eProcurement is stuck in 2004.
This may seem a little harsh, but it contains more than a grain of truth. Most procurement takes a push approach. That is, it tries to get people to follow the rules. It says: “This is our portal and you need to use the suppliers on it.” This is counter-intuitive: over the past ten years, the online experience (whether it’s shopping, news or software) has moved in one direction only. Users have been given (or have taken) increased choice.
By and large those who have tried to limit users’ options have discovered they vote with their mouse clicks. However, B2B portals have persisted with this restrictive model for longer. There are some good reasons for this: controlling the way people buy for their business is driven by some very serious needs around compliance, efficiency and transparency. Over the last few years, though, the limits of more traditional, rigid portals have become increasingly clear.
People don’t like being told what to do. They often have their own ways of doing things and if it is easier and quicker to purchase something elsewhere, they usually will. This is especially true for spot buying (purchase for immediate delivery) and tail spend (the bottom 10-20% of your budget which is spent on myriad smaller purchases). The trouble is, when people go ‘off-piste’ in this way, compliance and transparency suffer.
A bit of buyer psychology goes a long way
The obvious answer to that problem of people going ‘off-piste’ appears to be to simply enforce your rules more firmly. However, there is a better way of looking at this problem.
What if, instead of telling people to use your portal, you made your portal so compelling that they chose to use it? What if, instead of using workarounds, people asked you to put their favourite suppliers on the system? What if your system was so good that people wanted to work with you to make it better? What if this kind of ‘demand driven’ procurement actually made it easier for you to deal with transparency and compliance?
Learning from the consumer experience
Just think of all the sales drivers on Amazon. Customers who Bought This Item Also Bought…Frequently Bought Together….Today’s Deals…What Other Customers Are Looking At Right Now. Add to that the reviews which are essentially crowdsourced and you have seamless integration into social media and the cloud. Kindle users, for instance, can tweet when they’ve finished a book and view the passages other readers liked, while all new Amazon music is stored in the cloud.
The most popular consumer sites are easy to use. Payment is simple and delivery is usually next day and often free. Even if you buy nothing, many online retailers will send you recommendations based on what you’ve looked at.
Moreover these sites are accessible from almost any device. Capgemini research shows that if you make eProcurement available for mobile devices (such as iPads, phones and Microsoft Surface) up to 80% of the target group will adopt it. eProcurement on the go dramatically improves productivity and efficiency rates.
It is this kind of intuitive, flexible model that organisations should be looking at.
Practicalities and support
Of course organisations need to remember that it’s not just about clever psychology and a nice user interface. Your internal customers also need to feel that their requests are being dealt with and that they are being served – that calls for an easily accessible helpdesk and technical support. Your virtual ‘shelves’ have to be well stocked with plenty of options and you need a quick and convenient way of onboarding new suppliers. You may also need to accommodate some quite varied purchasing requirements, from simple ‘spot buying’ to complex service provision.
The results you can expect
This may sound like a lot to ask of the Procurement and IT functions – both in terms of the immediate requirements of designing and setting up the system and also for running and maintaining it in the long term. However, with the right support, it is achievable.
The particular strength of technology enabled BPO is that a provider like Capgemini can own the whole challenge, from creating the right kind of platform to all those other services that underpin a great buyer experience.
Finally, all this prompts the obvious question: is it worth it? Some of the recent statistics we have seen from our work in this area show that it is:
In summary, bringing your procurement up to date may seem daunting, but it may also be more accessible than you think and the payback will probably be quicker too.
Take a look at your procurement system, then watch this walkthrough of the buyer’s experience on Capgemini BPO’s IBX platform. Ask yourself: how would your staff rather do their buying?
For more information on Capgemini BPO’s procurement solution (IBX), there are some interesting case studies and overviews at http://www.ibxplatform.com/.