Take Control Now

In a few years, e-procurement may have so permeated society that your office will be reverse-auctioning filters for the Mr. Coffee. But that doesn't mean every company will be an e-procurement winner

GOBOSH. It stands for go big or stay home, and it's the approach you should take to e-procurement. Not big as in bloated and expensive, but big as in the absolute best system you can pull off. This might mean a total reworking of your current procurement system, a minor tweak or anything in between.

The Internet revolution is often compared to the Industrial Revolution. Both upended the business world, but the Industrial Revolution took years to accomplish its change. Now, cycle time (the time from invention to implementation) is often days instead of months, and the business model you've agonized over for countless hours is obsolete before the first rough draft is out of the laser printer.

That's why it's important to GOBOSH in your e-procurement. Not every company will be an e-procurement winner. Some will merely be pretenders, still trying to convince their employees to renounce the dead tree editions of suppliers' catalogs. How can you be sure that your company is an e-procurement champ? Well, you could buy out all your competitors, but that's a little Machiavellian, and there are all those messy antitrust issues to deal with. So it might be better to do some data capturing and general business recon beforehand. To help you do that, we compiled 10 axioms that you can bet your venture capital on.

Axiom 1
Remember that nothing has really changedThis might seem like a contradictory statement from an e-procurement magazine, but hear me out. A sage from centuries ago once said, There is nothing new under the sun, and he was right. Technology, terminology and methods of payment change, but the basic human endeavors of buying, selling, speaking and existing are, at their core, everlasting. So while e-procurement is a quantum leap in the way things get done, the same old things are still being done. True, every now and then, something that appears brand new pops up, but it usually either dies away or is exposed to be nothing more than a new version of an old concept. Ridiculously over-valued dot coms, for example. Companies that actually didn't want to post a profit appeared to be a new concept, but they were soon shown to be nothing but a dumb idea, and dumb ideas date back to the IPO of the apple in the Garden of Eden.

Vincent Chimienti, vice president of procurement for New York-based WPP Group USA, puts it this way. I think that there is probably nothing new other than some technical capability on the part of both ourselves and our suppliers. There is nothing that I would say is different in the world of e-procurement than there ever has been... The same caveats, the same things that we looked for then, we're looking for now. eProcurement is not a cure-all, a magic wand or even a neat card trick. It's a tool. A tool that must be used to provide customer service, needed products, services and convenience, just like businesses have always had to provide.

Axiom 2
Get started
Again, this is a seemingly strange statement. Isn't everybody already e-procuring his or her corporate rear off? Not quite. The hypemeisters would lead you to think otherwise, but this is a technology that is still in its nascent stage.

Paul O'Malley, e-procurement product manager for Key Next, Key Bank's B2B e-commerce unit says, We've seen the figures from Forrester and Gartner and others that forecast trillions and trillions of dollars to be spent in B2B transactions by the year 2003 or 2004, and we think that's pretty good news. The interesting thought is that those volumes represent only about 12 percent of total B2B commerce, both electronic and manual.

Sure, 12 percent is a sizable figure when you consider the total amount of goods being bought and sold, but that still leaves an undersold mound of businesses that aren't e-enabled. The e-business world has started believing its own press releases, always a dangerous practice. Statistically, most people reading this either aren't using e-procurement, or they aren't using it as much as they could be.

O'Malley continues, One of the things we concluded very quickly as we interviewed our clients was that many of them know they need to do something, but they just don't know where to get started. Although KeyBank's program is still in pilot mode, with full launch scheduled to take place in the late third quarter of this year, their experiences in becoming a market-maker, rather than a one-to-one e-procurement buyer or supplier; their middle-market client base have shown them that at times businesses have to be prodded into action. That's been the biggest challenge  helping them [their clients] understand that if you get hung up on where to get started, you'll never get started. The bottom line? It's never too late to make or save money. So, get started.

Axiom 3
Start, but don't over-commit
Maybe this should be Axiom 3a. Whatever the number, this is a critical axiom. Even if you're sold on e-procurement, you still need to ask yourself if it's right for your company and to what degree you should implement it. According to O'Malley, I think the idea of moving to an e-procurement process is something that is critical to a business in the long run, but it doesn't sound to us as if every company out there is going to be able to do this in the next three or four years. Maytee Aspuro, assistant administrator, division of administrative services for the Wisconsin Department of Revenue, puts it this way, I think you have to take a look at what you're trying to accomplish and what the transactions are and then in some [transactions], e-procurement may dominate, in others, e-procurement may play a supporting role.

