Spend Matters welcomes this guest article from Zycus.
Procurement technologies, intended to facilitate and support the sourcing and management of goods and services, have evolved significantly over the last 15 years, and new applications are constantly being developed. However, the effective adoption and use of electronic procurement technologies (EPTs) is still a “black box” for many companies, and postulated benefits remain elusive. Many practitioners are overwhelmed by the proliferation of EPT offerings, are faced with user adoption resistance and are questioning the efficacy of EPTs.
To address these challenges and to provide insight into the current state of EPT adoption, a 2-phase industry study was conducted by Zycus and Michigan State University. The project was led by Dr. Tobias Schoenherr, associate professor of supply chain management at Michigan State University. The first phase consisted of interviews with procurement leaders and practitioners to map out the current EPT landscape, identify EPT best practices and pressing challenges and detect any additional trends on the horizon that may shape how procurement will be conducted in the future. The outcome of the first phase then served as the input to the second phase of the research, which consisted of a large-scale survey among procurement leaders and practitioners, to assess the derived notions across a larger sample and to generalize the findings.
Motivations for the implementation of EPTs, as identified in the first phase of the study, included better integration, communication and visibility, better ensuing knowledge management and the increasing age of legacy systems, coupled with the availability of industry-specific software. Challenges encountered during implementation consisted of users having a preference for the legacy systems, change management issues, the demand for a user-friendly environment, no time to learn the new system, perceived loss of control and the technology being seen as an expense. Both formal and informal training, the promotion of success stories and the demonstration of specific benefits were used to overcome these challenges. Challenges reported after implementation included the fact that full capabilities of the systems are often not realized, specific reporting functionality is not offered, high supplier interface costs and data validity issues.
The second phase of the study identified the prospect for better integration and visibility internally as the dominant driver for EPT adoption, with however change management issues posing a significant obstacle. Most frequent applications utilized included spend analysis, financial savings management and contract management; modules enhancing infrastructural issues were also frequently implemented, such as modules for the procure-to-pay (P2P) process, supplier portals and e-invoicing. While the perceived usefulness of EPTs was very high, with EPTs improving one’s performance, productivity and effectiveness on the job, the perceived ease of use was notably lower, which may be attributed to the different user interfaces offered by EPT providers.
Suppliers enabled via EPTs tend to be long-term, important and strategic suppliers. This makes sense, since supplier enablement can consume a significant amount of monetary resources and time. Statements assessing the relationship quality to the suppliers were also highly rated, being indicative of respondents being greatly satisfied with the suppliers enabled via EPTs. Savings targets, material target costs and other procurement targets and goals were achieved by over 60% of our respondents, and most of our respondents were generally pleased with the performance delivered from suppliers.
Overall, the outcomes of this study provide a current assessment of the drivers and barriers of user adoption and what types of EPTs are currently being utilized. We described supplier characteristics that are enabled via EPTs and provided an assessment of the company and purchasing performance on which our respondents reported. With the insight derived, we have generated a deeper understanding of enabling procurement technologies and the adoption among users.
Discover the 12 key drivers and 16 major barriers to user adoption in this exhaustive MSU research report.