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IBM sounds the e-procurement alarm

By David Hannon -- Purchasing, 3/21/2002

There was no "shot heard round the world" that set off the e-procurement revolution. There have been plenty of Paul Reveres riding through the countryside shouting their e-procurement messages, but the real battles are being waged on countless fronts, inside the four walls of each adopter.

IT giant IBM has waged a successful campaign within its organization. Big Blue's e-buying offensive has been thorough and bold, putting more than $40 billion of its spend online to date. But despite the breadth and depth of their forays into e-procurement, IBM execs maintain a simple battle cry: start with a strategy, end with a technology.

This means having a long-term business plan in place before you start choosing your weapons in the e-procurement revolution, regardless of your company size or industry. IBM officials feel software installs (and even some software providers) too often fall flat because they hinge on a unique procurement tool that offers an attractive up-front savings, but simply cannot fit into real business processes. Instead of redesigning its business to fit off-the-shelf tools, IBM has developed a suite of products to fit its business practices.

It means not getting bogged down in minuscule details and losing sight of the end goal, which is global at IBM. Moving the buying process online is not just about streamlining purchasing, but all of the other business areas that purchasing affects. It means keeping contact with suppliers and customers to ensure the cycle is speeding along as fast as possible and if it isn't, then developing a strategy and finding a technology to fix it.

But even IBM knows it cannot predict the future. Its tools and processes need a set of checks and balances to make sure they remain current and effective. That means using internal auditors to constantly evaluate the IT investments and make sure they are pulling their weight. It means gathering and evaluating costs against the absolute low cost in a host of commodities.

It means sticking to the battle cry.

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