B2B

Business-to-Business
Contents
What is B2B
What is e-procurement?
Who are the key players in e-procurement?
What are the value propositions?
What is B2B ?
• Business-to-Business (B2B)
– B2B is about the exchange of information between
organizations for the purpose of supporting commerce
– The information exchange can occur using:
• Internet
• Private data networks
• Voice networks
• etc.
Why it’s Important
• Business-to-Business (B2B)
– B2B enables organizations to move toward integration
of business processes across extended enterprises
(collaboration)
– At a minimum, B2B represents a way to improve the
flow of information between businesses, leading to
• More effective allocation of resources to core value
added activities
• Leaner operations
– Integration with business partners can lead to
substantial operational & financial improvements
Big Picture
B2B supports the full rang
business activities - raw
materials to end product
B2B e-Commerce
B2C
Tier N
Scheduling
Manufacturing
Sales &
Marketing
Procurement &
Supply
Tier 1
Retailers
Distributors
Engineering
e-Procurement
Exchanges
e-Supply Chain
Buy-side
Inside
Sell-side
Consumers
Big Picture
VM
•Au
•Re ction
ver
se A
uct
ion
Company
X
MRO
HM
Direct Link
Direct
Materials
VM
HM
VM
•Ex
•Au chan
ctio ge
n
Company
Z
Company
Y
HM
Enabling Technology
XML is document structure/syntax used for creating structured
elements beyond those provided in HTML
Enable internationalized media-independent electronic publishing
Allow industries to define platform-independent protocols for the
exchange of data, the lifeblood of electronic commerce
Deliver information to user agents in a form that allows automatic
processing after receipt
Make it easy for people to process data
using inexpensive software
Allow people to display information the
way they want it
Provide metadata -- data about
information -- that will help people
find information and help information
producers and consumers find each
other
Enabling Technology
XML goes beyond HTML and enables…
– Mediation between heterogeneous databases
• Example: allowing medical information systems to exchange patient data,
eliminating data re-entry and allowing applications to quickly note critical issues
like drug allergies
– Common data representations for use by client-based manipulation tools
• Example: design tools in the semiconductor industry
– Presentations customized to user viewpoints
• Example: showing only the sections of a multi-component manual that apply to a
customer’s system, or presenting one manual to a user and a different one to a
system administrator
– Agent-based systems, where a particular user’s preferences can be applied to
the data
• Example: customized TV guides that list only “interesting” shows
Enabling Technology
Bandwidth constraints are disappearing…
Here comes an era of connectivity
64 M/second
We’
We’llll have
have infinite
infinite bandwidth
bandwidth
n aa decade’
decade’ss time.”
time.”
l Gates,
Gates, CEO
CEO of
of Microsoft
Microsoft -- October
October 94*
94*
.
K/second
hest Speed
over
ndard Phone
Lines
T1
1.5 M/second
Standard
Enterprise
Access
Price:
20/month
Price:
$1,600/month
† www.teledesic.com
* PC Magazine, October 1994
3 M/second
AT&T,
@Home
Now available
in Major US
Cities
Price:
$40/month
Starting in 2003, Teledesi
a low earth orbiting satelli
based system, will offer 64M
or greater, two-way capaci
This represents access spe
more than 2,000 times fast
than today’s standard
analog modems. †
Price ???
