Warning: session_start() [function.session-start]: Cannot send session cache limiter - headers already sent (output started at /var/www/ebusiness/book_review.php:13) in /var/includes/pagehead.php on line 2
Kevin and Debra Rollins Center for eBusiness - The Essential E-Procurement Guide For Executives
Skip navigation
Marriott School

Kevin and Debra Rollins Center for eBusiness

The Essential E-Procurement Guide For Executives

The Essential E-Procurement Guide For Executives

Richard M. Lane and Nicole Pleasants Lane

An article by Pamela Ettien, Senior Consultant of SoftResources LLC

September 2001

This book is unique in the series of reviews that we have performed to date in that it is a publication written for CoreHarbor, Inc., an Ariba software premier provider/implementer, and forwarded by Arthur Anderson, who has long had alliances with Oracle, SAP and Ariba, among other major vendors. If your firm maintains a decentralized purchasing model (e.g., employees are empowered to buy their supplies from a company of their choosing) and is experiencing difficulty with attempts to centralize purchasing, evaluate vendors, and control costs, then this guide is tailored to you.

Introduction

This book is unique in the series of reviews that we have performed to date in that it is a publication written for CoreHarbor, Inc., an Ariba software premier provider/implementer, and forwarded by Arthur Anderson, who has long had alliances with Oracle, SAP and Ariba, among other major vendors. This book is complementary and is available by visiting CoreHarbor's Web site and requesting a copy (see the "Where to Obtain the Book" section at the end of this review).

If your firm maintains a decentralized purchasing model (e.g., employees are empowered to buy their supplies from a company of their choosing) and is experiencing difficulty with attempts to centralize purchasing, evaluate vendors, and control costs, then this guide is tailored to you. If, on the other hand, your firm has centralized purchasing processes and more limited purchasing agents, this guide will still apply to you, but the message regarding "Maverick" buyers within departments may have a lesser impact. This book does not cover supply-chain management or production-based procurement, which is a major function of ERP/manufacturing systems.

A. Purpose of the Book

The purpose of this book, as stated by the authors, is to educate executives (i.e., CFO's, CIO's, CEO's, controllers, directors of finance, etc.) about the framework of e-commerce, with an emphasis on e-procurement. The authors state in the 'About This Guide' section, "This guide will give you a foundation to build upon and assist you in identifying how your organization can leverage e-commerce or e-procurement applications to optimize your company's bottom line." With this, I anticipated a very useful, step-by-step approach.

B. Mind Map of the Book's Contents

The book, comprised of 116 pages, is an easy read and is very high level in nature - the kind of guide you could read on a brief business trip or in an afternoon. The general layout of the chapters provides high-level information interspersed with "real-world" examples of how e-procurement was deployed at various companies. All in all, the chapters are unstructured.

As a means to convey this message, the book is laid out as follows:

Chapter 1 Overview of e-Commerce
Chapter 2 Traditional Procurement Challenges
Chapter 3 Defining Operating Resources
Chapter 4 Business Benefits of an e-Procurement Solution
Chapter 5 Importance of Strategic Sourcing
Chapter 6 Supporting Technologies of an e-Procurement Solution
Chapter 7 Supplier Catalogs and Content Management
Chapter 8 Understanding the Value of a Managed e-Procurement Solution
Chapter 9 Making Payments in Conjunction with e-Procurement
Chapter 10 Selecting an e-Procurement Solution
Summary The Future of e-Procurement

A person might expect this guide to be a representation of the paradigm shift from B2C, which is mainly selling to consumers over the Internet, to that of a web business-type model. This might include utilizing the Internet for seamless business communication and introducing e-procurement solutions for meeting customer expectations and production timelines. The book only partially meets this promise.

C. Definitions

The guide's definition of e-procurement is: "Automated solutions which allow users fast, detailed, buyer-specific information needed to make buying decisions and manage and control the strategic sourcing of operating resources." This definition's focus is mainly on operating resources (procurement of day-to-day business supplies and services) rather than direct sources or procurement of production-related items.

D. The Main Message

Key points this guide focuses on include:

  • The benefits of saving time in the procurement cycle and getting the best dollar savings possible for the procurement of operational items through the elimination of "Maverick" spending (e.g. a proper channel for all requisitioners to go through by providing catalogs from those vendors with whom prices have been pre-negotiated to get the best price).
  • Operational resources - Those items that are most difficult to track and quantify, not direct resource items used in production (apparently the authors expect that most ERP/MRP and shop-floor applications should be in place at the reader's company if they are involved in manufacturing concerns).
  • The value of online requisitions and online-approval workflow engines to expedite the process and reduce procurement costs over alternative manual processes.
  • The underlying message: Anyone not looking at e-procurement solutions and who is relying upon "outdated manual processes" is looking for serious trouble.

