Conference survey finds PMs craving better tools for pursuing electronic commerce
By Staff -- Purchasing, 7/15/1999
While most purchasing professionals know about and desire advanced e-procurement solutions, most are forced to use haphazard or incomplete systems to perform enterprise-wide procurement and contracting functions, according to a recent survey by American Management Systems (AMS), an international business and information technology consulting firm based in Fairfax, Va.The survey, taken at the National Association of Purchasing Management's (NAPM) annual conference in San Diego, polled purchasing managers on implementation of e-procurement solutions and support for complex contracting in existing tools. Key findings:
- Forty percent of respondents use more than one system to perform basic purchasing and contracting tasks. This includes both ERP platform users as well as managers who use dedicated purchasing systems.
- Two thirds of respondents do not have electronic catalog capability in place; 90% of those without the capability want it. Similarly, while 86% of managers are aware of and want single-entry search engines for comparison pricing among multiple electronic catalogs, 75% don't have this capability.
- One third of purchasing managers polled can not easily place orders against a master contract, even though 94% would like to be able to do so. Nearly half of the respondents do not have contract source selection, while 74% of them want this ability. Almost half of the managers surveyed do not have bid evaluation functions, though many wish they did.
AMS suggests that the "patchwork" approach to purchasing and contracting tasks creates "a high likelihood of inefficiency and waste in the forms of effort duplication, multiple database maintenance, and increased IT support costs." It estimates that "dollars lost may be in the hundreds of thousands, or even higher." What's more, AMS estimates that the general inability to comprehensively shop competitive suppliers may be costing "millions of dollars annually in lost savings."
The survey explored what services offerings purchasing managers find important in solution integration and what they want most from solution suppliers. In order of importance, purchasing managers are looking for post-implementation support, end user training, system customization, change management, and business process reengineering from their software providers. Those using ERP systems feel just as strongly about the importance of these services to the likelihood of a successful system implementation.
"The AMS survey illustrates that a large majority of organizations continue to rely on stovepipes of automation to support purchasing and contract management processes, making it difficult for procurement professionals to effectively manage and control expenditures," says Tim Minahan, senior analyst within Aberdeen Group's e-commerce research practice. "Aberdeen research indicates that corporate purchasing processes can be vastly improved by an e-procurement solution that supports all aspects of corporate procurement through a single point of automation. Our research shows that, when effectively deployed, such full-function e-procurement automation can significantly reduce costs, lower administrative burdens, and improve supply chain management activities."
"I can see how many could be surprised by the survey's findings," says Beth Palmer, senior principal, Procurement Solutions Group, AMS. "Unless you have implemented a significant number of purchasing solutions across a wide spectrum of industries, it's hard to get more than anecdotal evidence of what procurement managers find troubling or lacking in their implementations. We at AMS have long suspected what the survey has now quantified--most procurement and contracting models simply aren't robust enough to fully support the e-procurement needs of large organizations. Purchasing managers want complete state-of-the-art software combined with first class implementation and support."
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