B2B Market
It’s BIG and it’s growing rapidly
B2B Opportunities
Billions of Dollars
1400
1200
1000
800
B2C
600
B2B
400
200
0
1998
1999
2000
2001
2002
Source: Deloitte Research and Forrester Research
•
Note that B2B will far outpace B2C
2003
B2B Market
Some estimates are even greater…
B2B Market size
$8,000
7300
Billions of Dollars
$7,000
$6,000
$5,000
0%
0
0
~5
$4,000
$3,000
$2,000
$1,000
145
$0
1999
2000
2001
Source: Gartner Group
2002
2003
2004
B2B Market
• More interesting numbers:
– Product and process cost savings afforded by “metamediaries” will
amount to $57 billion in the year 2003. (Bear Sterns)
– “Metamediaries” will have a valuation of $228 billion in 2002. (Bear
Sterns)
B2B Market
Exponential growth is forecast for e-Business
$1,400
$1,200
(US $ Billions)
$1,000
1,234
Internet
Internet traffic
traffic doubling
doubling every
every 100
100 days
days
Total
Total bandwidth
bandwidth increasing
increasing 300%
300% annually
annually
Internet
Internet business
business doubling
doubling annually
annually
717
$800
$600
World GDP (1998)
$30 trillion
$400
377
180
$200
0.1
2.7
21.8
1995
1996
1997
73.9
$0
Source: "The Real Numbers behind 'Net Profits 1998”, Copyright 1998,
ActivMedia, Inc., research @activmedia.com, http://www.activmedia.com
1998
1999
2000
2001
2002
B2B Market
4,253
Other
509
1998 US Internet Services Spending
2,653
Business Services
353
2003 US Internet Services Spending
1,990
Utilities
218
2,848
Government
311
1,170
Healthcare
125
9,169
Manufacturing
(includes E&C)
975
4,018
Communications
& Media
566
3,043
Retail
436
9,871
Financial Sevices
$0
1,146
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$ Millions of Dollars
Source: Preliminary Data From a Deloitte e-Procurement survey
Internet
Internet professional
professional services
services spending
spending is
is expected
expected to
to grow
grow on
on average
average move
move than
than
700%
700% across
across industries,
industries, from
from an
an average
average $515M
$515M in
in 1998
1998 to
to $4.3
$4.3 billion
billion in
in 2003
2003
B2B Market
Opportunities
Opportunities in
in the
the Business-2-Business
Business-2-Business
(B2B)
(B2B) segment
segment dominate
dominate the
the
e-commerce
e-commerce marketplace
marketplace
$1,331
Business
to-Business
$843
Business
to-Consume
$499
( $ Billions )
Source: Forrester Research
$251
$108
$109
$43
1998
1999E
2000E
2001E
2002E
2003E
Contents
What is B2B ?
What is e-procurement?
Who are the key players in e-procurement?
What are the value propositions?
Current Market Trends in e-Procurement
Top e-Commerce Objectives
4.3
er service & satisfaction improvement
4.0
Improved supply chain performance
4.0
Reduce overall costs
3.8
Improved supplier relationships
3.8
e-Commerce procurement
3.7
Improved information / reporting
3.3
Revenue grow th
3.3
e-Commerce selling
1.8
Mergers/acquisitions
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Source: Preliminary Data From Deloitte e-Procurement survey
Four
Four out
out of
of five
five top
top e-commerce
e-commerce objectives
objectives focus
focus on
on procurement
procurement &
& supply
supply chain
chain
Why e-Procurement?
• Traditionally, procurement organizations have focused their efforts
on improving the supply management of direct materials
• Legacy and ERP systems have supported this effort by providing
tools that automate the procurement of direct materials spend
• Procurement organizations that have done work on the supply
management of indirect items have found that legacy and ERP
systems and processes do not provide the ease of use required to
assist end-users in complying with the organization’s purchasing
agreements
1% of respondents in a recent Deloitte survey are either implementing, planning
or considering e-Procurement for their organizations
What is happening now?
Today, procurement typically involves too many people, begs for streamlining, a
is ineffective in obtaining operating resources at the lowest cost…
• Current Procurement functions face many of the following challenges:
– Procurement is very transaction-intensive
– Many buyers are immersed in day-to-day tactical details
– Little time is devoted to value-added activities
•
•
•
•
Value engineering
Developing common design standards and specifications
Developing service strategies
Managing the total cost of ownership
– Managing paper flow is very time-consuming
• Documentation
• Obtaining necessary approvals (QA/QC)
– Time to process can be extensive (requestor, Procurement, A/P, Receiving
etc.)
– Vendor management is often an afterthought
What is happening now?
