The real ROI of eProcurement

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By Daniel Ball, director, Wax Digital

Return on investment (ROI) is the age-old dilemma for any organisational function working on its business case for a new tech initiative. It’s not always easy to present the evidence to support ROI and justify why a new piece of tech is needed. This can be frustrating, especially if you’re a procurement team that has always managed its processes manually and you need to demonstrate the benefits of digitising purchasing throughout the organisation.

If you are considering the introduction of eProcurement to your business for the first time – and are in the throes of building your case – you might be interested to hear the views of those that are already making headway with the software and reaping the many varied benefits it has to offer.

As an eProcurement software provider, we wanted to find out about the many different ways businesses benefit from the technology. We conducted a survey with 200 senior procurement professionals to establish their views on what benefits the technology delivers and what they expect to gain from it in the future.

The survey results showed that 82% of respondents had sufficient infrastructure in place to measure eProcurement ROI. Further analysis revealed that eProcurement advantages are contributing significantly to profit margins and efficiency. Encouragingly, it showed that on average, our survey respondents were saving £38 on supplier costs for every £10 invested in eProcurement. Similarly, for internal process costs, respondents claimed save £34 on average for every £10 they invest. These combined savings could see eProcurement achieve an ROI of 720%.

This return alone may be enough to support the business case for the software, however, eProcurement’s value to the organisation goes way beyond driving savings. Our survey results suggest that respondents expect to see eProcurement contribute to the broader success of the business, used as strategic tool to provide wider organisational and productivity benefits.

For example, efficiencies can be gained from automating time-consuming and laborious tasks such as invoice processing by the accounts payable team. This allows staff throughout the organisation to concentrate on strategy development, whereas increased cash flow can contribute to business growth.

Our survey also predicts a 71% rise in the number of UK organisations looking to adopt technology that integrates processes across the whole procurement lifecycle, to help deliver on a range of wider business benefits such as strategic sourcing and improved supplier relationships. This eProcurement functionality can help businesses to negotiate better terms with suppliers; and streamline day-to-day processes from tendering and auctions to contract and supplier management.

And our survey respondents showed us that many of them are already realising the benefits of eProcurement, with 81% claiming that it is either already having a wider impact in their organisations, or will do in time.

Whatever the key business reason is for adopting eProcurement is, it’s clear that its benefits can have an impact across the organisation. ROI is not always easy to predict but when technology can deliver on a host of cost, productivity and process efficiencies, the business case is far easier to pitch.