Hard ROI prompts revision of e-procurement rationale

1 November 2001
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01 November 2001 | David Arminas

Guinness UDV spent £5 million before it realised implementing e-procurement was more than just introducing a purchasing system, according to the multinational drinks giant's e-procurement director.

Tony Martin told delegates at the E-procurement Summit late last month that electronic buying is now an essential part of company infrastructure.

"This is an infrastructure programme now because return on investment (ROI) is a difficult measure for e-procurement alone," he said. "We see this as an enabler for our business, not a pure return on investment."

But the task has not been easy. "I have spent 12 months trying to get buyers to come on the journey with me... but they are largely frightened by what it might bring," added Martin.

"We are putting a miserable £374,000 a month through our platform at the moment," he said. "But we will have £3.5 million a month by January."

Barclays bank also sees e-procurement investment in a different light now, said Ian Russell, its e-procurement programme director. "The focus has changed to a more infrastructure-based investment," he said. "That is not to say we are not looking at a return, but the benefits we seek are not just financial."

Benefits to Barclays come from decentralised buying with centralised control, better information on buying patterns and increased compliance with strategic contracts. The goal is for all UK group requisitions to go through the e-procurement portal within the next two years.

The business case for e-procurement spend is falling apart, Frits Janssen, managing director of best practice network BuyIT, told SM.

"People are having to justify their investment in e-procurement," said Janssen. "Any million-pound spend must have a business case and a return on investment (ROI). But people are finding measurement of savings difficult - they're bailing out and saying 'no, it's infrastructure', assuming that doesn't require an ROI."

SMnov2001

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