Poor e-procurement costing British manufacturing companies their competitive edge?

Failure to fully understand and utilise e-procurement could be costing British companies their competitive edge, according to research commissioned by e-procurement software firms Xoomworks and Ariba along with Dell from independent David Lewis Consultancy. In a nation-wide survey among finance and IT directors of 350 mid-market companies primarily in manufacturing (56%) but also spanning construction retail and media, with turnover more than £70 million, more than half (53%) cited ‘lack of awareness’ as the main reason why so few are not exploiting e-procurement. Nevertheless, the research suggests that 24% of firms have made e-procurement investments so far, and 27% are planning investment in the next 12 months. Meanwhile, it says 12% consider the software too expensive, 11% believe the process too complex and 7% think the available software not sophisticated enough. Promotion of the report is clearly a bid to ramp up sales for Xoomworks and Ariba in the tier beneath the big boys, but it’s interesting nonetheless. It also finds, for example, that of the e-business investments being made across industry, so-called ‘customer facing’ projects, like CRM (custmoer relationship management) are taking the lion’s share, and that firms are not afraid of paying £200—500,000 for such IT investments – some even more. Additionally though, it identifies these as already in decline due, it postulates, to unproven returns on investment (ROI). e-procurement, on the other hand, has a strong story in terms of ROI, there being plenty of examples where it has been rapid and tangible – and not only, although largely, on the indirect (non production) side. According to Ariba, take up of e-procurement in the enterprise market is continuing to accelerate – it says fast. But the firm is anxious to make the point that mid market organisations are now able to take advantage of the same cost savings as the larger multi-national organisations without spending a fortune to do it. And hence the awareness drive. “Surprisingly, of those mid-market companies yet to embrace e-procurement, their lack of action is less to do with the sophistication of the software itself or its cost, and more to do with the fundamental lack of understanding,” concludes Steve Jackson, COO of Xoomworks. “This study shows there is still a lot of ground to cover in the UK in explaining the benefits and dispelling the myths surrounding e-business,” says Ferdi Roberts, Ariba’s UK managing director. “It’s clear some businesses aren’t fully aware of how an e-procurement solution like Ariba’s, can significantly enhance their bottom-line – even in today’s economy.” And Dan Thomas, e-business development manager at Dell UK emphasises the importance of getting this message across. “In a tougher economic climate, the low-cost producer will ultimately be the winner,” he says. “By enabling our supply chain, we have consistently been able to drive low-cost material from the supplier, through the supply chain, and to the customer. This has allowed Dell to continue to be profitable, and we have seen the real business benefits our customers of all sizes have achieved through the Internet enabling their procurement process.” “Everyone can benefit from e-Procurement – return on investment is typically achieved in less than a year and affects the bottom line directly, giving organisations a significant competitive edge,” states Jackson.