Likewise, later when they wanted to install software for e-auctions from Frictionless Commerce, they simply discussed the benefits with finance. "It was a no-brainer," they recall.

In fact, even the original decision to purchase SAP didn't require much justification by the purchasing operation. The idea sprang from the company's corporate finance department, and was related to efforts to standardize transaction processes around the world and avoid any Y2K problems.

So much for stories of the bureaucratic roadblocks that supposedly block progress at big companies. As for smaller companies:

Pat Walker, vice president of finance and the top purchasing executive at Walker Machinery, in Belle, W.V., has had a different experience.

Recently, he convinced the Caterpillar heavy-equipment dealership to invest in procurement software from Verian. To make the case, he estimated the savings he thought he could get from suppliers in several categories and presented the savings to management. "We put all our spending into 35 categories," he says, "and forecast the low-end (1% savings), medium (2.5%) and high-impact (5%) savings we thought we could get."

Then he took the conservative route and projected overall savings of 2%. "Always be conservative," he says, "and if the conservative numbers don't look good, don't pump them up. Optimistic assumptions will get you laughed out of the boardroom."

Good advice from a professional who is very familiar with boardrooms. Walker is a member of the family that owns the dealership.

Building the business case for buying software and hardware more often requires the kind of formal number crunching that Walker has done than the informal discussions that the health care executives had, and it isn't always easy. "Projecting ROI (return on investment) is always a challenge," says Walker.

That's because CFOs make it so. Says one former corporate finance chief, they'll insist on knowing the full scope of the details of the software project, the relative risks, the potential savings, specifically how the software will help purchasing take sourcing to the next higher level and the internal resources required. The IT (information technology) group may have questions too, such as whether another program already installed will accomplish the same results; whether the new program will integrate with existing programs; whether there will be administrative costs to configure the software for your specific purposes; how much regular support will be needed; training required; and whether the company has the right hardware for the software you've chosen.

When it comes to those IT concerns, executives says, purchasing has to take ownership and make the new software work as advertised. Many people think it's IT's job to make it work, but it's really purchasing's job when it comes to procurement software.

It's also purchasing's job to make the sales pitch. At Blyth Inc., in Greenwich, Conn. Linda Peyton, director of procurement technology, showed the company's executive committee how many additional sales it would take to equal the cost savings she hoped to introduce by using technology from SAS and Procuri. "We were talking about a hypothetical $1.6 million savings over 12 months on a $15 million spend," she says. "The equivalent earnings before interest and taxes would have been about $3.6 million in sales."

Frequently, ROI comes in stages, says Jill Goff, director of sourcing and procurement systems at consultant firm BearingPoint. "Each stage could have its own ROI," she says, "and it can include soft productivity dollars."

Other elements of savings, he says, include headcount reduction. But, savings also come from better data on spend and getting additional value from suppliers—information you can get with the right software.

Applications specialists at Verian have a to-do list that structures the thought process for building a business case:

• Understand how existing procedures affect purchasing, accounting and other departments.
• Document the challenges the current process creates and how those challenges affect the corporation.
• Quantify the impact of staying with the current system vs. moving to new software.
• Summarize how the proposed software solves problems with the current process.
• And build consensus among other stakeholders —such as accounting, manufacturing and engineering so they'll support your efforts.

Nicole Lane, senior director of product development for application services provider USi, says many companies are becoming more open to arguments about the qualitative benefits of additional software and hardware instead of just insisting on only the quantitative benefits. The streamlining of processes, the ability to benchmark vs. competitors, the potential for following audit trails and the added leverage you can get with suppliers that comes from adding procurement software can bolster the quantitative numbers you develop for your business case, she says. Those advantages appeal to executives.

The key, says Lane, is to think like the business leader you are approaching for support, and think of the whole enterprise.

Building the case may take time and effort, but it's worth it. Says one purchasing executive at a major Fortune 500 company: "Without the right software tools, you won't get as much accomplished in purchasing."