Procurement departments are being put under the spotlight as
businesses attempt to cut costs during the recession but
technologies used to streamline how businesses buy goods and
services are not delivering expected benefits.
According to the
Global Procurement Survey 2009 from CapGemini, two thirds of
big businesses said the current economic conditions are having a
significant impact on procurement activities.
The survey also revealed that, although companies
have been using software, such as e-procurement systems and online
auctions, to streamline buying products and services for ten
years, they are not making the most of them.
For 60% of the companies surveyed, less than 20% of their total
spend went through procurement tools. Only 7% of the companies
questioned made over 80% of purchases through these systems.
"Given these systems have been about for more than ten years, we
expected to find a healthy amount of use of them, particularly in
the large organisations ($1bn plus revenues) which made up the
majority of respondents. What we found was quite the opposite,"
said the survey report.
The report said most procurement tools do not suit certain types
of purchases when they cannot, for example, be chosen in a
catalogue. Because of this, buyers often bypass them.
"Building a solution is one challenge but getting people to use
it is another. Too often people find ways to bypass the system and
revert to traditional ways of transacting; for example employing
the phone as an easier medium. Unless a robust compliance strategy
is in place, the amount of spend directed through a system is
likely to remain low," the report said.
The report revealed that 67% of procurement departments within
large companies said economic conditions are having a significant
effect on their strategies. It said over half of the companies
surveyed were targeting savings of more than 5% with some aiming
for double-digit growth.
BP said last week that it has cut its IT suppliers from 40 to
five in a drive toward simplicity, standardisation and efficiency.
The oil and gas company has consolidated its IT for application
development and maintenance over the past 12 months. It announced a
series of contracts yesterday, which it claims will save $500m over
five years.
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