Closer ties with IT lead to improved spend analysis

6 October 2004
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07 October 2004 | Cara Whitehouse

Purchasers should forge closer ties with their IT departments to make sure their systems work more effectively, according to a leading analyst.

Pierre Mitchell, vice-president at AMR Research, told the eWorld Purchasing and Supply conference in London that IT systems often left purchasers unable to effectively analyse their spend and supplier quality, meaning they were unable to control what they couldn't measure.

In the conference keynote speech, he said purchasers needed to be empowered to take ownership of the technology by involving themselves early on in the design process to influence its development.

"In a sense, IT is often a solution looking for a problem," he said. "In this case procurement can help IT to spend its money more effectively."

Many systems were too complex for purchasers to use without support. Instead they must constantly call on IT for help.

Mitchell said purchasers and their businesses find themselves in "the perfect storm" where they must save on average 8.3 per cent of their budget a year, according to some studies.

This storm includes pressures such as increasingly short delivery times, more demanding customers and the threat of low-cost sourcing in places such as China.

To weather these problems, purchasers need IT systems that give a good overview of what is spent, by whom and where.

This leads to better control of spending and planning.

Mitchell said: "Spending visibility is necessary to check people are buying properly."

If companies shut down the old ways of buying, staff will have to use the new processes, he said.

His comments coincided with recent research from the London Business School revealing that 55 per cent of businesses have no active projects to improve spending visibility, while 31 per cent saw no value in such improvements.

Peter Smith, managing director of ProcurementExcellence and a past president of CIPS, said: "Purchasing departments must stay closely involved in development of systems all the way through or they will get what IT think they want, not what they do want.

"IT often doesn't perceive purchasing systems as high profile or 'sexy' as other systems.

"There is a need for mutual education to make sure IT understand how important procurement systems can be."





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