Convincing the Boss to Invest in eProcurement
By: Brock Hirschman
Director, Large Customer eCommerce Solutions. W.W. Grainger, Inc.
Making processes easier is a great idea to simplify workflow and save time, and getting lower costs is even better. Simplification and savings are drawing many procurement professionals to electronic procurement, which is also known as eProcurement or ePro. There are a variety of scalable technology solutions available to get the products and service offerings needed to get the job done. But the big question is, how to get the boss – the leadership team – on board with this idea?
Let’s look first at what eProcurement really means. It's the usage of an intranet or the Internet to get products and services for a business with the goal of streamline purchasing and managing financial controls. To get your C-suite to buy in, you'll need to take these key steps:
- Highlight financial benefits
- Personalize the advantages
- Gather support
- Align with leadership trends
First and foremost, clearly call out the financial savings and cost reductions that eProcurement can bring to your company. Specifics are important here. Set the stage to get executive buy-in. The e-commerce site PYMNTS.com had an interesting article on spending reports for business-to-business payments. It notes the importance of efficient procurement practices to create significant cost reductions.
It is no surprise that cost savings is the top key performance indicator, according to Xchanging’s 2015 global procurement study, which reinforces the important point of financial impact (and benefits) from efficient procurement practices. The respondents said savings tracking and spend analytics (77 percent and 76 percent, respectively) were the most important items to implement. In terms of key procurement functions measured, achieving cost savings (47 percent) was the highest among respondents, followed by revenue impact at 19 percent and identifying cost savings at 16 percent.
The survey also indicated that more than half of the respondents had eProcurement tools in place, such as:
- 68 percent have automation
- 64 percent have supplier performance management
- 69 percent have e-sourcing
- 54 percent have predictive analytics
- 50 percent have technologies involving the Internet of Things (IoT)
According to data from the CEB (now part of Gartner), 51 percent of large companies have procurement managing corporate spending. That means the remainder of corporate spending is not aligned with the procurement professionals, with an estimated $14 million in missed savings annually.
Follow up your financial points by personalizing the advantages that eProcurement can bring to your company. Avoid generic benefits and specifically show what it can do for your company. It is possible to show the benefits available, before you technically even have the official tools live. As part of your process, consider getting a thorough demo and/or a trial period. You’ll need details of how eProcurement simplifies specific processes, something you can do with a trial account or more thorough research to ensure your ideas and needs match with the capabilities and offerings available.
Keep in mind that this customization can also be a good selling point with executives. Depending on the type of procurement system you already have in place, you may be able to integrate e-Procurement when working with vendors. For example, some companies with existing procurement systems have worked with Grainger to check their technical capabilities and systems to see how they align with Grainger’s eProcurement solutions.It serves as test run and this check details more about the integration process as well as the benefits from using eProcurement.
Gather support from your colleagues and departments. Show examples of how ePro can make a difference for your company, including how it addresses immediate issues from actual procurement requests. It helps to have these details of how real problems can be resolved. This peer buy-in can help show how you’ve carefully identified and tested the best possible solutions, keeping in mind the user audience (your company's departments).
Highlight how eProcurement aligns with leadership trends. Almost a decade ago, the conversations around eProcurement occurred in trade magazines like Supply & Demand Chain Executive, which noted that eProcurement was a novelty idea in the 1980s and 1990s. Now the discussions about eProcurement have moved up to the corner office: McKinsey & Co. publishes at least one article a month on the benefits of digitizing procurement for its multinational executives.
It is never easy to show why spending money is necessary, but eProcurement has the potential for cost reductions and greater efficiency within a company. Keep these ideas at the forefront of your conversation with the C-suite in getting them to invest in the long-term. There is much to gain in terms of efficiency and savings for your company be harnessing eProcurement. Plus, you’re there to help them understand why it's needed.
Brock Hirschman is the Director of Large Customer eCommerce Solutions and leads a team that drives implementation, penetration and adoption of B2B eCommerce and eProcurement solutions across the large market customer base. He works closely with IT, eCommerce Development, Sales, and customers to develop, integrate, and deploy Grainger’s digital solutions.