… today’s procurement process is highly complex
ements
Paper
Catalogs
Online
Requisitioning
System
Email
Corporate
Purchasing
Requisition
Sourc
Pricin
John Hancock
John Hancock
John Hancock
Express Mail
PO Creation
Co-workers
John Hancock
Signature
Approval
(1-2 weeks)
John Hancock
John Hancock
John Hancock
John Hancock
John Hancock
Corporate
Purchasing System
fax/mail/phone
Ordering
Shipment
Payment
Invoicing
Central
Receiving
Enterprise Acco
Asset Tagging #1234
Supplier
Commodity
Manager
Accounts
Payable
PO
Key Issues
• Slow process (weeks)
• High error rates
• Business consumer has poo
visibility of preferred supplie
pricing, order status
• Requisitioning and sourcing
separate tasks (leading to p
compliance)
What is happening now?
eProcurement presents a comprehensive, automated way to effectively manage and reduce
cost of operating resources…
Product
Selection
Availability/
Price Check
•
Product Selection - Enhanced content management of non-catalog
ID items reduces time requirements; common user interface allows
users to easily navigate system and eliminates the time associated
with obsolete products and/or descriptions
•
Requisition
Approval
Availability/Price Check - System automatically associates and/or
queries; system eliminates obsolete pricing and supplier “up-selling”
Requisition
•
Requisition - System generates requisition based upon product
selection; replaces manual process; carries all standard information
(dept. #, account codes, etc.); process eliminates downstream rework
P.O.
Generation
P.O.
Submission
Blanket Release
•
Requisition Approval - Dynamic routing occurs automatically; needs
only actual supervisor approval; all information is standard and system
confirmed
•
P.O. Generation - System automatically generates P.O. from
requisition
Receipt of
Product
P.O.
Confirmation
Status Check
•
Submission/Release - System automatically sends P.O. to supplier
•
Confirmation/Status - All queries are completed electronically;
hierarchy is preserved for tracking purposes
Receipt of
Invoice
Invoice
Review &
Payment
•
Receipt of Product - No changes
•
Receipt of Invoice - Increased electronic transactions effectively
eliminate this step - automatically matched to P.O.
•
Invoice Payment - System supports multiple payment methods
(ERS, EFT, P-card, etc.)
What is happening now?
… the eProcurement process is greatly simplified
Key Improvements
• Fast process (days)
• Completely automated (no p
• Single point of contact for
business consumer.
• Involvement by “purchasing”
required.
• Catalog based selection.ens
compliance with approved
vendors.
• Real-time access to order st
eProcurement
Application
Online Approval and Asset Tagging
1-2 days
#1234
Enterprise
Accountin
Other Internal Stakeholders
Shipment
Supplier
Ordering
EDI, internet
Supplier Mgt./
Catalog Mgt. /
Process Mgt.
Proof of
Receipt
Invoicing
Payment
Approved
Purchase
Order
mmodity Manager
Accounts Payable
What is e-procurement?
eProcurement solutions focus in four areas…
Capturing and
Leveraging Spend
Managing Content
E-Procurement
Solution
Connecting the
Players
Constructing the
Supply Base and
Incentives
Capturing and Leveraging Spend
By using the corporate computing network and ERP systems, eProcurem
solutions automate and enhance the product selection and order placemen
processes
Users
ERP System(s)
Process
Owners
Common User Interface
Approvers
MRO
Catalogs
Services
Acquisition
eProcurement
System
Capital
Acquisition
Expense
Management
Managing Content
eProcurement solutions capture and automate the presentation of
customized supplier information to multiple users , one of the most diffic
activities to manage for many companies
External
Catalogs
SIC
Mapping
Internet
Catalog
Adapter
Aggregated
Catalog
Intranet
Internal
Catalogs
Catalog
Addresses:
URL, File
End-User
Navigation
Connecting the Players and Constructing the Supply Base
eProcurement systems providers are moving towards a marketplace mode
for connecting buyers and suppliers
Transaction Enabler
Company
Supplier (ED
EDI
XML
Order
Routing
Company
OBI
Supplier (ED
E-mail
Auto-Fax
Supplier (XM
Supplier Registration
Supplier (OB
Catalog Management
Company
News, Info, Other Svcs.
