The First Procurement Insights Post . . . Five Years Later Were My Observations Right?

Editor’s Note: As we quickly approach my 1,000th Procurement Insights blog post – we are with today’s submission at 995, I thought that I would share with you the very first post from May 18th, 2007.

The topic that I tackled was the movement away from ERP/IT-centric e-procurement initiatives and the effect on buyers, sellers and the software vendor community.  With hindsight being 20/20 was I on the mark with my observations?

I am pleased to welcome you to the first day of the Procurement Insights Blog.

In its most honorable form, this medium provides individuals with a vehicle to share meaningful ideas to the betterment of all participants.  It was this spirit of integrity and unfettered passion for procurement that was the impetus behind the creation of Procurement Insights.

What qualifies one to even start a blog dealing with what many consider to be a complex, diverse and dramatically evolving issue and profession?   Lets just say that it has always been my belief that the more you know, the more you realize you don’t (or need to) know.   Therefore, the cornerstone of knowledge or subject matter expertise begins and ends with effective communication.  So superseding impressive credentials and exemplary references is the pressing desire to just talk.

Through this “filter” (the Procurement Insights Blog) of collaborative dissemination it is my hope that all participants come away with something meaningful to their particular situation or circumstance.  Even if it is merely the ability to challenge one to think outside of the framework of ideas with which they are already most familiar.

In this inaugural post I would like to discuss the emerging trend involving the movement away from ERP/IT-centric e-procurement initiatives and the effect on buyers, sellers and the software vendor community.

Observation:

Based on my extensive interaction with both private and public sector organizations a number of factors have been identified as the driving force behind the movement away from ERP-centric or IT-centric procurement initiatives.

These include, but are not limited to:

• The high (and continuing) rate of e-procurement initiative failures – studies indicate that 75 to 85% of all initiatives exceed budgetary expectations but fall far short of projected savings.
• The lack or absence of key stakeholder involvement and buy-in (re procurement professionals) in an initiatives early planning stages.
• Supplier resistance (especially within the SME community relative to public sector programs).

What has been your experience in terms of your organization’s e-procurement initiatives?  Are there factors not mentioned above that you feel are worth noting?

Furthermore, and perhaps in response to the less than stellar results, there are significant changes occurring within the the software vendor community itself which is raising serious questions.  For example:

• What impact will the departure of senior executives from the Oracle procurement practice to start a competing company have on the industry?  (For those of you who may not already know, senior personnel who oversaw the Oracle procurement application started a company that they indicated was going after the small to mid-size market.  However, based on my conversation with one the former executives it was acknowledged that the new company’s product offering could be attractive to larger organizations.)
• Is the recent announcement by SAP indicating that they will be introducing a 90-Day E-Sourcing Trial for only $10K a response to prospective and existing clients’ questioning the validity of their significant licensing and maintenance fees?  In a recent article I wrote (titled Vendor/consulting fees: Value for money?) I referred to an actual case study whereby a public sector organization approached PeopleSoft to create a basic PO Reconciliation program.  The starting price PeopleSoft quoted was $100K.  Somewhat reluctant to pay what was felt to be a “high” fee, the organization looked for an alternative solution ultimately finding one that cost a fraction of the $100K starting price tag.  While PeopleSoft is a different company, I am certain that similar SAP examples exist.

What are your thoughts regarding the above developments?

30