Almost 80% of companies use business-to-business e-procurement to some degree, although flawed business cases result in many companies failing to see real benefits, says M-Web CommerceZone.
M-Web CommerceZone, a business-to-business e-marketplace, has processed transactions worth more than R9 billion since its inception two years ago. At present, says CE Andrej Horn, transaction values amount to more than R450 million a month.
While the industry has seen many failures, he says M-Web CommerceZone`s success lies in deploying purpose-built private exchanges for each client and sourcing a select group of suppliers to provide clients with indirect goods and services.
"Public exchanges, where everyone can log on and buy from any supplier, often lead to price wards that have obvious drawbacks for suppliers while seducing buyers into opting for the lowest prices, regardless of other prerequisites for responsible e-procurement. That ultimately results in dissatisfaction all around."
Horn says the nature of online business-to-business e-procurement has changed substantially in the past two years to mature into an accepted practice used by leading organisations worldwide.
A recent international poll indicated that almost 80% of companies surveyed are using e-procurement to some extent, although 70% of those say they use it for fewer than 10% of their purchases.
Horn says this indicates that a large number of companies have failed to see real benefits from e-procurement and are therefore not moving their procurement online at significant levels.
Many of these simply bolted an e-procurement module onto their enterprise resource planning system and expected results, he says.
"This has rapidly led to companies discovering that suppliers are reluctant to integrate with each and every client`s different systems because of the costs associated with the integration and maintenance of all the different links.
"On the buyer side, the maintenance of all these catalogues behind their firewalls further amounts to a huge workload, which has resulted in a reduction in the number of suppliers brought online and the resultant decline in e-procurement."
However, he sees flawed business cases as the biggest obstacle to e-procurement growth.
"E-procurement is back on the corporate agenda," Horn says. "But, like with all other IT-related projects, customers are now demanding to see a proper business case that will deliver a measurable return on investment.
"It will be the service providers who can deliver on these expectations that will be the survivors of the local business-to-business industry."
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