Major firms failing to make big e-procurement savings

15 March 2001
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15 March 2001 | David Arminas

Most of Britain's prestigious blue-chip companies have failed to achieve more than 5 per cent savings through e-procurement, adding to fears that it may not be a panacea for improving low-value, high-volume buying.

The preliminary findings of a survey to be published in May by research organisation Business Intelligence, in association with e-procurement software provider Ariba, found that just over 70 per cent of respondents made savings of up to 5 per cent.

Only a fifth of companies had managed up to 10 per cent savings, the report noted.

Nevertheless, the 200 respondents remained upbeat about their use of e-procurement in the next two years. Forty per cent said they used the Internet for buying goods and services and another 38 per cent plan had to do so. Additional savings of up to 30 per cent were predicted in the next two years.

Industry insiders were unsurprised by the relatively low level of savings reported in the survey.

John Watton, marketing director of Ariba UK, said: "It shows that a lot of UK businesses have only dipped their toe in the water. E-procurement use is very low and we're not seeing the potential that has been seen outside the UK."

Simon Watkins, head of e-commerce at Purcon Consultants, said buyers needed longer to derive the benefits.

"It takes time for an e-procurement solution to gain critical mass and to be embedded with the user community," he said.

David Mannion, principal e-business consultant at ICL E-Business Services, said large e-procurement savings came from process automation, not from reduced purchase prices.

"There is a lot of hype about massive savings, but they apply to automating processes. Automate the process and you can either reduce headcount or redeploy personnel elsewhere," he added.


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