ESM Solutions has sponsored research into Best Practices in Electronic Procurement, the use of Procurement Process Automation to save time and money. Our research shows that the goal of Procurement Process Automation is to overcome the six “Points of Pain” that traditional systems (including those that incorporate online shopping) inflict upon their users. These “Points of Pain” relentlessly and inexorably deplete funds, resources, energy and morale. These factors can prevent an organization from truly achieving the promise of electronic procurement solutions.

1. Transaction Costs — It’s estimated that labor-intensive, paper-excessive procurement processes can cost organizations more than $100 per order in time and resources—a figure that’s often higher than what the ordered item costs!
2. Wasted Effort — Paper-based requisition, purchase and approval processes cause redundancy of effort, promote errors, and inevitably result in costly, frustrating delays.
3. Inefficient Management — Because they lack real-time data, administrators have no way of accurately budgeting and auditing their resources. Nor can they implement an effective overall purchasing strategy.
4. Lost Savings Opportunities — Traditional procurement environments are a breeding ground for “maverick” or “rogue” buying which, according to one study, can account for a 30 to 45 percent increase in overall procurement costs. The purchase of unnecessary or non-contract items outside of standard business rules occurs routinely, undermining whatever efforts have been taken to save money through volume discounts, preferred vendor lists, and vendor bidding. It’s also difficult for organizations to leverage standard operating procedures for contract utilization and manual warehouse inventory, because it’s not clearly visible, is never fully exploited, nor can it be easily adjusted to meet the organization’s needs.
5. Misallocation of Resources — The costs are impossible to quantify, but no one doubts that the time and energy employees spend procuring supplies would ideally be better spent with on productive business. In our study, author Max McKeown defines the goal of procurement automation with almost the same words we might use to define business goals. The goal, he says, “allows people to grow strong and independent in pursuit of the fulfillment that comes from serving other people.”
6. Depletion of Energy and Morale — Bogged down by paperwork, requisitioners, administrators and business managers who find themselves performing redundant, distracting and potentially demoralizing work can eventually fall prey to resignation characterized by lack of vitality, even apathy.

Project Champion – All implementations require an executive level individual to help drive the cultural changes that are inherent with any software deployment. The champion needs to be able to articulate the importance of the project and communicate their full commitment in getting the applications rolled out to the entire organization and removing any barriers to changing outdated procedures.

Buy-in from Purchasing Department – The purchasing department will own the applications from a system administration perspective as well as being subject matter experts to the end user population. They need to understand their roles and responsibilities and be committed to removing obstacles to the process and helping to promote the process change. If they do not buy in, the project can stall and become burdensome because nothing is being accomplished.

Customer Resources (Priorities & Focus) – Even though our applications can be deployed within 6-8 weeks, the participation of the purchasing department is critical and cannot be completed within that timeframe if they are not able to focus on the project activities. Many of the activities are minimal, but if management does not make it a high priority with other duties, the schedule will slip.

IT Participation - Even though the software is a hosted solution owned by the purchasing department, IT will be needed to during the interface installation, testing and production monitoring phases. Our interface will be tested with the GL partner, but each customer has specific technology requirements that will need to be reviewed to support the interface connection and network communication policies (ie. Firewall and DB settings)

Train-the-trainer model - Our professional services methodology allows for us to deploy our solutions quickly. We empower the purchasing department (as owners) to be responsible for basic administration functions. We will educate them on the application so they can duplicate the training to the rest of the organization.

Leverage Application Functionality – In order for us to deploy our applications quickly, we highly recommend reviewing/changing existing processes to utilize system functionality rather than trying to customize the application.

Phased Project implementation – Implementations are designed to be rolled out in phases to allow for the purchasing department to understand the application and potential impact on the organization. Phase I can include a single department and should be one that is close for handling initial support questions.

Seven Milestones – Each project is unique due to customer business processes; however, deploying ESM Solutions’ customized solution can be broken down into seven basic steps:

• System training
• Data Import
• ERP Integration (if applicable)
• Supplier Enablement
• Testing and Configuration Changes
• User Training
• Go Live (Phase I)