Successfully implementing any new software solution often proves a lot trickier than businesses anticipate. When it comes to e-procurement, there are a number of factors that should be taken into account prior to roll-out, to pave the way for pain-free adoption. Up there with the most important of these is financial justification.
A clear financial rationale should be in place before the decision is taken to automate the procurement function. Establishing this helps to allay doubts that employees may be having, and allows decision makers to view the projected cost savings of an e-procurement solution when set against its cost.
Savings encouraged by the use of e-procurement come about in two ways: lower transaction costs and reductions in the average purchase price. Financial savings are underpinned by the data or ‘spend analytics’ generated through e-procurement systems.
1. Lower transaction costs: Automation reduces procurement transaction costs. It eliminates a large chunk of the paperwork associated with sorting and evaluating tenders, which in turn helps to reduce man-hours. It also helps to reduce errors in the ordering process, cutting down on wasteful expenditure.
2. Reductions in purchase price: While e-procurement does not of itself reduce the purchase price of goods and services, it creates the conditions for achieving price reductions. For a start it can be used to direct buyers to source from suppliers with whom there is a pre-negotiated agreement designed to reap economies of scale.
3. Spend analytics: The generation of detailed, instant data on who is spending what in the firm is among the most valuable features of any e-procurement system. It allows a thorough analysis of spend patterns, which can then be used for decision making and forecasting.
Explore these three aspects of effective e-procurement adoption in full, along with 14 others, by downloading our free SourceDogg white paper, Converting to e-Procurement: 17 Aspects of Successful Adoption.