Supplier (E-m
Understanding the e-Procurement Process
By simplifying communication and reducing marketplace friction for both
buyers and suppliers eProcurement solutions result in significant value
creation
Current Buyer-Supplier
Relationship
A
B
C
A
B
C
D
E
Buyers
B
B
C
D
E
F
A
e-Commerce
Procurement
A
eProcurement
Relationship
D
C
D
E
F
Suppliers
CONSISTENT WITH CURRENT
ENVIRONMENT
E
F
F
Buyers
Suppliers
MARKET PLACE
STRATEGY
91%
91% of
of respondents
respondents in
in aa recent
recent survey
survey are
are either
either implementing,
implementing, planning
planning or
or
considering
considering eProcurement
eProcurement for
for their
their organizations
organizations
Source: Preliminary Data from a Deloitte eProcurement survey
Contents
What is B2B ?
What is e-procurement?
Who are the key players in e-procurement?
What are the value propositions?
Understanding the e-Procurement Players
Companies in the eProcurement arena are offering a variety of solutions
using different architectures to meet varying customer needs
Selling Companies
mployees
ntranet
Marketing,
Selling,
& Servicing
ERP
-Side Solutions:
roadVision
onnect OrderStream
M Merchant Server
icrosoft Site Server
ommerce Edition (SSCE)
etscape SellerXpert &
erchantXpert
pen Market
andesic
MART Technologies
LinxTM/eToolsTM
Buying Companies
Internet
Transactions & Data Transfer
Collaboration
Data Aggregation Solutions:
• Ariba Network
• ASPECT
• Commerce One MarketSite
• Harbinger
• Requisite Technology
Transaction Solutions:
• Ariba Network
• Commerce One MarketSite
• Netscape ECXpert
• Tradex
• Open Buying on the Internet
(OBI)
• webMethods
• WebDITM
• VAN
Strategic
Procurement
Employe
Intrane
ERP
Buy-Side Solutions:
• Ariba ORMS
• Commerce One BuySit
• Concur
• Clarus
• Intelisys
• Netscape BuyerXpert
• Oracle Internet
Procurement
• RightWorks
• SAP B2B
• Tradex
• eLinxTM/eToolsTM
Understanding the e-Procurement Players
Process Rules
Seller-Centric Solution
Transaction Mgmt
Content
er from Company A
er from Company B
uyer from Company C
Seller
Organization
Seller’s
Infrastructure
Characteristics
Different look, feel, etc. per seller for buyers
n Content presented in a seller-biased format
n Transaction managed by seller’s system
n No governance of purchase for buyer
n Facilitates integration with Seller’s system
n Need to establish secure connections to multiple
vendor sites
n
Examples…
eTools, CommerceOne SupplySite, Grainger.com,
Industry.net, Open Market, most supplier web sites
Understanding the e-Procurement Players
Process Rules
Buyer-Centric Solution
Transaction Mgmt
(Buyer-managed content)
Content
uyer’s
anization
Seller from Compa
Buyer’s
Infrastructure
racteristics
ferent support requirements per buyer for sellers
ntent management more complex & costly
ller access required (price changes, availability, etc.)
