Technology-enabled procurement is no longer about whether it helps companies perform better or not. Rather, according to the Aberdeen Group earlier this year, "the debate is over technology deployment options remains unresolved in the procurement realm as the split between those that prefer installed (41 percent) versus on-demand (37 percent) remains close."

In analysis of its annual benchmark study, released in fall 2008, the Aberdeen Group found that enterprises in North America have significantly improved their procurement performance after implementing an e-procurement solution. Not only that, but performance improvements due to e-procurement activities were readily apparent. Most notable were the reduction in requisition-to-order processing cost and time and reduction in maverick spend. Aberdeen's research shows that companies have been able to achieve up to 20 percent cost savings for each new dollar of spend brought under management.

"To move up the maturity curve, procurement executives need to understand where they currently are in terms of people, process and technology," notes a recent Hackett Group report, titled 2020 Vision: Delivering on the Evolving Value Proposition of Procurement.

And where are they? While nearly three quarters of the companies recently surveyed by KPMG LLP currently believe that procurement is a "high priority" within their organizations, about half address the function mostly from the standpoint of cost instead of "value creation," the international accounting and consulting firm says.

Reporting on its latest survey of nearly 600 global procurement and top-level executives, KPMG argues that "companies are missing business improvement opportunities by ignoring key procurement issues, especially in the areas of tax and technology." While many companies report using IT tools such as "spend analysis" (53 percent) and "e-procurement" (50 percent), nearly three-fourths (72 percent) of the respondents have less than 10 percent of their spend channeled through e-procurement and e-sourcing applications.

One problem appears to be the fragmentation of procurement in terms of management oversight. Of the companies in the survey, 42 percent have their procurement functions reporting to operations and 38 percent to finance. As such, any real improvement in the setup requires deep structural change.

So, while e-procurement technologies significantly improve procurement performance time and time again, companies' implementation practices generally do not.

In a recent paper, e-procurement provider Coupa Software, Inc. identified what it sees as the top most common mistakes companies make in selecting and implementing e-procurement software. Herewith, five tips based on the most common implementation mistakes:

1. Listen to the people around you. Structure your implementation process to involve your users. Get input from the ultimate end-users throughout the implementation process; their sense of ownership and feedback will be keys to the implementation's success.
2. Embrace the 80/20 rule. Get the project up and running, show value and then move forward. Shoot for an initial roll-out that delivers 80 percent of the capabilities you're ultimately looking to implement, then move forward in implementing that last 20 percent of functionality. This approach allows you to foster enthusiasm and gain momentum for the project and your team; reduce risky, costly customizations; and correct any problems early on.
3. Maintain strong top-level sponsorship. At least once a month, project managers should take an objective look at their projects. If the executive is no longer passionate about the project, or if communication between the sponsor and the project team has deteriorated, or if the value of the project is no longer being communicated actively across the organization, it is time to resell the merits of your project or find a new sponsor who is willing and able to pick up the role.
4. Do not assume all users are created equal. Rather than roll out solutions to everyone at the same time across groups of employees regardless of skill level, carefully craft a roll-out strategy. Don't hesitate to engage influential users. Ultimately, identifying and recruiting your influential users will pave the way to a smoother, more successful roll-out.
5. Consider the hidden cost of "doing nothing" to address e-procurement. Failing to implement an e-procurement system can carry a high price. Take a practical, pragmatic look at the cost of not changing the way your company manages its processes. Consider the potential improvements in employee productivity and purchasing decisions. Taking action sooner rather than later can increase operational controls, efficiency and real savings that go straight to your bottom line.

Finally, remember that technology is a strategic business resource that, when used effectively, is a key enabler and enhancer of organizational performance.

"It's important to look at a new system as an opportunity to fundamentally improve a business and make it more efficient, more responsive and more effective," Coupa Software states.

Companies must not only look at the big picture — they must also understand it.

Resources

Avoiding the 10 Most Common Mistakes in Selecting and Implementing e-Procurement Solutions
Coupa Software, Inc.

The Impact of E-Procurement in North America
by Amit Gupta
Aberdeen Group, September 2008

2020 Vision: Delivering on the Evolving Value Proposition of Procurement
The Hackett Group, Inc. (2008 Book of Numbers research series, Vol. 12, No. 2), Oct. 21, 2008

KPMG Survey Finds Procurement a High Priority at Most Companies...
KPMG LLP, Sept. 10, 2008

CPO Rising: The CPO's Agenda for 2008
by Andrew Bartolini
Aberdeen Group, February 2008

Seven Steps to Better Procurement Practices
by Dave Stephens
Healthcare Financial Management Association, December 2008