LIVE In-Depth: Forrester Research Examines eProcurement Trends

Andrew Bartels of Forrester Research reported some useful figures and analysis on the state of eProcurement in his afternoon break-out session at LIVE. Unfortunately, he also announced that the Forrester / ISM relationship -- where Forrester published and analyzed ISM data on a quarterly basis -- had ended.

But onto Andy's presentation. When Forrester surveyed users, they found that over 30 % of eProcurement implementations had not met expectations (31% were as expected, 28% were slightly above, 6% were well above).

When Forrester set out to analyze why implementations fall short, they discovered that typically one or more issues comes up including:

- Companies start at the wrong place and stop at the wrong time

- Organizations fail to make process changes

- Companies fail to address the people side

- Organizations fail to give enough attention on the supply side

Another interested finding was that the CFO was the key individual for getting process changes made. In other words, without the buy-in of the CFO, most procurement projects were going nowhere.

The good news, however, is that savings from eProcurement are real. According to Forrester, organizations typically save $5-$20 dollars (hard savings) per PO, and improve compliance with policies to 90% (from 40-50%). Organizations also can often identify new opportunities to do better sourcing from eProcurement systems.

How can organizations improve there eProcurement ROIs? Forrester identified a few key areas, a couple of which we’ll explore in more detail in a separate blog entry later tonight or tomorrow. First, companies can improve their ROI through getting resistant suppliers on board. Next, organizations can improve catalog management and coverage. Third, companies can link procurement initiatives with contract management. And fourth, companies can link invoices to reconciliation and payment.

Bartel’s analysis confirms that eProcurement is not slowing. In fact, if you combine his analysis with Ariba’s comments during the media lunch that 40-45% of their pipeline is Ariba Buyer related, the market is looking up for eProcurement initiatives as a foundation for Spend Management.

-Jason Busch

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