E-Procurements continuing challenges.

Author:Ford, Randy
Position:Cover Story - Brief Article

A good e-commerce provider will make the supplier part of any solution, maintaining the integrity of the process and improving it for them by including rapid payment, automated purchase orders and the ability to accept data in their preferred format.

Corporate e-purchasing capabilities have continued to progress over the past year, but not without some major challenges for CFOs. While rapid expansion was forecast for e-purchasing, it has been neither as fast nor as problem-free as many predicted. A recent report by Forrester Research and the Institute for Supply Chain Management, for example, showed mixed news for Internet purchasing growth, citing high technology as both a detriment and an ally.

Indeed, the challenge is to harness the Web in ways that are additive and not distracting or costly for your company. Consider developments in four basic areas:

1) Integration

Most corporations have dedicated significant resources to enterprise resource planning (ERP) systems. When an organization moves its purchasing functions onto an online system, problems may arise because the e-purchasing software is incompatible with the existing ERP system. Integration challenges often occur when corporations invest in the most popular of the current wave of e-commerce software -- buy-side, rules-based catalog software. While these can be quite effective, they stop short of providing key integration functions and may require additional investment to complete the automation and integration tasks. CFOs should review their ERP integration needs and understand how different applications provide robust and timely information.

2) Cost

CFOs are nervous about allocating additional resources to their e-purchasing initiatives if they are unsure of their return on investment (ROI). Those who have already invested heavily in ERP are anxious to protect -- and benefit from -- those investments and worry about further expenditures that may only exacerbate their integration headaches. The confusing pricing structures of e-commerce software suppliers make determining true ROI more uncertain.

Pricing schemes should be evaluated to understand all costs for software licenses and support. If your company tends to buy rather than outsource, consider a hosted or online application service provider (ASP) model where the provider can supply the infrastructure components you lack, such as integration or payment capabilities. With the right business model for supplier payment and...

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