are the basic essential components. But in most cases, e-procurement catalogs aren’t like that.
First of all, the search functionality doesn’t work. It’s not broken, it’s just that with a lack of investment in data maintenance, there isn’t sufficient accurate information for the search engine to work with. In one organization I worked in, I tried to search for a piece of software. It was Microsoft Project. Pretty standard stuff. I tried a search for “Microsoft Project”. It seemed like the logical thing to do. No results. “MS Project”. Nothing. “Project Management Software” , “PM software” – nothing. The support team took longer to answer the phone than Office Depot but I wanted to follow the process. Eventually I got help.
“Do you know the part number?”
What?! I’m expected to know the part number in order to find a product? That’s supposed to be user friendly?
This, regrettably is not unusual. Catalog data often falls into disrepair and users are often faced with long lists of part numbers or unhelpful technical descriptions of products that only an expert buyer can make use of. The effect is that requisitioners raise off-catalog orders which get escalated to the P2P operational team – delivering a process that is exactly the opposite of what e-procurement was meant to deliver!
Usability is the key. If users don’t know how to use the system or they find it difficult, they will at best, misuse it and at worse not use it at all. And if the system doesn’t respect the requirements of specialist users, they go elsewhere.
Take travel as a category and a very common user experience. The compliant way to book travel throws up flight and hotel options but Trip Advisor tells you that the hotel that meets the policy is a rat infested hovel and you can get the flight at half the price on-line. What does that tell your user community about the travel procurement team?
Just as any website is the storefront of the business that operates behind it, so the e-procurement system is the show case for the procurement function and a poor implementation results in multiple solutions all around the business that fragments compliance and embeds poor practice.
e-procurement designed by finance
One of the easiest ways to get an e-procurement implementation wrong is to design it without involving the purchasing community. Why then do many organizations get the finance function to design it? The result, a purchasing system that looks like a finance system and a workflow that only an accountant would understand.
Why does this happen? It’s because finance people see procurement and purchasing through a finance lens. They see the system as a means of implementing controls and of allocating spend appropriately for accounting purposes. And they will focus on finance KPIs such as DPO and GRNI.
On the other side of the fence, the purchasing community want to see things delivered on time. They want usability so that the purchasing process can be delegated to users. Cost centers and GL codes aren’t important to them, Capex and Opex are vaguely understood but as far as DPO and GRNI are concerned – you may as well be talking in a foreign language. They don’t understand these concepts, they don’t want to understand them and neither should they be expected to.
e-procurement can deliver huge benefits. There is a whole range of great solutions out there with all the functionality required to deliver these benefits. The EU commission has estimated it could save €100 billion per year by implementing e-procurement – but these savings will never materialize unless the lessons are learned – not just from the success stories – but also from the failures.