Aspuro is a believer in general caution when it comes to e-procurement. Establish your base, establish your presence and then catch up with maybe a little bit more fancy technology or fancy look and feel, but you have to balance those cost benefits of time, of dollars as well as investment in relationships.

Axiom 4
Be willing to experiment
Maybe you're one of those people who never changes a single setting on your computer desktop. You're running that same starfield screensaver, same cursor blink rate and the same irritating warning beep as you were the day you pulled it from the box of packing peanuts. That's fine for your personal use, but the Don't disturb it, they designed it that way for a reason approach won't fly when it comes to making e-procurement initiatives. Sure, you can start with a turnkey system, but continually massaging that system to fit your company's individual needs is critical to making your company a prime e-procurement mover.

KeyBank, which positions itself as a market maker for its middle-market clients, has experienced many configuration issues. Their efforts quickly revealed the necessity of adapting a flexible attitude to problem solving. Paul O'Malley says, We're writing the book as we go. We keep telling ourselves that when we run into a challenge here or there, there's really no track record for the right solution. We make a decision, and feel our way forward.

While your company's situation is probably easier to handle than KeyBank's (there are places to go for solutions, as we'll see in Axiom 5), their adoption of an experimental approach is one worth mimicking. No software, no system, no business plan is so good that it can't be improved upon. It just takes some mouse muscle to improve upon it. As George Patton once said, If everyone is thinking alike, no one is thinking.

Axiom 5
Be a thief
Not a literal thief, of course, unless you like the concept of spending a few years with a state-supplied uniform. There's something to be said for constantly scouting new strategies. (Call it aggressive networking if you want to.) Aspuro states, I can say that I'm an advocate of being a thief, in the sense that the technology is moving so fast and furious that it is really unrealistic (I also don't think it's prudent) to expect to invent [all solutions] within the confines of your organization. There is just so much going on there, so you have to really keep your eyes and ears open to literature, to newspaper articles, to what your buddy just told you during bowling about what his company is doing and find those pieces of information and constantly take them in to see how you might use it, in e-procurement or in any other organizational context.

Don't be fooled by the thievery terminology. This is far from an easy solution. According to Aspuro, it's vital that you be an intelligent thief  intelligent in what sources you use and where you go to search for that information and then how you filter that information for the purposes of your organization. And again, this is not off-the-shelf or right-out-of-the-page kind of taking, because then you have to incorporate it into your culture, into your processes. You still have to have a creative process here, and a managerial process to be successful.

In reality, Aspuro's theft concept is a logical outgrowth of the postmodern, information economy. It's the neural network of the Internet and old-fashioned word-of-mouth brought to a practical level, with tangible results. So get out there and start thieving. It's your e-duty.

Axiom 6
IntegrateNo matter the quality of information you employ, if it's not integrated (you might even say saturated) throughout your organization you won't get the maximum ROI. If Team A's workers have the latest software and techniques, and their buddies over at Team B haven't even gotten the word that the company is now e-procuring, you could be worse off than if you'd never started e-procuring in the first place. Not only will there be two types of requisitioning going on, possibly at cross-purposes with each other, but there are those all-important human traits of jealousy and ego to consider. The employee filling out a triplicate stapler requisition form might feel a bit envious of her friend across the hall who clicks out the same request in a few seconds.

Regarding integration, Aspuro says, There has to be integration within the organization to capture knowledge, to do product development efficiency (and to me e-procurement is a product), and to be inclusive of their customers at all times. The best companies are the ones that somehow find a way of keeping the communication lines going. And this communication has to go beyond the stereotypical, but oh-too-true, Dispose of your ideas here, because we aren't listening anyway approach. Aspuro puts it this way: And integration, it's not only integration of knowledge that is facilitated by communications, it's facilitated by a less hierarchical organizational chart. Which means that empowerment has to be more than an overworked buzzword.

In e-procurement, like in every other aspect of business, you simply don't know where your company's best ideas are hidden. But you do know what will happen to those ideas if they aren't encouraged and then employed  they die, and they usually take other burgeoning ideas down with them.

Axiom 7
Develop a tolerance for failureIn the blowing-and-going Internet economy, a tolerance for anything but headline-grabbing success seems out of place. But without a tolerance for failure, only the most stubborn will continue fighting the corporate inertia and keep searching for improvements. If you don't establish that there is a certain amount of leeway, there's hesitation. Also, once something does go wrong, that can undermine the relationship right there because people start going into defense mode versus problem-resolution mode, says Aspuro.

