A clean slate gives Gulf e-sourcing an advantage

24 May 2006
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25 May 2006 | Mark Johnson in Dubai

The absence of outdated technology in the Arabian Gulf is likely to ease the growth of e-sourcing tools in the region.

But if it is to catch on fully, vendors will have to demonstrate cost benefits.

Speaking on the sidelines of the CIPS Middle East e-sourcing and e-procurement conference in Dubai, Mickey Howard, lecturer in operations and information systems for the School of Management at the University of Bath, said the Middle East has a great opportunity to leapfrog other areas in the move to new business practices.

"The emirates and the Middle East could see some rapid benefits from e-sourcing because they don't suffer from IT legacy. In the west there are layers of EDI systems and AS400s mainframes, which can hamper progress."

But one stumbling block to uptake in the area is cost. Omar Hejazi, CEO of Dubai-based e-marketplace Tejari, said outlining the cost savings was the only way to get Arab firms listening. "We have to emphasise the savings that moving to a new platform will give them."

But UK firms, many of which are more advanced in their use of e-sourcing technologies, warn that businesses in the emerging economies should not just take a superficial stand on costs.

Steve Pink, general manager, IT and indirect procurement for British Airways, told delegates the airline had now introduced its e-sourcing capabilities across all its commodities and the next step was to look at using it in more sophisticated ways.

"The cost of ownership, rather than the initial cost of purchase, are two different issues," he said.

For example, Pink said, the airline had looked at the cost of sourcing new doors for its aircraft and decided against the cheapest option because they discovered there were invisible costs down the line of owning the door.

"We chose a lighter, though more expensive, set of aircraft doors because we realised that the heavier, cheaper option would add to our fuel costs on each aircraft.

"With fuel costs now a major issue for us the cheaper option would have cost us more in the end."

SMmay2006

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