Direct e-purchasing brings savings

Businesses will soon be able to sample the first fruit of a joint initiative by e-procurement giant CommerceOne and enterprise software specialist SAP...

Businesses will soon be able to sample the first fruit of a joint initiative by e-procurement giant CommerceOne and enterprise software specialist SAP to combine direct and indirect purchasing.

In the past, analysts such as Gartner have been critical of packages for e-procurement, saying that they only address indirect purchases such as office supplies and computers. Yet it is a widely held belief in the industry that the biggest savings in e-procurement are to be had in direct buying, the strategic purchasing of raw materials, for example.

However, this is set to change with the introduction through an early adopters programme of CommerceOne’s Enterprise Buyer suite.

Chris Philips, membership director for marketing at CommerceOne, said, “Our background has not been in the direct procurement space. This is less mature than indirect procurement.” But he added that, with the introduction of Enterprise Buyer, the situation will soon change.

Developed in conjunction with SAP, the e-procurement package has been designed to offer both direct and indirect procurement.

Philips said that while indirect purchasing provided by the existing CommerceOne software is geared towards staff making purchases from a catalogue, direct procurement involves dealing with complex manufacturing systems that manage raw materials and inventory, often without human intervention.

“Most people can buy indirect goods from a catalogue, but direct procurement requires an expert buyer,” explained Philips.

The benefits that CommerceOne hopes to achieve by combining direct and indirect procurement are twofold.

First, said Philips, users can collect consistent data across all purchasing within the business. Second, by combining indirect and direct procurement it becomes possible to integrate financial information and accounting systems.

With such data on procurement, Philips said business managers would be able to determine how much they actually spend on a given business activity.

However, some industry experts are advising users not to hold their breath. During the Gartner Symposium in November, Andy Kyte, research director at Gartner, said, “It will take until 2003 before a single e-procurement system is available on the market capable of handling 30% of a business’ purchasing requirements.”

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