Globalization of e-Procurement — Does Your Organization Measure Up?

Best practices to jump start, or validate, your global e-procurement rollout approach


By James A. Kandilas, CPA

So your organization embraced the promise of e-commerce tools used to enable the source-to-settle cycle; you are amongst good company. For the majority of us, the vortex of the e-procurement tornado swept us into this world during the late 1990s.

If you are like most, you have tweaked your internal business processes, peppered in an appropriate level of best practices and actuated those processes using an enterprise resource planning (ERP) system or chosen a best-of-breed route.

Your organization has presumably spent the last several years fostering deeper relationships internally between Sourcing, Procurement, Legal, supplier relationship managers, Application Development, Shared Services, Infrastructure IT and lines of business. Externally you have done so with suppliers, software vendors and system integrators/consultants.

To illustrate this point, Aberdeen Group recently issued "The E-Procurement Benchmark Report," which indicated that respondents who implemented e-procurement reduced requisition-to-order cycles by 75 percent, reduced their requisition-to-order costs by 48 percent, reduced maverick spend by 36 percent and increased spend under management by 36 percent.

Now fast forward to 2007. As your organization has developed, you have played a role in the birth of a latter-day trend — global deployment of your enterprise technology for your source-to-settle process. Since the frenzy of early B2B adaptation in the late 1990s, proven results have directed us to this new fork in the road. But what motivates us to explore this concept further? What are most organizations looking to accomplish? From our experience, the following are common goals:

  • Attain increased total spend under management, globally.
  • Attain increased contracted spend compliance.
  • Gain spend visibility, which fosters improved decision making and more sophisticated supplier relationships, including supplier consolidation and contract negotiation.
  • Lower total cost of ownership (TCO) of enterprise systems by leveraging one footprint, in lieu of managing disparate enterprise systems or legacy/homegrown systems globally.
  • Lower operating costs by leveraging streamlined business processes and best practices that have been refined after years of hard work and lessons learned in one region.
  • Leverage as many common data elements as possible to improve not only spend reporting but also transactional reporting for financial systems and roll ups.
  • Migrate from internal software adoption at the business unit or line-of-business (LOB) level, where data reside in a local server with its own customizations, to software adoption at the regional/global level, with data resident for the enterprise on a real-time basis.

If your organization identifies with these motivating factors, you are most likely among a number of organizations in the same boat, expecting to achieve your goals through a global rollout.

The Shelby Group has gathered and summarized strategic, tactical and operational highlights surrounding global rollouts from our involvement with thought-leaders in spend management and scores of Fortune 500 organizations. Here are the data points we have collected, which may help to either get you started or validate your current approach.

What Is Your Global Strategy?

Let's start with some of the questions that are necessary to create, build upon, revise or validate a global deployment strategy.

What salient points should we address in the construct of the strategy? As you set out to implement a corporate-wide strategy across the globe, executive leadership will need to paint broad brushstrokes as to the particular vision of the organization's rollout. At the early mile-marker, organizations typically define the vision by fleshing out those motivating factors into a more definable purpose, for example:

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