03 March 2005 | David Arminas
Companies are buying procurement software ahead of programmes for other functions because of the savings they generate, according to Oracle.
And purchase-to-pay programmes are the most popular type of procurement package according to Andrew Douglas, the company's senior procurement specialist.
"We are now seeing that purchase-to-pay software is most often the first invested in," he said. "Traditionally it has been software for other areas such as human resources and finance but for these functions measurable return on investment has not been as easy."
He said this situation had come about because of a general squeeze on IT budgets. "Companies can see that purchase-to-pay software saves money and time. The average savings are 59 per cent in time for processing orders from requisition to payment. The cost to process an invoice is down from £20 to under £10."
Douglas said return on investment for a system costing £250,000 for a company with a £25 million turnover would be achieved in the first 12 months.
Purchase-to-pay software lets buyers order goods and services on-line. Items are shipped and invoices paid electronically. This means purchasers have to sign off fewer orders than using a paper-based system.
The systems may, however, increase pressure on buyers. "Initial savings can be impressive but once a electronic system is installed, the board will expect purchasers to make year-on-year savings," said Dr Rachel Mason-Jones, senior lecturer in supply chain management at the University of Glamorgan Business School.
She said that because purchase-to-pay systems generate a lot of information about suppliers' turnovers, annual budgets and a purchasing department's buying patterns, "purchasers should think about how they will use this information to save money in the long term before they start the tender for purchase-to-pay software."