Opinion: Giving software the hard sell

Allowing internal clients to use e-sourcing tools will free purchasers for more complex and strategic roles.

E-Auctioning has become common practice for many companies, and no doubt many more organisations will follow the trend in the years to come as the software gets easier and cheaper to use, purchasers become more professional and there are more consultants to teach us the tricks.

The use of e-sourcing tools – which support the sourcing process from project start through contract stage to contract management – is also increasing. However, many companies appear to be satisfied with hosting just the occasional e-auction or perhaps handling an e-sourcing project. But isn’t it time to start reaping more benefits from these tools?

E-sourcing technology offers huge benefits, enabling purchasers to overcome several challenges facing big dispersed companies. It can improve knowledge sharing, increase collaboration, reduce risk and increase process transparency. But there are even bigger prizes to be won if companies use the technology properly. Looking over the horizon of the immediate tactical benefits of e-sourcing, I see a fundamental change in the way procurement, especially indirect procurement, will operate in companies as a result of this technology. It will bring procurement back to the internal customer.

We should use e-sourcing as a key enabler for knowledge-sharing between purchasing units. It can help staff share processes and use information created in earlier projects. The opportunity to share knowledge created in the sourcing process from initiation to sourcing strategy development to request - for information to contract and contract expiry is far bigger than the immediate benefits of a simple e-auction.

Another benefit of e-sourcing is its use as a platform for collaboration with other purchasing units in a company, with internal clients and with suppliers.

Last, but certainly not least in this time of Sarbanes-Oxley and other regulations, e-sourcing gives purchasers a central repository in the company where they have a real-time view on their sourcing processes and contracts. This will enable them to better manage risks related to procurement.

However, it is clear that procurement departments have penetrated into many indirect spend categories over the past decade and that sourcing these categories demands intensive interaction between procurement and the internal customers. The result is that internal customers increasingly understand the basics of professional procurement, for example, how to create effective specifications.

So a logical development would be to transfer part of the procurement operation back to them. In sourcing projects where a highly-skilled purchaser has little value to add beyond a set of standard routines, there is a strong argument for giving the internal client an e-sourcing tool which they use according to a process controlled by procurement and which procurement monitors, supports and, if need be, intervenes. This will leave procurement free to concentrate on high value-added sourcing projects and activities such as coaching or training internal clients, defining processes and enforcing them.

Lower value-added activities can be completed by the internal client. This might be seen as a threat to the purchaser. But it need not be. These changes can be achieved without procurement losing control of the overall process.

E-sourcing packages are extremely good for the tasks they are designed to facilitate. They are not likely, though, to impinge on those areas that make professional purchasers invaluable to companies. An e-sourcing package is not an expert in stakeholder management. Nor is it able to define the optimal sourcing strategy. It cannot manage change, identify outsourcing opportunities, develop strategic relationships with vendors, understand internal demand or analyse supply market behaviour.

For all those complex activities, and many more besides, you need highly-skilled procurement professionals. In short, e-sourcing technology means you can hand many of the simple tasks over to the internal customer while procurement managers get on with the strategic activities at which they excel.

Dennis de Jong is senior vice-president, global procurement development, at ABN Amro