Many e-procurement systems are installed but not fully used.
A study by A.T. Kearney, highlighted in an article in InternetWeek
and one in Line56
shows that many companies are not getting the full benefits of the e-procurement systems they already have. Kearney surveyed 147 companies and found that 96% had installed e-procurement systems such as electronic catalogs, e-sourcing, electronic RFx, and Internet auctions. Yet, those same companies were only running an average of 11% of their corporate spending through their e-procurement systems. Specifically, only 14% of direct materials, 15% of indirect materials, 4% of services, and 8% of capital spending were being done electronically. As a result, 23% of the same companies say they haven't met their e-procurement objectives, and 48% say they're still waiting for measurable results.
Now, I would like to know more about the original sample of companies, because I do not see anywhere near 96% of the companies that I deal with having implemented any sort of e-procurement beyond using Google to search for supplier web sites once in awhile. Perhaps the companies in Kearney's sample were deliberately chosen for their past purchase of e-procurement technology.
Nevertheless, the conclusion is unmistakable. Installing new technology, such as e-procurement systems, is not difficult. Converting suppliers, and even converting purchasing groups, from old ways of doing business is challenging. Companies greatly underestimate how much tradition, culture, and organization must be changed to get full benefits from e-procurement. How great are the potential benefits? Kearney points to those companies from the study that it counts in the "leader" bracket, who achieved a 41% improvement in cycle time, a 10% reduction in staff, and a 13:1 ROI.