eSourcing – have we reached the tipping point?

Imagine we commissioned an agency to carry out market research on the public awareness and understanding of “eProcurement”.

Question one might be “do you understand what eProcurement is all about?”  And the results would probably look like this.

75%        No idea

12%        It’s something to do with using computers to help organisations buy things, but don’t ask me to go into the details

9%          Is it about buying illegal drugs, very popular during the “rave” boom?

3%          Yes, I have a reasonable understanding, but are you talking about the purchase to pay process or the sourcing process? eProcurement might cover either or both?

1%          I am Jason Busch and I claim my free gift...

I suspect that general understanding, even amongst people who work in business and professional jobs, isn’t very high. And we’ve partly brought that on ourselves in the profession through inconsistent and confusing terminology over the years. (The mis-use of the term “Supplier Relationship Management” being a classic example!)

Here, I’ve generally used eProcurement to refer to the transactional angle – from requisitioning through ordering to invoicing and payment.  Technology that supports the aspects of procurement related to selecting and agreeing contracts with suppliers, I’ve tended to call eSourcing.

Perhaps because of this confusion, and the size, strength and publically quoted nature of the ERP providers, general business focus has been more strongly around eProcurement than eSourcing over the last few years. The one exception maybe has been reverse auctions, which has had some wider coverage – not always positive.

Maybe now the tide is turning. After all, sourcing relates to what I’d argue is the most important part of the procurement role – choosing the best suppliers to deliver the competitive advantage organisations need.  eProcurement is arguably “just” the admin around that strategic objective.

And as we’ll see from a number of posts looking at technology providers over the next few days, there appears to be real growth and even, (dare I say it), excitement in the eSourcing market.

Have organisations finally realised how important this stuff is, and what technology can do to help achieve better results?  It certainly feels like even the late adopters are moving from a stance of “we don’t need eSourcing” to the “I know we need to do it soon” position. And the leaders in terms of  adoption or usage are looking to more sophisticated techniques to deliver them even greater benefits. (None of this comes at the expense of eProcurement of course – and indeed some recent results from providers in that field are also encouraging).

More on this as we look at some of the providers, and as always we’re interested in your views. Has eSourcing hit the tipping point and become ubiquitous in terms of adoption and use?

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