ftware, hardware and infrastructure costs
pedes real-time interaction with sellers
cilitates integration with the Buyer’s system
mples…
Ariba ORMS, Clarus Procurement, CommerceOne
Site, TradeEx, Intelisys
Seller from Compa
Seller from Comp
Understanding the e-Procurement Players
Process Rules
Buyer-Centric Solution
Transaction Mgmt
(3rd Party Aggregated Content)
Content
uyer’s
anization
Buyer’s
Infrastructure
A
G
G
R
E
G
A
T
O
R
Seller from Compa
racteristics
gregator offers a value added service to convert data
a standard,I.e. build content
ferent support requirements per buyer for sellers
gregator access required
ftware, hardware and infrastructure costs
pedes real-time interaction with sellers
cilitates integration with the Buyer’s system
mples…
, Van, Harbinger, Requisite, Aspect, CommerceOne,
Ariba through partners
Seller from Compa
Seller from Comp
Understanding the e-Procurement Players
OBI Solution
uyer’s
anization
Process Rules
Content
Transaction Mgmt
Transaction Mgmt
Seller from Comp
Buyer’s
Infrastructure
racteristics
verages catalog content & search functionality
supplier sites
siness rules, approval workflow, order history,
. reside on buyer’s system
cess controlled from buyer side
erent look, feel, etc. per seller for buyers
ntent presented in a seller-biased format
mples…
sys, Ariba “Punchout”
Seller from Comp
Seller from Com
Understanding the e-Procurement Players
Process Rules
Extranet Solution
Transaction Mgmt
Content
Multiple Buyers
Multiple Sellers
Electronic
Marketplace
haracteristics
Data standard implemented by the Electronic Marketplace
The Electronic Marketplace offers a value added service to convert data to a
andard, (i.e., build content)
Generally supports parametric search capability across suppliers
Dependant on critical mass
xamples…
ommerceOne, Ariba Network, Grainger.com
Vendor Analysis: Overall Description
Connections to
ERP & Legacy
Buy-Side
Software
Electronic
Marketplace
Sellers
Catalogs
ORMS
Ariba Network
Buy Site
Market Site
SAP
PeopleSoft
JDE
Baan
Oracle
Aggregat
Internet
Procurement
Oracle
Exchange
Grainger
Chem
gacy Systems
TPN
B2B
mySAP.com
Aspe
Vendor Analysis: Vision
Buy-Side Software
Electronic Marketplace
ORMS
Ariba Network
Deep Functionality
Focus on Users
Capture Full ORM Spend
Secure Largest Market Share in Fortune 1000
ASP Solutions for Mid Market
“Distributed” Content
Buyers will Attract Suppliers/Partners
Availability of Content will Attract More Buyers
Network Effect Grows
Participation Free for Buyers & Suppliers
Buy Site
Build Competitive Product While Promoting BuySide Solutions to Hook-Up to Market Site
PeopleSoft is a Reseller/Partner
Market Site
Vision is Focused Here
Regional Franchise Model Vs. Owning Buyer
Aggregated Content
Network Effect
Fully Automated Process
Internet Procurement
Oracle Exchange
Build Full Solution for Direct & Indirect
Build a Solution that Works Beyond Oracle Installed Base
Leverage Oracle’s Resources
To First Build an Electronic Marketplace With
Capabilities Similar to Ariba, Then to Leverage
Oracle’s Customer Base to Participate
B2B
mySAP.com
Built an Integrated e-Procurement Solution
Focused on SAP Installed Base
Leverage Installed Base Beyond Just e-Procurement
Offer Full-Scale of Services for SAP Customers
Vendor Analysis: Strengths - Features & Functionality
Buy-Side Software
ORMS
User Interface & Wizards
Dynamic Workflow
Multi ERP w/Prebuilt Adapters
Program Scalability
Integrated T&E & e-Forms
# Live Customers/Referenceability
Automated P-Card Processes
Buy Site
Electronic Marketplace
Ariba Network
Punch-Out Feature
Flexible Transaction Routing
Large # Suppliers & Buyers
Supplier Hook-Up Fast & Free
Leverage Vertical & Horizontal Marketplaces
Market Site
Current Version Meets Basic Needs
New Release (6.0) Promises to be
Competitive with Ariba
Price
Open to Multiple e-Procurement Systems
Data Aggregation Model
Developed/Planned Range of Business Services
Transaction Engine
Large # of Suppliers
Internet Procurement
Oracle Exchange
Synonym Search
Reporting/Analysis
Oracle Integration
Price
B2B
SAP Integration
Price
Global Solution
Vision
mySAP.com
Vision
Vendor Analysis: Weaknesses
Buy-Side Software
ORMS
High Initial Price
Java-Client (Download)
Buy Site
Electronic Marketplace
Ariba Network
Closed to other Buy-Side Solutions
Market Site
Inadequate Workflow
Limited ERP Integration-Multiple ERP
Limited References/Scalability
Microsoft (only) Platform
Scalability of Aggregated Model
Suppliers Required to Pay
Internet Procurement