With those points in mind, here are some of my thoughts on each chapter:

Chapter Comments/Observations
Chapter 1 - Overview of e-Commerce The first thing I noticed is that there is not an objective statement at the head of each chapter. Also, there is no predictive format to the way the information is presented. The chapter just launches into an overview of some of the issues the authors feel executives need to know. While the information tends to run together, the first half of the chapter focuses on the progression of B2C - focused e-business methodology - into more of a B2B slant carrying forward as a new way to leverage the Internet. The chapter explores how the pathway to B2B points towards e-procurement as one of the tools to establish working relationships with vendors while reducing costs of manual procedures in a measurable and quantifiable way. These concepts are common knowledge to most forward-looking executives with regards to B2C and B2B; what I found more useful was the discussion of "Business Exchanges" and "Auctions/Reverse Auctions" found on pages 20-26.Also helpful at the end of chapter 1 was a chart of some application vendors for the buy-side, sell side, and auction-services procurement methods mentioned in the chapter.
Chapter 2 - Traditional Procurement Challenges Chapter 2 contains a few useful process flowcharts to help make a point about considering e-procurement and abandoning traditional manual purchasing methods. The concept of "Maverick buying" is introduced and becomes a redundant theme throughout this chapter as a means to make a point; it's less expensive to automate in the long run and gives the organization more controls over costs and policy enforcement. Otherwise, there is nothing truly remarkable about this chapter.
Chapter 3 - Defining Operating Resources Chapter 3 discusses non-production goods and services necessary to maintain a business (a place where a lot of purchasing waste occurs). It gives some obvious examples of these types of purchases (i.e., computer equipment, office supplies, and business services) and launches into a discussion on the ERP side of procurement (i.e., direct production items) that handles the production-oriented material purchases. Perhaps the best thing about this chapter is the "Using Supplier Web Sites" and "How an e-Procurement Solutions Works" on page 43. I was disappointed that you had to go so far into the book to get this information, which is probably some of the most relevant content. They also throw a few names around, like Oracle, SAP, and Ariba (which happens to be the products that Arthur Andersen, the book's sponsor, recommends). This introduces a slight amount of salesmanship bias. This chapter also discusses the difficulties capturing what the authors term as "spend" if not using an e-procurement solution and talks very briefly about T & E spending. I wish they had expanded on the subject of T & E to bring it into more relevance with the rest of the chapter. Also, once again, the "Maverick" purchaser rears its head again.
Chapter 4 - Business Benefits of an e-Procurement Solution I found this chapter to be a very redundant re-hashing of points already mentioned in the book. More succinct summaries of the previous three chapters would have been more useful than a "re-sell" of the benefits extolled throughout the previous chapters. The discussions are at a high level, and the content is more obvious than it is insightful. The momentum of the guide slows down significantly in this chapter. Also, there are less and fewer mind maps and organized points, which could help the reader to visualize the benefits clearly and nail the point home.
Chapter 5 - Importance of Strategic Sourcing Strategic Sourcing, which they define as "a methodical approach used to optimize sourcing decisions for goods and services" is perhaps one of the most beneficial components of an e-procurement system. The selection of preferred providers who will source the items for procurement catalogs is a big part of the cost reduction cycle. The point this chapter makes is that if you utilize e-catalogs of preferred vendors willing to offer you buying discounts or special pricing and offer only those products to your users (who are deemed to be relatively untrained procurement employees), they can become purchasing agents for the benefit, not detriment, of your company. The purpose of strategic sourcing can be found on page 56. The balance of the chapter includes few illustrations on how to measure spending categories in order to set up strategic sourcing. It also has a list of steps presented on pages 59-62 to help set up these vendor relationships by analyzing previous spending habits. These points are very helpful and will help the reader think about the way the company procures items and what vendor attributes should be measured before implementing e-procurement. The end of the chapter introduces collaborative sourcing, or "buying consortia," which means leveraging buying power across multiple vertical industries by sourcing with the same suppliers to receive the best value-an idea that is catching on.On page 64, the hosted-solution-providers paragraph at the end of the chapter throws in a sales pitch for CoreHarbor. I guess that's okay; the reader can still choose the appropriate vendor that best meets their needs, as there are constantly new entrants into the e-procurement market space.
Chapter 6 - Supporting Technologies of an e-Procurement Solution There are some pretty good overviews of EDI (Electronic Data Interchange) and XML (Extensible Markup Language) and the differences between them in this chapter, but it is very brief (four pages). They focus on these two technologies because they relate to e-procurement as a means to transmit purchase orders to suppliers in a format consistent with their technology. Since this is a guide and not a full-blown how-to book, the view into data transmission is adequate. Also mentioned are the United Nations Standard Product and Service Classification (UNSPSC), an emerging standard for catalog numbering conventions.
Chapter 7 - Supplier Catalogs and Content Management Chapter 7 uncovers some of the key concerns associated with catalog content, errors in consistency of item descriptions, and some obstacles that may arise as a result of procuring through different catalog formats. The various methods in which catalogs are built are also included. The overview is brief but does list the names of some content management service providers on page 77.
Chapter 8 - Understanding the Value of a Managed e-Procurement Solution Chapter 8, which is intended to tout the benefits of an outsourced solution using an Application Services Provider (ASP), makes a few good points, at the cost of being rather biased in its approach. This chapter sets you up for the CoreHarbor services sales pitch, which comes toward the end of the book. If you aren't yet familiar with the ASP delivery model and its pitfalls, this is an okay place to start. It is a good thing that they mention the various types of service providers on pages 83 and 84 and cite some vendor names. Of course this is not a substitute for conducting a more in-depth investigation into the gamut of service providers available. CoreHarbor is mentioned under "Managed Service Providers" on page 84; one would be curious to know whom else they compete with in this marketspace. Also on pages 84 and 85, "Why Consider a Hosted and Managed Solution" is helpful. Compare this to "Potential Drawbacks to an ASP Model" on page 86. Many of our clients are not suited to an ASP model due to internal business processes, complexities that require customization, and the desire not to transfer control to an outside company - some of the reasons they cite here.
Chapter 9 - Making Payments in Conjunction with e-Procurement Chapter 9 discusses the merits of P-Cards versus Electronic Funds Transfers (EFT) in the payment cycle of e-procurement. P-cards are promoted in e-commerce and e-business; there is a good overview of why and how to use them on pages 95 and 96.
Chapter 10 - Selecting an e-Procurement Solution While the guide gives a brief overview of selection criteria on page 99, this is by no means an entire set of information required to make an informed buying decision. The questions on page 100 regarding content catalog management are insightful but brief. This four-page chapter is a kick-off point but does not replace professional software selection advice to ensure all stones are overturned.
Summary The summary discusses the future of e-procurement and a conclusion by CoreHarbor.
Glossary A brief glossary of terms used within the guide.

