Driving ambition or brilliance or charisma is not what makes a leader. Vision is important, and perhaps being at the right place at the right time. But to give a vision life there are two very simple things a leader must have: a bit of chutzpah and an opportunity. e-Procurement is one of those opportunities. And purchasing and supply chain professionals aren't the only ones who can be e-procurement leaders. Out of necessity, the "e" in e-procurement demands people from a variety of disciplines. That's what we looked for in devising the criteria for our list of e-Procurement Leaders, a list that includes Internet start-up founders, technology innovators, professors and authors, as well as purchasing and supply management practitioners.
In addition to having pioneered e-procurement technologies, implemented their companies' initiatives or taught in colleges and universities, our leaders are able to manage change, are excited about the future and plan to continue to push for innovation. Those in business were asked to support their success with numbers. Did they positively affect their organizations' spend? Have they saved time and money and, if so, how much? Have they been able to generate revenue from any portion of their e-procurement initiatives? It all comes down to results, after all.
e-Procurement is an objective of e-business, not just the goal. An in-depth look at a few of our e-procurement leaders let's us in on a special secret: You can make things happen today if you have the will to break into uncharted territory, or to simply help your organization become more competitive.
The Results Are In and They're Promising
Estimates of the cost of handling a paper invoice range from $75 to $150 (and in some cases more) depending on the company, the products being ordered and who's counting. According to the questionnaires the nominees were asked to complete, the savings in time and money achieved have been significant.
United Technologies Corporation (UTC) was one of the first companies to sign on with FreeMarkets, an online reverse auction company. In 1997, CEO George David challenged his Vice President of Supply Management, Kent Brittan, to shave $600 million in procurement costs by the end of 2000. The company's 1999 annual report projected savings of $850 million, $170 million of which came from participating in FreeMarkets' auctions. Since 1998 UTC, a $28 billion company, has put $1 billion worth of contracts out to bid in 110 auctions.
UTC was the first to implement IBM's Global Procurement platform. William Schaefer, vice president of Procurement Services at IBM, apparently practices what his company preaches. IBM has averaged procurement savings of eight to 10 percent since 1995. But what's really astonishing is that its automated purchasing is 91 percent "buyerless." In other words, IBM's purchasing system requires the involvement of a human being only nine percent of the time.
Prospective leaders were asked if they've been able to generate revenues from their e-procurement initiatives. This last question is tough because it's probably enough at this point to have a solution in place and working. Nonetheless, we searched for people who can spot opportunities, and spinning e-procurement technology into gold is one of them. That's IBM's claim to fame and can be read about it iSource Business' November 2000 issue.
A Practical Vision of the Future
One person who's studied e-procurement as a piece of the larger e-business puzzle is Ravi Kalakota, Ph.D. and CEO of hsupply.com. More precisely, he's worked to understand the economics and practical business implications of the Internet revolution part of the vision he started to acquire long before most of us had ever heard "You've got mail."
Born and raised in India, Kalakota was one of only 20 candidates selected from 150,000 applicants to attend Osmania University from which he obtained his undergraduate degree in computer science.
In 1992, Kalakota turned his attention to the Internet and, just eight years later, he discusses his take on where the next phase of B2B procurement is heading: "It's about inter-enterprise integration. We started with purchasing, which led to procurement, then Net markets and now marketplace to marketplace. It's a steady evolution. We've been struggling with integration within companies for 25 years. The next phase is going to take a lot of work."
Playing From a Position of Strength
A public sector example of Kalakota's point is Arizona State University's e-procurement team, which we've taken to calling Team ASU. Ray Jensen, director of purchasing and business services, urged us to consider his entire purchasing staff when he learned he'd been nominated for inclusion in the e-Procurement Leaders list. He wasn't just being humble or magnanimous. Every member of Jensen's crew played a key role in initiating, planning and implementing the university's e-procurement initiative.
According to Associate Director John Riley, with whom we talked at length, ASU has been preparing itself to be e-business ready for nearly a decade. "The team approach became more obvious because we had everything right here and it all flowed together." The team has three components implementation, sourcing and systems, which represents 18 buyers and sourcers and five systems experts.
To select its e-procurement system, Team ASU sent out a Request For Information (RFI) to suppliers that described what they wanted a system to do, but without providing cues to technological requirements or limitations. American Management Systems (AMS), its long-time EDI supplier, got the job even though Riley's team recognized its product as "vapor ware" AMS didn't have the technology in place to do the thing it proposed to do.
What AMS did have was an intimate knowledge of the university's existing systems, an understanding of large-scale purchasing operations and a lot of interest in getting in the game. At the same time Ariba, one of the first and best B2B software companies, also responded to the team's RFI because it was interested in developing an inroad into colleges and universities. The result was a partnership between AMS and Ariba, with full rollout in September 2000.
Nature Abhors a Vacuum
Historian Stephen Ambrose, in his book D-Day, June 6, 1944: The Climactic Battle of World War II, pinpointed perhaps the single most important factor in America's contribution to winning the war. On the day of the invasion soldiers often found themselves leaderless because the officers they'd followed into battle had been cut down by the enemy's fire and lay scattered on Omaha beach. Then someone, a sergeant perhaps, would call out "Follow me" and lead the next charge. Ambrose attributes the Allied victory to this willingness on the part of common people to perform uncommon acts of courage.
Everyday life and not just war or other crises often presents similar opportunities for people to step into the void created by changing circumstances. Some people are simply born to lead and fill the role automatically. Others don't know what they're capable of until faced with the fact that somebody had better do something.
The advent of e-business offers challenge and advancement to people who are willing to step into the breach and lead. It's one of those rare times when the window of opportunity is wide open. Whether at the executive level or the grassroots, the time is ripe for people who have it in them to stand up and say, "Follow me."
Today's e-procurement leaders are taking up the call and transforming business and their organizations' ways of doing business. The exciting part is watching these leaders emerge.