Oracle Exchange
Limited Functionality
Poor Ease of Use
Limited References (live)
B2B
Late to Market
Schedule Keeps Slipping
Not really in Existence
mySAP.com
Not Yet in Existence
Vendor Analysis: How They Win
Buy-Side Software
Electronic Marketplace
ORMS
Ariba Network
Strongest Buy-Side Solution & User Interface
(With Wizards)
Integrated T&E & e-Forms
of Live Customers, Reference-ability & Proper Scalability
Large Aggressive Sales Force
Lots of Demos
Strength of Buying Community
Suppliers can Sign-Up Fast/Free
# of Suppliers
Promise of New Features
Buy Site
Market Site
De-emphasize Buy-Side Solution
Partner for T&E and e-Forms
Positioning/Marketing
Aggregated Content Model
Current & Future Value
Leverage Market Site “Franchise” Partners
Internet Procurement
Focus on Oracle Install Base
Extremely Aggressive Sales/Pricing
Focus on Vision
Bold Claims Leverage “Quals” from Strategic
Procurement
B2B
Focus on SAP Install Base
Strong Existing Client Base/Market Share
Focus on Vision and Strength of Development
Oracle Exchange
Focus on Vision
Leverage TPN/Requisite in Interim
mySAP.com
?
Vendor Analysis: Market Buzz
Buy-Side Software
ORMS
“Buy-side software is a commodity”
“SAP & Oracle will kill them!”
“Their price will have to come down”
Electronic Marketplace
Ariba Network
“Why would anyone want to maintain a catalog?”
Buy Site
“Their strategy keeps changing”
“They are losing some of their key clients - poor
references @ others”
“They have given up buy-side to Ariba”
Market Site
“Content management still required, they have 5
people @ Sabre
Internet Procurement
“Their references/claims don’t hold up including
their largest - AT&T”
“Clients are purchasing other solutions even when
they have a free IP package”
“Demos unstable at best”
“Not really pure HTML - still Java client”
“Don’t see how they can compete outside of
giveaways in Oracle installed base”
B2B
“All they have is Vapor-Wear”
“SAP is expensive to implement”
Oracle Exchange
“They don’t have an exchange only TPN - and
they can’t get it to work”
mySAP.com
“What is it?”
Contents
What is B2B ?
What is e-procurement?
Who are the key players in e-procurement?
What are the value propositions?
Value of eProcurement
• Standard Procurement (GartnerGroup and NAPM)
–
–
–
–
Up to 60% of company revenue is spent on outside purchases
75% of invoices are typically for items costing less than $1,000
Cost in time/paperwork to create a purchase order (P.O.) is $70 to $300
Nearly 1/3 of non-production purchases are made outside the formal
procurement process at an average of 15% to 27% higher costs
– Overhead to procure a $5 item is the same as a $5,000 item
• eProcurement (GartnerGroup)
– Cost of an eProcurement P.O. averages approximately $6
– Best Practice eProcurement solutions can bring P.O. costs to below $1
– The Business-to-Business Web commerce application market will reach
$1.27 billion by 2002; the buy-side portion of this market will be $300
million
Depending on current Firm
practices, eProcurement
can potentially reduce
internal buying and selling
costs by more than 90%.
Source: RB Webber & Associates
$70
$6
– Derived from sources including
CAPS, NAPM, and Stanford
University
Value of eProcurement
eProcurement solutions are delivering quantifiable benefits…
Improved strategic
sourcing of
difficult to manage
categories*
Supplier Cost Reduction
Improved leverage
due to better sourcing
contract compliance
7 - 10%
%
Improved supplier
processing costs
s
a
v
i
n
g
s
4 - 7%
2 - 3%
* If category has no prior strategic sourcing effort, savings can be significantly greater
Value of eProcurement
… these benefits are focused on a significant portion of corporate spendin
indirect operating resources
Manufacturing
Resources
28%
Operating
Resources
36%
Human
Resources
17%
Top 10 Operating Resources
Rank
Products / Services
Office Supplies
Office Equipment
Computer HW/SW
Travel
Goods for resale/merchandise And Raw Materials
Temporary services
Printing
Telecom
Package
Advertising
Source: Preliminary Data from a Deloitte eProcurement survey
Profit,
Dividends
6%
Taxes,
Other
13%
Source: Killen & Associates, 199
Companies
Companies that
that have
have implemented
implemented eProcurement
eProcurement solutions
solutions have
have experienced
experienced
significant
significant benefits:
benefits: more
more than
than 7.5%
7.5% savings
savings on
on average
average
Source: Preliminary Data from a Deloitte eProcurement survey
Where Does the e-Procurement Savings Come From?
