Monday, June 4, 2001

e-Procurement: Don't Believe the Anti-Hype

Aberdeen Group, a leading IT market analysis and positioning services firm, counters industry predictions of business-to-business (B-to-B) e-Commerce failure with validation of real benefits that have been recognized by enterprise users of Internet-based procurement automation (e-Procurement) technologies.

"In an attempt to recover from their previous predictions for the growth of Internet-based B-to-B transactions, certain industry prognosticators have recently issued statements damning e-Procurement," said Tim Minahan, director of supply chain management research at Aberdeen. "The transaction focus of such predictions overlooked what is truly important to businesses: process improvements and cost benefits. Aberdeen research finds that e-Procurement is delivering real benefits in both these areas. Specifically, our research finds that enterprises using e-Procurement technologies are recognizing enhanced supply chain visibility and management, greater process efficiencies and improved cost control."

Aberdeen research has identified benefits in the following areas:

* e-Procurement: Internet-based technologies to automate the acquisition and management of goods and services. Some of the benefits companies have recognized through the use of e-Procurement technologies include a 73% reduction in transaction costs, a 70% to 80% reduction in purchase order processing cycles, and a 5% to 10% reduction in prices paid. Based on these findings, Aberdeen estimates that an average mid size organization can expect to save almost $2 million per year through the use of e-Procurement technologies.

* e-Sourcing: Web-based technologies designed to support the identification, evaluation, negotiation, and configuration of products, suppliers, and services. Some of the benefits companies have realized through the use of e-Sourcing technologies include a 25% to 30% reduction in sourcing cycles, a 5% to 20% reduction in prices paid, and 10% to 15% faster time-to-market cycles. Based on these findings, Aberdeen estimates that U.S. businesses could recognize $690 billion in savings through the adoption of e-Sourcing technologies.