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 system—dubbed MyStore—would 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 adoption—though she didnt know yet by how much—even 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 suppliers—information about product pricing and other details—is 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 to—using a variety of applications—grows. 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.
Searching for Help
Searching for Help
Its little wonder, then, that e-procurement buyers and sellers are looking for outside help managing catalog content. At Ametek Inc., of Paoli, Pa., officials knew from the beginning of their e-procurement project in June of last year that they didnt want to try managing suppliers and their content. The company was implementing Oracles Internet Procurement application as part of a larger Oracle ERP (enterprise resource planning) project. The task of managing supplier content would cut into the potential savings from the $1.5 million e-procurement project and require adding to the staff of four involved in managing e-procurement, said Sue Eckel, Ameteks director of e-procurement. Thats because, although a principal goal of e-procurement was to reduce the number of suppliers, at the time the company was working with about 7,000 suppliers of indirect goods.
So Ametek looked to solve both problems—managing the electronic catalogs and aggregating its suppliers—through outsourcing. It contracted with ICG Commerce to use its Managed eProcurement service, which reformats supplier catalogs into consistent file formats and online presentation and also aggregates the purchases of multiple buyers to drive down product costs. Ametek also signed up for services from catalog-management service provider TPN Register LLC—now owned by General Electric Co., of Fairfield, Conn.—to streamline access to the catalog content of suppliers that were not part of the ICG network.
E-procurement was rolled out in May, and Ametek has seven supplier catalogs available through ICG, in Jenkintown, Pa., and another four through TPN Register. By next May, Eckel said, she expects a total of about 18 suppliers on board. That will encompass about 70 percent of the companys spending on indirect goods—something that would have taken years had Ametek tried to manage suppliers and their content on its own, she said.
Count the Ways
Count the Ways
Theres no shortage of options for e-procurement buyers looking to outsource catalog management. Service vendors, including Requisite, TPN Register and ICG, typically work on a contract basis, and their charges vary depending on the number of supplier catalogs buyers want to work with.
Buyers can also choose to implement catalog management software from vendors such as Poet Software Corp., of San Mateo, Calif.; Cardonet Inc., of Santa Clara, Calif.; Liaison Technology Inc., of Austin, Texas; and Vinimaya Inc., of Tarrytown, N.Y. One software vendor, Trigo Technologies Inc., of Brisbane, Calif., focuses exclusively on software that allows suppliers to more easily publish their catalogs to the multiple formats used by e-procurement applications.
Not every enterprise moving to e-procurement will need to tap into such content management products and services, however. In some industries, happily for buyers, a critical mass of key suppliers has already gathered around one of the supplier networks of e-procurement vendors such as Ariba or Commerce One. Through these networks, suppliers already can upload catalogs and accept electronic orders, said Andrew Bartels, an analyst at Giga Information Group Inc., in Cambridge, Mass. In the railroad industry, for example, a large number of suppliers are supporting Clarus Corp.s e-procurement system, Bartels said. It may make sense for buyers in such industries simply to embrace the dominant e-procurement software platform and network.
In industries where no dominant software platform has emerged, however, e-procurement buyers and sellers are increasingly looking for help managing content. Besides using outsourcers or content management applications, enterprises are giving up on creating custom catalogs and turning toward an approach already built into e-procurement systems. Called PunchOut by Ariba and RoundTrip by Commerce One, this method allows buyers to access suppliers e-commerce Web sites from within e-commerce applications to locate and order products. Then, once a product is ordered, it is recorded within the buyers e-procurement system and follows the internal workflow, such as being recorded into an ERP system.
At Corporate Express, as many as three-quarters of new buyers doing e-procurement are planning on using these punch-out capabilities, Aiello said. Thats a complete reversal from last year when most buyers still were asking for custom electronic catalogs to be integrated into their internal e-procurement systems.
But punch-out capabilities have major limitations, experts say. For one thing, the buying organization loses any control over the content and how it is presented. Each suppliers site would have a different design, organization and way of classifying products, which could cause confusion among users. Search functionality within the e-procurement system also wouldnt work across suppliers Web sites accessed through punch out.
Such limitations are a main reason companies such as Union Bank and Ametek are cautious in their use of punch-out functionality. Both companies are connecting to specific suppliers Web sites primarily for configurable goods, such as computers and commercial printing. Union Bank, for instance, has 10 of its suppliers connected through Aribas punch-out capability, while Ametek accesses two through similar functionality in its Oracle system and through the service with ICG. For most goods bought online, however, both prefer to use custom catalogs.
“[Punch out] is not a silver bullet and not a way to deal with everything,” said Union Banks Morrell.
So, with many buyers continuing to prefer custom e-procurement catalogs, suppliers such as Corporate Express have been searching for software to help aggregate and publish electronic catalog data. It chose in March to install the Trigo Enterprise software, which should launch this month, said Bret McInnis, vice president of e-business technologies at Corporate Express. That system will be used not only to support buying customers e-procurement systems but also to manage the product catalog appearing on Corporate Express main Web site scheduled for a relaunch by the middle of next year.
Of course, buyers and sellers could be spared a lot of the content management headaches if e-procurement platform vendors would agree on common file formats and XML standards.
Some relief could be on its way around standards. One effort within the XML consortium Organization for the Advancement of Structured Information Standards, or OASIS, is seeking to create a common XML business document library called UBL (Universal Business Language) that would allow for some interoperability among various flavors of XML. A UBL technical committee was formed last month, but any standard is likely to be at least a year off, said David Burdett, product manager of xCBL and XML standards at Commerce One.
Wise suppliers such as Corporate Express and buyers such as Union Bank know, though, that they had better not wait for, or even count on, new standards. Theyve got to attack the problem now rather than wait.
“Two things help you achieve ROI [return on investment],” Union Banks Morrell said. “Its having meaningful content and then having compliance by the end user. Without both of those, youre not going to achieve your ROI goals.”