E. Who the Book is Best Suited For and Not Suited For

This guide could be a good overview for anyone not familiar with the e-procurement wave. It doesn't necessarily delineate between a good ERP system with electronic requisitioning capabilities, integrated workflow, and good reporting except in the area of online catalogs tailored for e-procurement through a web-browser front-end. This piece has been missing until more recently from most ERP systems, thus facilitating the need for e-procurement solutions. If you are seeking more succinct information on what it takes to implement an e-procurement system, don't look here; the content is much too generalized to be of much help unless you call the book's sponsor, which is, surprise, CoreHarbor, or the other contributor, Arthur Andersen.

F. Conclusion

If you find that your company has problems tracking its internal-operating source costs and your best suppliers, and if you want to save some money on the entire process, you may find some insight from this book. Best of all, it is a free guide (sales slant not withstanding).

There is more succinct information that could be gained immediately from the Internet. To give a good example, one white paper written by PeopleSoft in April 2001 entitled "eProcurement - The Promise and the Reality" is a free download from www.isit.com/doc.cfm?ArticleID=4071&tech=ec in PDF file format. It discusses the current view of the e-procurement evolution in more definite terms, and what implementing such a solution really takes. The downside of corporate-sponsored white papers is that they are focused on (in this case) PeopleSoft e-procurement solutions. In fact, the footnotes at the bottom of this give the reader other source documents to read more about the subject (although those may not be available free of charge).

G. Where to Obtain the Book

You can obtain a complimentary copy of this book by visiting www.coreharbor.com or calling the company at 1-800-267-3151. Additional copies can be purchased from CoreHarbor for $9.95 each, including shipping and handling charges.

Information about SoftResources

SoftResources has recently published a book using a similar format for Microsoft/Great Plains entitled, The Essential Guide for Selecting Today's Business Software. SoftResources believes the key to writing such publications is remaining objective and not recommending a particular product or vendor.

This article was written by Pamela Ettien and D. Richard Dance from SoftResources, an unbiased software selection firm that works with over 7,500 software packages in 50 different categories of software, such as Accounting, Manufacturing, Distribution, Customer Relationship Management, HR/Payroll, e-business, etc. It also helps large and small clients select from over 2,500 software implementation vendors and Value Added Resellers (VARs). Then it performs contract negotiations so clients get a fair deal. SoftResources consults with companies all over North America in almost all industries including commercial enterprises, governments, non-profits, and school boards. Check out the company's web site at www.softresources.com for more details.

Copyright © 2000-2009. Kevin and Debra Rollins Center for eBusiness. All Rights Reserved.

Last modified: June 23, 2009. Maintained by Webmaster. Script execution: 0.06 seconds Admin