Aberdeen: E-procurement improves bottom-line results

RP news wires, Noria Corporation

E-procurement has delivered measurable value to enterprises by improving cost savings, streamlining internal processes, and enhancing supplier relationships, while continuing to capture more spend under management, according to a new study published by Aberdeen, a Harte-Hanks company.

This study, "E-Procurement: Trials and Triumphs," leverages the insights of procurement executives from more than 620 enterprises, and established that, since 2001, enterprises have significantly improved purchasing performance across key performance indicators. As a result of their e-procurement initiative, the study found that enterprises, on average, displayed a 35 percent improvement in spend under management, with a 41 percent reduction in maverick spend. Enterprises also reduced their requisition-to-order cost by 48 percent, and cut transaction cycle time in half. However, the research indicated that significant e-procurement challenges remain in areas of supplier enablement, catalog management, and end-user adoption.

"Our research has discovered that the procurement department is no longer just a transaction center for placing orders, but can also be a source of competitive advantage by acting as an information hub supporting business planning and decision making. There is more to an e-procurement solution than cost savings; it is now a tool that removes manual error-prone repetitive tasks and promotes compliance with business controls allowing procurement resources to focus on more strategic tasks," said Amit Gupta, research analyst, Aberdeen.

Best-in-Class enterprises are excelling in many performance metrics, and demonstrate the following performance benefits:

• Place 78 percent spend under management control, which is 26 percent more than their peer enterprises

• Display 83 percent on-contract spend, with 25 percent less maverick spend than all other enterprises.

• On average, have requisition-to-order cycle times of one to two days, which is more than half of their peer firms, with transactions costs that are 33 percent lower than all other enterprises.

The e-procurement benchmark report recommends that enterprises should start with a center-led procurement department championed by an executive, who will leverage the capabilities of business partners and stakeholders, and drive end-user adoption. Most enterprises will benefit by leveraging technology solutions such as supplier networks, catalog hubs, which allow quick enabling of suppliers and transmitting purchase orders electronically. Additionally, top performing enterprises should aim to integrate e-procurement with finance and accounts payable systems.

A complimentary copy of this report is made available due in part by the following underwriters: SciQuest, Wax Digital, Ketera, Enporion, and Coupa. To obtain a complimentary copy of the report, visit: http://www.aberdeen.com/link/sponsor.asp?cid=4215.

About Aberdeen Group, a Harte-Hanks Company
Aberdeen is a leading provider of fact-based research and market intelligence that delivers demonstrable results. Having benchmarked more than 30,000 companies in the past two years, Aberdeen is uniquely positioned to educate users to action: driving market awareness, creating demand, enabling sales, and delivering meaningful return-on-investment analysis. As the trusted advisor to the global technology markets, corporations turn to Aberdeen for insights that drive decisions.

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