CPO Challenge part 3: Selling eProcurement to your organization

One of the major problems that purchasing organizations face, is how to actually bring home the savings. Visualizing and marketing the corporate contracts is one of the biggest challenges that purchasing functions are facing today.

I think we all agree that succeeding with procurement is very much about getting your agreements used in the organization. So let’s regard it as a sales process.
As in any sales process, you need an attractive product to market in order to attract potential buyers. And once you’ve succeeded with the sale, your customers must feel that they got the good end of the deal.

So what are you selling?

Your contracts.

And how do you market them?

With an easy-to-use enterprise wide eProcurement solution.

We’ve discussed strategic sourcing and how to get your group wide sourcing done earlier (see IBX Newsletter #4 2007: http://www.ibxeurope.com/?id=3334), so let’s jump straight into the pros and cons of implementing and getting full usage of an eProcurement solution.

There are two cornerstones in eProcurement that can make or break a procurement intitiative: usability and content. These two aspects are vital when it comes to generating compliance to the contracts. Of course there are many parameters that decide compliance, such as stakeholder involvement, TCO-perspective, robust and well executed strategic sourcing and consideration of local needs. But when it comes down to getting the majority of the users on board, it will eventually boil down to usability and content quality.

Getting all of your employees on-board

Your customers, the employees that are going to use the eProcurement solution can be devided into three main groups:

1. The will learn anything:s,

2. the will learn if easy:s and

3. the always need help:s

Statistically they map into the bell curve figure below and the trick is to get as many users as possible into the “will learn is easy”-segment.

Figure 1: The employees – the customers of any procurement initiative are statistically mapped into three groups with different needs. 
  

The “will learn anything:s” are your typical early adopters, they embrace new technology (with a passion) and will get through anything – be it confusing user interfaces or lack of relevant content. They are an exception though. The majority of the employees fall into the “will learn if easy” category, they will follow your lead if the path is clear enough. They are familiar with the web and assume that any web-based solution will be as easy to use as Google.com while providing content with the quality, flexibility and transparency of Amazon.com. Lastly, you have the “will always need help”-group. Albeit few, this group are often loud and may cause the boat to rock even though there is no storm in sight. To bring them on-board, the eProcurement solution needs to be complemented with support services such as “buy-on-behalf” and assisted purchasing.

As the figure below illustrates, there is a huge potential in raising the compliance to the sourced contracts.

Figure 2: Cost reduction and compliance go hand in hand when delivering results to the bottom line.

Spend distribution for indirect material and services

But a simple and straight forward user interface with support services in place will only get you so far. The solution needs to facilitate multiple call-off methods. Traditionally, an eProcurement solution focused on catalog buying only. The problem is that only 25-35% percent of a company’s spend can be bought through a catalog, the rest needs alternative call-off methods such as user-defined forms, bundled products, request for proposal, time based purchases or subscriptions.

Figure 3: Indirect material and services spend distribution by category. Only 32 percent of the total spend can be bought through traditional catalogs, the remaining 68 percent need more advanced call-off methods.

Why content quality matters

Place yourself in the shoes of your employees. You need assistance with your project and urgently need a consultant. No matter how hard you try, the search engine of your eProcurement solution comes up blank time after time. Chances are that you turn your back forever and pick up the phone to call your old school buddy at the local consultancy firm. You’re breaking company regulations, no doubt about it, but you’re getting the job done and that’s enough to justify your actions. Or is it?
Content quality goes hand in hand with advanced call-off methods. Both are equally important when it comes to capturing spend, and keeping your customers hooked on the eProcurement solution.
A search engine will only find what’s available – and if the quality of content is poor no matter how advanced the search engine is, it will not find a single thing.

Making sure that your contracted suppliers provide adequate content can be a hard task. But it doesn’t have to be. Catalog scorecards provide deep insight into how a supplier’s content rate against the best of breed. They also provide clear and powerful tips on how to improve content quality – something that is proved to drive business. Which in itself should be an incentive to the supplier to act.

But content quality is not just a supplier issue. Poor content quality can stall or completely break an eProcurement initiative. First impressions last, and if users have bad experiences with the eProcurement solution, chances are that they are not coming back on their own.

The end-user algorithm

Intuitive user interface + full call-off coverage + quality content = happy consumers.

And we all know that keeping a consumer happy is a sure fire-way of keeping them coming back for more. And that’s what you need in order to succeed with an eProcurement implementation.

Farzin Saber, Professional Services Manager, IBX Group