mponents of Cost Savings
Distribution of Savings
Routing &
Authorization
Procurement
Operations
5.0%
8.8%
Receiving &
Payment
Operating
Goods & Services
5.5%
Value of eProcurement
The eProcurement value proposition captures these benefits and supports
the case for change…
Savings on Procurement Spend
n Larger
discounts from vendors, typically 2+%
additional off for using eProcurement
n Ability to source & configure non-traditional
items (e.g., advertising)
n Compliance to item level standards
n Increased compliance for corporate contracts
from 20% to 90%
Savings on Processing and Transaction
n Reduced PO costs
n Reduced time required to process and
approve POs and requisitions
n Ability
to strategically source and leverage smaller
purchases
n Continuous improvement on cost reduction
n Auctioning for commodities
n Reducing high margin substitutions
n Reporting
n Reduction
in associated process costs through
automated forms capability
n Reduced errors
n Reduced cycle times to both find and process purchase
Lower head count requirements
n Reduce head count in appropriate departments
Cost of implementation and maintenance
n Software license and maintenance fees
n Hardware costs and maintenance fees
Value proposition
n NPV
n IRR
n Payback Period
n Implementation
n Catalogs,
and Ongoing Support
training and enhancements
Value of eProcurement
An integrated Strategic Sourcing and eProcurement approach enables
Procurement Transformation and provides tools for improved supplier
management
Strategic Sourcing
• A collaborative and systematic approach for
dramatically reducing “external spend”while
improving quality and internal processes
• Has typically been an under-utilized lever which
provides a “high-gain, low-pain”alternative for
reducing costs
E-Procurement
• Extends product selection and order initiation to
the desktops of frontline employees while
maintaining the contracts and business rules of
the organization
• Captures and automates the presentation of
customized supplier information to multiple user
Procurement Transformation
• Enhances the procurement function with an
integrated supply chain, streamlined processes,
cost reductions, and strategic supplier alliances
• Leverages detailed vendor performance and
transaction information to support strategic
procurement decisions
Value of eProcurement
By leveraging the benefits derived from each initiative, synergistic and
sustainable results may be attained
E-Procurement
Strategic Sourcing
Encourages use of supplier agreements (i.e.,
eliminates “maverick”buying )
Better data provided from E-Procurement system
to support sourcing
Frees up Procurement resources to focus on
strategic efforts
Results in consolidated supplier lists
10% – 30%
Total Savings
• Focuses development work with preferred
suppliers
• Reduces number and complexity of catalogs
• Focuses catalog content and features on priori
• Allows required supplier efforts to be included
negotiated agreements
• Reduces maintenance cost and complexity of
catalog and system
• Prioritizes roll-out based on benefits
Procurement Transformation
•
•
•
•
•
Instills “customer focus”
Eliminates low-value activities
Improves procurement process workflow
Standardizes procurement practices
Promotes capture and use of data to enable supplier
alliances
Value of eProcurement
Concurrent projects ensure that strategic sourcing best practices are
integrated into eProcurement efforts
Impact on Purchasing Cost
Savings as % of
Total Spend
Up to 10%
Up to 20%
Initiatives
Strategic Sourcing
Initiative
•
•
•
•
Total cost of ownership
Product substitutions/standardization
Corporate wide purchasing
Supplier rationalization
eProcurement
Initiative
•
•
•
•
Contract management
Demand management (changing buyer behavio
Streamlined transactions
Continuous improvement