B2B Payments

Why So Many eProcurement Efforts Fail — And How To Fix it

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Imagine a business that has overcome the headwinds of digital adoption: the cost of implementing new technology, the corporate culture that fights change, the investment required to pick the right solutions. In eProcurement, businesses need to clear all of these hurdles, but often, even that isn’t enough to obtain a more strategic and efficient procure-to-pay experience.

According to researchers at Gartner, about half of general eProcurement solutions ultimately fail to meet the needs of companies once implemented.

“The lingering problem is that, for many indirect spending categories, general purpose eProcurement solutions lack sufficient work-stream-specific functionality to deliver an ROI,” concluded Gartner Research Vice President, Procurement Solutions & Strategies Debbie Wilson.

According to Steve Lundin, CMO of eProcurement company Jaggaer, there are loads of reasons for that failure rate.

“The implementation could take longer than someone wants. It may fail because there are too many gaps, and those gaps have to be addressed later, but the customer doesn’t want to wait for those gaps to be fixed,” he recently told PYMNTS. “They want the solution to fulfill all of their needs. They may not see adoption within their company. The people using it may not feel comfortable using it. Maybe it wasn’t what they wanted.”

It’s a long-winded answer to a complex challenge in eProcurement. Since the rise in eProcurement solutions in recent years, now companies have more options than ever to digitize their procure-to-pay process. Lundin said the next phase in this industry will be to develop more customized solutions.

Jaggaer is taking this information to heart. The company announced earlier this month that it has launched initiatives to investigate the industry-specific needs of their customers and to roll out suites of procurement solutions tailored to targeted verticals, including healthcare, manufacturing and logistics.

“When you go in assuming you can make a one-size-fits-all solution work, you open yourself up to a myriad of instances where there could be failure,” he said.

Today, he added, there is what he described as a “Henry Ford” problem with eProcurement offerings on the market: “You can have it in any color, as long as it’s black.”

And while Jaggaer has only just begun its research initiatives to understand the particular eProcurement challenges from one industry to the next, there are already a few patterns emerging. According to Lundin, healthcare has an enhanced need for shared search capabilities, while transportation demands sourcing and tagging features more than other verticals. Patterns of these unique needs will continue to emerge in greater clarity as Jaggaer continues its research, Lundin noted.

The executive emphasized that this is part of an emerging, new wave in eProcurement.

“As technological solutions become more ubiquitous, the expectation is that you’re running a company that is actually utilizing digitalized procurement solutions,” he said, adding that in only a few years, the outliers won’t be the companies using the most sophisticated eProcurement tools; it will be the ones who have failed to adopt a digital strategy.

The way companies approach digital procurement is also shifting, the executive said, as businesses turn from looking at how technology can fit into their overall business strategies, to developing those business strategies around the technology that’s out there.

That has significant implications for how a company approaches the implementation of an eProcurement tool, Lundin added.

“You have more companies adopting digital solutions from the get-go, and saying, ‘this is how commerce is being done. This is where we need to be,’” he said. “You find less tolerance for solutions that don’t fit their needs. This is why, honestly, you need solutions that are tailored to those industry nuances.”

This is also part of a much bigger picture of digital transformation, Lundin added.

“Our entire economy, our technology infrastructure is moving toward this specialization and away from generalization,” he said. “Things have become more complex and each industry has its own nuances, and this is a reflection of where the entire industry is going — where the entire world is going. This is the future. This is what people expect, and what they should expect.”

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