[From iSource Business, May 2001] When the benefits are obvious, solutions providers find many takers. That's why the Global 2000, the biggest enterprises with businesses spread around the world, have latched on to Ariba and Commerce One. It's plain to see that e-enabling has a huge, bottom-line win, especially if a company of multi-billion-dollar magnitude can achieve even a fraction of the savings possible with e-commerce. Thus, large companies have been quick to embrace e-procurement, and most are achieving a Return on Investment (ROI) within a year. But mid-market organizations should, and can, take advantage of new technology even more quickly than Global 2000 players have in the past.
Come One, Come All
In this case, what is good for the goose is even better for the gander. Mid-market companies can realize the same benefits as their larger counterparts, while making smaller investments with a greater chance of success and the promise of ROI in under a year. The typical global enterprise, because of its size and the complexity of its many, varied business processes, faces an implementation time frame of nine months to a year. The price tag starts at $1 million and goes as high as $10 million. For now, no one has invented a magic bullet for enabling e-commerce horizontally across multiple, multi-country businesses with widespread business processes, and overlaying new technologies with disparate existing Enterprise Resource Planning (ERP) systems. There are also the cultural adjustments that global companies face, which are necessary to get people to start doing things differently in order for the company to reap the full benefit of the change.
Midsize companies do face similar challenges, including sometimes-complex business processes, integrating existing technologies and inspiring people to adapt, but it's on a much smaller scale. The keys are to find a solution that's absolutely flexible, to partner with an enabler who has the knowledge and skill set to understand and automate your business, and to think as all-encompassing as possible when considering the capability of the technology. If you're an entity in the $50 million to $1.5 billion range, focused on one or two businesses, your odds for a successful project are tremendously better than the mega-company that has a dozen, or more, businesses. But, move quickly through the implementation process. The longer it takes, the more things change and the less value you derive because costs go up.
The Way You Do the Things You Do
Here's an example of exactly how compelling the ROI can be for a mid-market company: An organization in the financial services industry recently automated procurement, and their supply costs dropped seven percent, they decreased maverick spending from 60 percent to 30 percent and they reduced inventory by $2 million. The best part? It all was done within 120 days.
How did they do that? Let's look more closely at the elements that are the most critical to the mid-market.
- An application that is flexible. Not all applications are created equal. For the greatest flexibility, be sure your solution allows business rules to be changed and the system to be reconfigured by a non-technical person. Mid-market companies are often in a position to respond to their customer's changing requirements, so don't let your system hold you back. Also, be sure you're taking full advantage of the collaborative capabilities of the Internet with a 100 percent browser-based solution.
- A partner with expertise. Get to know your enabler well, because the relationship you have with them is long-term. The best solutions providers develop expertise to solve specific challenge sets. Look to your enabler for upgrades and new solutions that evolve with your needs.
A solution that delivers extended value. As your business grows and changes, you'll want to apply the benefits of your e-procurement technology across as many dimensions of your business as possible. Can you expand your solution to include asset management, inventory management and expense management? Be sure to consider capability with the future in mind.
Finish up Strong
Tehseen Ali is co-founder and board member of Verian Technologies, the Charlotte, N.C. provider of Web-based electronic procurement and materials management solutions.