Tolerance for failure is part of valuing employees, and like communication, it must be more than a sound bite in a staff meeting rah-rah speech. When an organization is infused with the belief that people aren't punished for honestly trying to improve things, more things are improved. When things are improved, people feel more valuable. When people feel more valuable . . . It's like a vicious circle in reverse. There has to be an appreciation for the human element of an organization, because if you lose your best people, or if you can never even get good people into your organization you're never going to get anywhere, says Aspuro.

This tolerance for failure also keeps employees from looking over their shoulder for the cost-cutting ax. Even in today's strong job market, there is still an innate fear that software and computers will push workers out of jobs. According to Chimienti, replacing supply chain personnel with a Web site is a formula for disaster. The important thing is to get that fact out to everyone, and a tolerant atmosphere will do just that.

Axiom 8
Commit to succeed
It's true that terms like commitment and succeed have been reproduced in countless cubicle posters, usually featuring a soaring eagle or a runner straining to break a finish-line tape. While the pop-culture life of these terms may be at an end, the core concepts they represent are still sound. Think about the groans and winces the announcement of a new office development can produce. Bad experiences with previous revolutions and the We've always done it this way outlook can be hard to overcome.

Employees should know that this new system holds not only changes for them, but also rewards. Telling someone that his job will get easier, if the inherent distrust of new developments can be overcome, is a great motivator. Regarding e-procurement, Chimienti says, It certainly is a culture change in the company to change processes and to change the way business is done. Internally, yes, it is a challenge. But it certainly has its rewards in terms of efficiency.

He goes on to say that this rise in efficiency can be seen rather quickly, once the employees get their hands on a system, especially if they have not had a sophisticated procurement system before, or if they've had a system but it's been cumbersome. I think some of the systems that I've seen in e-procurement are really elegant, and they work really well. Like the first five minutes of a date, if the initial nervousness is overcome, the result is a much better experience for everyone involved.

Axiom 9
Say noA triority is a collection of three things your boss would have you to do at the same time. Most of us have been saddled with a triority at one time or another. For some, it's a permanent condition, bending them down and leaving unsightly triority marks on their backs. But, expectations of superiors notwithstanding, no company, no matter how organized, committed, driven or manic they are, can be all things to all people. Neither can they do all things at all times. There are some tasks that simply cannot be handled, or handled to the degree that might be desired by some. And you must say no.

Most of us view telling higher-ups no as an instant careericide. Truthfully, for some, it might be just that. (Of course, if you're fired for simply saying no, how secure could you have been anyway?) But Aspuro maintains that saying no is a skill that should be developed. She has told people no and survived. Why? Because I went on and said, These are the reasons why, and these are the issues and these are the resources, and these are what I believe are the priorities and this is how I think we can accomplish it, but still the bottom line is no, we can't do this the way you think you want to do this, because we haven't the capacity.' Say no when necessary, but always offer alternatives and solutions.

She has seen the results of no one saying no. I think organizations flounder and some terribly fail, because they're not willing to draw those limits about what they can accomplish, and then they do everything bad instead of a few things well. So say no. But have your resumé polished up just in case.

Axiom 10
It's the service, stupidIn two years, what will be the hallmarks of an e-procurement monster, one that dominates and succeeds like there's no tomorrow? What will the overpriced business textbooks of the future bulletpoint as key for e-procurement? Service. There might be a short grace period in which people are wowed by your technology, but when the honeymoon ends, you'd better provide serious service. Remember the first time you got a voice-mail system, and how positively slick and Jetsons it seemed? Now think how irritated you get when you have to wade through a menu of choices. What if a user is faced with a screen that states, To trace your bifurcated widgets that were accidentally shipped to Bolivian Basalt Company, click here, and then finds out here is a dead link? Starting to get the picture? No amount of techno-glitz will keep that user happy.

Chimienti puts it this way, I think some of the complaints that I hear now on the purchasing side from people who are using e-procurement are that order entry is easy, but follow-up and certainly problem resolution can be difficult. I think if that aspect of it is resolved, that would be a major coup. According to him, it's vital to maintain that level of customer service that existed before the Internet came in. For the supply side, O'Malley says, You really need to supply what your buyers want, and a lot of times it's not a catalog commodity. It could be a service, it could be access to a vertical market. It could be the ability to use dynamic pricing and auctions and RFQs.

The bottom line is that regardless of how well you implement commitment, thievery, integration and all the other factors, if people don't get better service than they're getting now, you've failed. And that will hurt your career far more than saying no.