E-procurement strategies slash costs by up to 75%

Organisations implementing the right e-procurement strategies and technologies can reduce their purchasing costs by up to 75%,...

Organisations implementing the right e-procurement strategies and technologies can reduce their purchasing costs by up to 75%, according to a report by the Aberdeen Group.

The analyst firm said companies implementing e-procurement best practices, such as thorough business process investigation prior to deployment, are achieving the greatest savings.

The report, which looked at companies in Europe, the Middle East and Africa, also cited the use of e-procurement as a revenue generating tool, through improved supplier relationships, defined classification standards and helping partners with logistics cost management.

Frances Howarth, an analyst at Aberdeen Group, said strategy and planning are vital to e-procurement success. "Technology is not a strategy," she said. "Companies need to plan their spending, set benchmarks, train all their users and work closely with suppliers."

Defining how e-procurement can improve business processes will go a long way towards helping companies to achieve savings, Howarth said. "It is not just a matter of putting new technology on top of existing processes. Companies need to work with suppliers to make sure the applications do exactly what the business requires."

One of the biggest hurdles to overcome with e-procurement projects is integration with legacy systems. "Although suppliers have responded to the problem by building adaptors, there is still a lot of work to do," said Howarth. "However, companies do not necessarily have to integrate entire systems - just enough to get the system working."

A big growth area in e-procurement is online marketplaces. Howarth said larger companies should look at investing in these when they are launched.

"If companies get in early they have more of a chance to shape the markets," she said.

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