B2B Payments

The Paradox Of eProcurement

B2B buyers are often viewed as apprehensive to adopt new technologies in their operations, despite expert consensus (and evidence from the B2C side of commerce) that innovative tools can make the purchasing process much more efficient and beneficial to both sides of the transaction.

It would seem, then, that B2B buyers are somewhat of a paradox: they know procurement technologies are helpful, yet they resist implementing them.

A new study conducted by Zycus, a procurement SaaS provider, in partnership with the University of Michigan has highlighted just how stark this paradox is within the current community of procurement officials. Through a series of surveys and interviews of these officials in 2014, researchers collected insight about corporate use of enabling procurement technologies (EPTs).

The majority of these respondents were seasoned professionals with an average of 15.7 years in the field. On average, these officials began using EPTs about four years ago. More than one quarter of respondents are from a major corporation with annual sales of more than $10 billion. Collectively, the responses offer intriguing patterns regarding the relationship between the attitude of these technologies and the actual use of these tools in the workplace.

Digital Procurement Benefits Both Buyers and Suppliers

The study, “The Drivers and Barriers to Effective User Adoption of Procurement Technologies,” acknowledged the ability of EPTs to improve operations on both sides of the procurement transaction. The data obtained from digital procurement tools, for example, can arm buyers with hard facts about their purchasing habits and aid in purchasing decisions like whether to expand their supplier base. This data can also provide suppliers with feedback about their performance.

In addition to internal implementation of digital procurement tools – which, survey respondents agreed, can lead to increased contract compliance and heightened visibility into their companies’ spend habits – these technologies can facilitate faster invoice payments and a more efficient procure-to-pay process for the supplier.

But procurement officials, the research showed, are also aware of the benefits that procurement technology can offer them specifically. “By far,” the study revealed,” the leading driver for eProcurement adoption is the promise of better integration and visibility within the company, followed by the ability to identify new business opportunities and to reach savings goals.

The financial benefits of digital procurement alone were considered the strongest incentive to adopt these tools. According to the report, spend analysis, financial savings management, and procurement contract management are currently the three most popular types of digital procurement technology services being utilized by procurement officials in today’s market. Other popular types of this technology include electronic invoicing, procure-to-pay modules and supplier portals. These tools, the report concluded, allow procurement officials to automate as much of their job as possible, allowing more time to focus on more strategic efforts.

The Paradox: Procurement Officials Resistant To Change

The Zycus research report unveiled some intriguing contradictions among procurement officials and their perceptions of digital procurement tools. Clearly, these employees acknowledge the benefits – especially the financial ones – of these technologies. At least 40 percent of respondents agreed that EPTs are useful to their job, improve job performance and productivity, and boost effectiveness. At least 80 percent of respondents all agreed that EPTs are a good idea in the workplace. Most strongly agreed that they have a positive perception of these tools, and about 70 percent or more of these officials said they would like to implement these technologies in the workplace or use them more frequently.

Despite these overwhelmingly positive positions in favor of EPTs, the research uncovered some of the strongest barriers to technology adoption perceived among procurement officials.

Only about half of respondents said that these technologies are easy to use, for example, and that they do not have difficulty using it. Less than half agreed that it is easy to get these technologies to do what they want them to actually do. Management issues, expensive cost of implementation, company culture and no “buy in” from users were all cited as leading reasons procurement officials would not implement these tools.

This is all despite findings that more than half of respondents disagreed or strongly disagreed that their existing, legacy procurement systems are better than EPT options.

Interestingly, procurement officials face more pressure from their own industry than by their suppliers to adopt these technologies. According to the research, about half of respondents said they felt neutral about how these tools impact their relationships with suppliers. But when procurement officials reflect on the pressure to adopt these technologies exerted from within their own industry, the majority agreed that procurement technology is approaching the norm, and procurement technology adoption is encouraged.

More than 40 percent strongly agreed that best-in-class companies use innovative procurement technology, but officials are more neutral in their position of whether they feel the need to adopt EPTs to remain competitive.

Room For Growth Among EPT Innovators

Zycus’s research suggests that procurement officials will need to experience a shift in company culture and mindset to realize the benefits of procurement technology that they already know exist. But the study also hints at ways the developers and innovators of these technologies can improve their offerings to encourage greater traction within the procurement community.

Procurement officials, the research showed, hold expectations for their procurement tools that are on a similar level to those held for B2C digital procurement and eCommerce. “Users have become so accustomed with nice and streamlined Web experiences they encounter when dealing with B2C sites such as Amazon,” the research report’s author, associate professor of supply chain management at MSU Tobias Schoenherr, said. “Unfortunately, until very recently, many EPTs did not offer this same level of easy of users, but users expected these interfaces also on the B2B side.”

Many of these technologies can actually increase costs for suppliers to adopt, a challenge exacerbated by the fact that buyers use a variety of digital procurement tools, each of which suppliers are expected to be able to integrate within.

Procurement officials also reported several shortcomings experienced from their existing procurement tools, including a lack of complex reporting capabilities, the need for sophisticated external systems to complement these tools, and concerns surrounding the validity of data obtained through these technologies.

While corporate buyers can implement training sessions to help officials attain the full capabilities of these tools, Zycus’s research suggests that the developers of these tools still have a ways to go before they can fully raze the barriers – whether actual or merely perceived – for procurement officials to adopt them.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

Click to comment