How to avoid e-procurement pitfalls that can sap ROI.
Last November, toward the end of a nine-month companywide e-procurement rollout, Cindy Morrell knew something wasnt right. Employees at Union Bank of California in San Francisco, where Morrell is vice president of e-procurement, began issuing a storm of complaints about the companys new e-procurement system based on Ariba Inc.s Buyer application. Users fumed that it was too hard to find items in the systems catalog. Items from different suppliers were organized, presented and named differently. Morrell worried that the systemdubbed MyStorewould be widely abandoned even before it was fully rolled out to all 8,700 of the companys employees.
She realized something had to be done to revamp the way supplier catalog content was collected, organized and presented to make it better fit the way employees search for pens, paper and other indirect goods. By March, two months after MyStore was launched across Union Bank, Morrell decided to use software and services from Requisite Technology Inc., of Westminster, Colo., to reformat and reorganize catalog content from different suppliers consistently. The move, Morrell said, has helped increase user adoptionthough she didnt know yet by how mucheven as MyStore has grown to include 100 suppliers.
"It really is a hole" because you are dealing with so many different suppliers, said Morrell. "And even though you may have a standard process in how you bring this information onto your system, it is not an easy task."
Morrell is lucky. She caught the problem early. The difficulty of aggregating content from suppliers and managing it, however, has stalled and even crippled many e-procurement projects, experts say. Content management, according to an AMR Research Inc. report, poses the biggest challenge to enterprises rolling out e-procurement. And its one of the primary reasons, many IT managers say, e-procurement is making little or no change in the overall cost of buying products and services.
In an attempt to solve the problem, many organizations such as Union Bank are beginning to use a growing number of services and applications aimed at e-procurement content management. Others are even giving up on the idea of posting custom supplier catalogs on their sites. Instead theyre turning to so-called punch-out techniques that allow users to access and buy directly from supplier Web sites from within e-procurement applications.
For buyers attempting to deploy e-procurement, it can be challenging even finding enough suppliers that are prepared to do business online. Even if they do, and even after investing millions of dollars to deploy systems from vendors such as Ariba, Commerce One Inc., Oracle Corp. and SAP AG, however, buyers often find that the catalog content they get from suppliersinformation about product pricing and other detailsis inconsistent from supplier to supplier. Not only that, but its difficult to feed into popular e-procurement applications because vendors have yet to agree on standard file formats and XML (Extensible Markup Language) conventions for integrating supplier content into their systems. Take Ariba and Commerce One. Ariba supports Catalog Interchange Format, or CIF, and Commerce XML, or cXML, while Commerce One supports Catalog Update Process, or CUP, and xCBL (XML Common Business Library).
But the problem doesnt end with buyers. Suppliers, too, are struggling with publishing their electronic catalogs, particularly as the number of e-procurement buyers they are trying to sell tousing a variety of applicationsgrows. Without the use of some sort of content management software or service, e-procurement suppliers often find themselves spending too much time and money building custom catalogs for buyers.
Thats what Corporate Express Inc. used to do. At first, when a few customers began asking the Broomfield, Colo., business-to-business office and computer products supplier for e-catalogs beginning two or three years ago, the task wasnt overly burdensome, said Wayne Aiello, vice president of e-business services. But by last year, as the number of customers doing e-procurement grew to 200, Corporate Express realized it couldnt continue to support the rush of new buyers wanting catalogs.