e-Auctions; not just for the mega-procurement users

At the recent Andomise / Coupa breakfast (our first piece about buying cloud services was here)  we also had a presentation from Alun Rafique  of Market Dojo. They offer solutions and services around e-auctions, based on a very flexible, low-cost, simple user interface approach.

Rafique’s hypothesis is that we’re seeing a big move away from users engaging major consultancy based services around e-auctions. Increasingly, users want to be able to do it themselves, and the technology is available to enable this, having become easier to use and faster to implement than it was a few years back. Here are his other key propositions:

  1. Many clients are using cloud applications in areas such as sourcing and auctions that “sit on top of ERP" – this is in order to “keep their ERP system clean and tidy”.
  2. Inexpensive proof of concepts are becoming the norm – organizations want to start small and test before making major commitments.
  3. SMEs (small firms) also want a piece of the action – and low cost solutions mean access for such firms is available.
  4. Accessibility and on-demand opens up new markets – organizations who previously could not afford the technology.
  5. Customers get a solution that fits around them – pick something that fits you.

Rafique also questioned whether the “enterprise suite” is the right approach – is best of breed a better option, as integration becomes less of a nightmare? He’s got a vested interest of course in that line, but his advice to use proof of concept to justify and fund more extensive roll-outs is a good idea for anyone.

And “e-Sourcing is a commodity”, he says. But the most fascinating comment I thought was around the way that smaller firms are embracing the technology. Market Dojo work with a firm that has a turnover of just £1 Million per annum. Yet they do around 5 sourcing exercises a day, right down to bidding events for £100 contracts (for components, for instance)!

That would have been unthinkable a few years ago, but shows how much the sourcing technology has advanced in terms of simplicity and cost (or lack of cost), and how competition can drive value for the user, even for very small amounts of spend.

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Voices (6)

  1. David Turner:

    Picking up on the comment regarding print. I know a client that is using very effectively eauctions to bid on a job by job basis against a pre approved list of printers. The value per job can be a low as a few hundred pounds.
    The benefit the firm ses is that they can then optimise spend through taking advantage of slack production times and the printers get the opportunity to fill production slots.
    As previously stated we are now seeing these tools embedded in procurements standard toolkit .

  2. Sub-OJEU negotiations (Market Dojo):

    @ Julian. That is a very interesting question you raise and something I imagine you face a lot with your innovative concept.

    We have a whole new product up our sleeve for imminent release to address exactly this area, as we think that e-sourcing has focused too much on large, complex aggregated contracts and not enough on quick and easy negotiations amongst a pool of preferred vendors. If you make the e-sourcing process quicker and easier than conventional sourcing methods, such as e-mail or phone, then we think the adoption will take off.

    We have set the precedent with our current customers, so it’s time to bring it to the wider audience, both public & private sector, to encourage better negotiations for those lower spend levels. Framework contracts certainly have a place, but let’s promote mini-competitions to drive best value.

  3. Julian Trent:

    Very interesting to read more views and evidence that buying organisations are looking at disaggregation to drive better value from markets that fluctuate more frequently than previous contracting approaches have recognised.
    This is great news for SMEs and buyers who can better understand and work with rather than stifle market forces.
    What are the implications of this on things such as EU regs and thresholds? Will we see more lower value commitments replacing framework contracts eventually?

  4. Market Dojo:

    Some very interesting comments. We have seen that auctions can be used to disaggregate spend but it does depend on the category. For example we have known of clients who want to split their print spend and tender it on a weekly basis as capacity of the local printers is the biggest cost driver. Thus auctions amongst many local print suppliers was the solution.

    Interestingly we originally aimed at the SME market although we were taken back by the larger entreprises [even Fortune 500 companies] wanting a more accessible e-Sourcing application to sit on top of their ERP systems. However, as Peter mentioned, we are now seeing more SME’s wanting to take up the mantle. The first driver seems to be the centralise their quotations with an easy to use system for their suppliers. However, once started they are already examining the auction capability. Also we are seeing large companies look at auctions down to £10k spend as the cost and accessibility of the tool does not prohibit this (Obviously the proper processes still need to be adhered to). These are very interesting times.

    We would also like to thank Peter for covering us, Andomise for giving us the opportunity to present and also our other Co-Founder, Nick Drewe who presented alongside myself.

  5. Ian Heptinstall:

    Frequency should depend on the category, and the strategy, but the technology can open up sourcing options that would otherwise be discounted due to the effort involved.

    I know of an example where auctions were used to allocate freight transport work between framework suppliers, giving them the opportunty to offer better pricing for back-loads or if they happened to be going that way for other clients. Local depots uploaded several lots each morning for tomorrow. Any not bid for used the base framework & were allocated in the afternoon.

    Scanmarket was another supplier who offered an affordable DIY service a few years ago. It was quite easy to use.

  6. PlanBee:

    I totally agree with the concept that eAuctions in themselves should be cheap and easy to run. They are just another tool, like RFP’s, that all Procurment staff should know how to use and when to deploy

    Of course running an eAuction and running a good eAuction can be two wildly different things (as your recent articles on Guy’s presentation show)

    Another interesting point here is should a cheap eAuction tool be used to disagregate spend? If an eauction is cheap and easy to run should you eAuction your copier paper requirements on an annual or a monthly basis?

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