What CIOs Need to Know About Procurement Systems
“Staggering” Lost Opportunities
The cost to companies for not having better sourcing and procurement solutions takes a toll on employee productivity. 72% of respondents whose procurement system does not improve productivity say a better system would save them almost 3.2 hours a week on average. That translates to 258 hours per user a year, or nearly an entire work month.
Costs of Working Around Procurement Systems
Because there are 204,000 sourcing and procurement workers in North America, one work month lost equals 32.3 million hours wasted by wrestling with or working around inefficient sourcing and procurement systems.
How Lost Time Would Have Been Used
69% of respondents say they would find new savings opportunities. 36% say they would save money by guiding a purchaser to better choices. 28% would get more spend categories under contract. And 21% would purchase more cost-effective items.
Rule 1: Choose the Right Software
The survey identified five rules that make some deployments more productive than others. Make sure the procurement software supports automation of your key business processes and that it is not difficult to use. 34% of respondents who are very or extremely satisfied with their system say the features they need to successfully automate their processes are the most important reason for their satisfaction.
User Interface Is Key
Respondents say they value depth of features more than ease-of-use. They would rather have software with the features and functions they need, even if it is a little harder to use.
Best Practices For Selecting Software
1) Identify a small set of business processes and functions that the system must support. Choose those that drive the greatest increases in productivity. Make them deal breakers. 2) Require vendors to demonstrate that the software can support those critical processes. Then run through them yourself to determine whether the user experience is acceptable.
Rule 2: Don’t Rely on One Vendor
Companies often choose the same vendor for all their sourcing and procurement applications, rather than selecting the right software for each application. They like the simplicity of working with one company, a consistent UI across modules and applications integrated out-of-the-box. Yet, 66% of respondents could have achieved better productivity by selecting applications from two different vendors rather than standardizing on a single vendor.
Rule 3: Invest in Implementation
It matters little whether internal resources, third-party services or vendor services implement a system. Rather, the level of resources applied and the experience of those implementing the work has the most significant effect. Implementation is critical to both the initial launch and the long-term success of the system.
Rule 4: Frequently Update Your Procurement System
48% of respondents who regularly improve their system say it makes them more productive. 40% in the same category say that their system could improve. Only 10% say their system does not improve their productivity, and 2% say it makes them less productive.
Rule 5: Ease of Use Is Essential
Ease-of-use is critical to how effectively users leverage tools. 81% of respondents agree that if their corporate procurement tools were easier to use, there would be less rogue spending. 78% agree that if their corporate procurement tools were easier to use, their employees would find better deals.
Recommendation
Ideally, companies should be able to buy the right software for their sourcing and procurement applications from one vendor. If they cannot, the best solution is to go with the right software for each application.
