Monday, April 2, 2001

Moving Purchasing Online Reduces Costs

Aberdeen Group, a leading IT market analysis and positioning services firm, states that e-Procurement reduces purchasing costs and time by more than 70%. Companies who move their purchasing online dramatically reduce costs, shorten purchasing cycles, and drive improvements to the bottom line. In addition, Aberdeen finds new service-based hosted offerings extend the benefits of e-Procurement to the broadest audiences.

In both 1998 and 2000, Aberdeen surveyed users of e-Procurement systems and collected information on product selection and implementation, as well as actual benefits realized by user organizations. The market Viewpoint, “e-Procurement: Finally Ready for Prime Time,” compares Aberdeen end-user survey research from November 2000 to the research conducted in November 1998, and finds absolutely consistent and compelling real dollar savings.

“Although executives and investors have soured on the promise of other business-to-business technologies, Aberdeen end-user research demonstrates that e-Procurement delivers rapid and quantifiable results,” says Christa Degnan, research analyst. “Aberdeen expects these benefits will translate into considerable e-Procurement market growth, representing more than $9 billion in sales by 2003.”

The Viewpoint documents detailed benefits in the following areas:

- Reduced purchase requisition processing expense;
- Reduced purchase requisition processing time;
- Decreased “maverick” spending;
- Lowered prices of goods paid; and
- Reduced inventory expense.

Based on these findings, Aberdeen estimates that an average mid size organization can expect to save almost $2 million per year through automation in process and product costs.

Initially, large implementation costs and additional maintenance responsibilities were barriers to e-Procurement implementation. New, hosted procurement solutions and services allow smaller organizations to benefit from Internet purchasing automation. Service-based offerings provide significant benefits over premise-based applications, including:

- Reduced deployment cycles;
- Reduced implementation costs; and
- Reduced ongoing operating costs.

Digital Content Distribution Market to Reach $5.95 Billion
A new report released by the Aberdeen Group states that the digital content distribution (DCD) market will grow from $1.33 billion in 2000 to $5.95 billion in 2005, with a compound annual growth rate of 34.9%. The DCD market consists of technology and services suppliers that provide solutions to enable Internet-based internal and external communications among enterprises and individuals.

“The market is hungry for DCD solutions that can distribute complex content - including static, dynamic, streaming, and interactive content - between the points of creation and the points of consumption,” says Ben Elstein, co-author of Digital Content Distribution: New Media, New Challenges. “As public and private networks shift toward next-generation delivery capabilities, merging audio, video, and data, DCD technologies and services will enable enterprises and services providers to offer value-added services to end-users in businesses and the home. Increasingly, the market is driven by a need for more cost-efficient networks with packetized infrastructure that support delivery of complex digital content and content monetization strategies.”

“Companies that implement DCD solutions can create new sources of revenue, such as repurposing existing digital content,” agrees Michael Hoch, report co-author. “However, most available content delivery and distribution systems do not integrate well together or suit the needs of businesses, their customers, or their partners.”

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