The Proof Is in the Purchasing

Study proves e-procurement saves money

Boston  March 26, 2001  Information technology (IT) market analysis and positioning services firm Aberdeen Group has released a report stating that e-procurement reduces purchasing costs and time by more than 70 percent. Companies that begin purchasing online dramatically reduce costs, shorten purchasing cycles and drive improvements to the bottom line. In addition, Aberdeen finds new service-based hosted offerings extend the benefits of e-procurement to the broadest audiences.

In both 1998 and 2000, Aberdeen surveyed users of e-procurement systems and collected information on product selection and implementation, as well as actual benefits realized by user organizations. The market Viewpoint, e-Procurement: Finally Ready for Prime Time, compares Aberdeen end-user survey research from November 2000 to the research conducted in November 1998, and finds absolutely consistent and compelling real-dollar savings.

Although executives and investors have soured on the promise of other business-to-business technologies, Aberdeen end-user research demonstrates that e-procurement delivers rapid and quantifiable results, says Christa Degnan, research analyst. Aberdeen expects these benefits will translate into considerable e-procurement market growth, representing more than $9 billion in sales by 2003.

The Viewpoint documents detailed benefits in the following areas: reduced purchase requisition processing expense, reduced purchase requisition processing time, decreased maverick spending, lowered prices of goods paid, and reduced inventory expense. Based on these findings, Aberdeen estimates that an average, midsize organization can expect to save almost $2 million per year through automation in process and product costs.

Initially, large implementation costs and additional maintenance responsibilities were barriers to e-procurement implementation. New, hosted procurement solutions and services allow smaller organizations to benefit from Internet purchasing automation. Service-based offerings provide significant benefits over premise-based applications, including reduced deployment cycles, reduced implementation costs, and reduced ongoing operating costs.

The full report, including quantitative and qualitative data from end users and analysis of the important features and differentiators in e-procurement systems, is available at Aberdeen or by calling (800) 577-7891.