When transactional e-procurement systems first emerged in the late 1990s, the theory behind them was sound. By channelling indirect spend through such applications, procurement departments could ensure that spend went through preferred suppliers and would gain the management information needed to seek further economies of scale. In addition, procurement would be free of policing such requests and could concentrate on more strategic activities that would hasten its evolution from a back-office department to a core business function.
There’s no doubt that, in retrospect, this promise was over-hyped, particularly with regards to the amount of money that could be saved. According to a study conducted by CAPS Research in 2006 across 195 global organisations in 29 countries, although 70 per cent had some form of e-procurement system, only 36 per cent of total spend went through them.
Of late, however, a newer breed of e-procurement provider has emerged, with a clear view on where these systems have fallen down in the past. Such applications, they claim, were originally designed for procurement professionals and overlooked one crucial aspect: the user. A lack of user-friendliness, they argue, is one reason why internal take-up of such systems remains disappointingly low.
Over the past 18 months providers such as Ketera, Coupa, Proactis and travel and personal business-related service specialist Rearden Commerce have all made user-friendliness a central part of their sales patter. When the UK-based Proactis unveiled its 2007 spend control suite, for example, this is how Terry Wilcox, its commercial director, chose to present it: “By making the software easier to use, organisations can expect increased user adoption throughout the entire organisation, not just in the procurement department.”
There is certainly evidence to suggest that implementing an effective, user-friendly e-procurement system can have a positive impact on internal customer spending habits. Research by Aberdeen Group published in October suggested that companies with an efficient e-procurement initiative increased the amount of spend under management by 35 per cent on average and reduced “maverick” spending by 41 per cent.
Companies that were rated best in class in terms of e-procurement, meanwhile, had an average maverick spend of only 17 per cent – some 59 per cent lower than that of other firms.
Wilcox believes there are three main drivers that have made the issue of user-friendliness finally come to the fore: technological advances in the form of higher processing power and greater disk space; a desire from consumers used to buying from the likes of Amazon and eBay at home to see this ease of use in their working lives as well; and the realisation by companies that having an easy-to-use system could play a key role in driving compliance and reducing maverick spend. “If vendors like us don’t respond to this, then we don’t deserve our place on the leaderboard,” he says.
Ketera, a US-based vendor, was the first company to actively promote the user-friendliness angle when it launched its on-demand, web-based procurement suite in August 2006. It claims to have had a “tremendous” response, pointing out that one of its customers saw the amount of spend under management increase from $750 million a year to over $4 billion.
“We realised we could differentiate ourselves by focusing on the shopping experience and making it as simple as possible,” says Pravin Kumar, vice-president of products. “The problem we were addressing was a lack of adoption in large companies. They were hitting a brick wall in terms of adoption of e-procurement systems internally and the main reason was because it was so hard to use them.”
According to Jason Busch, founder of the blog spendmatters.com, the idea that e-procurement software could – and perhaps should – be as easy to use as a consumer internet shopping experience is entirely realistic. “The difference between consumer and business requisition systems is the workflow process behind the scenes, in terms of the approvals and getting the pricing and discounts right,” he says. “There’s a lot of complexity, but the actual user experience can, and should, be just as easy as the consumer experience.”
Lack of intuition
But all this is far removed from the experience of Paul Bennett, head of purchase-to-pay solutions at the British Broadcasting Corporation (BBC). The organisation implemented SAP’s EBP 4.0 dedicated purchasing tool in May 2005 but soon encountered complaints from internal customers about how hard it was to use.
“The issue is that in an organisation where you have quite a lot of people who are used to buying personal things on the internet, you give them a system that’s not that intuitive,” he says. “They tend to make a lot of mistakes and the system doesn’t help them through the journey. They get lots of horrible error messages rather than something that really encourages them to use the system.”
Another complaint is that the system does not lend itself to casual browsing, when a user wants a certain product but is unsure of the exact make or model. “You have to get a lot of things right in the beginning before you start to do your purchase,” Bennett adds.
As a result, the BBC brought in its own team of developers with the specific aim of improving usability. It started rolling out the revised version in July 2006 and completed the process in February 2007. “We had to change certain screens and certain messages that appeared when you hit certain buttons,” says Bennett. “And we’ve had to change the language to make it mean something to an end-user who isn’t a professional buyer.
“If we could improve users’ experience we would have fewer people trying to work around the system or complaining about it,” he adds. “And maybe we could make those who are using it do so quicker, which would save them time in their work.”
It is perhaps more of a challenge for an enterprise software company to design a user-friendly e-procurement module for an ERP system – or even its own standalone package – than it is for those building front-end systems, with internal customers undertaking transactional purchasing the sole audience, from scratch.
“ERP is a very specialised application tailored to a very small number of people who live in the application all day long, and those requirements run contrary to ease of use,” reckons Rick Collison, director of procurement and content solutions at Ariba. “As a product manager at an ERP company, it would be a very difficult challenge to ignore my core user base on behalf of a new user base I would like to get to.”
Paige Leidig, head of SRM solutions marketing at SAP, admits: “SAP does have a reputation for our user interface being challenging for customers. But one of the things we try to do is to design our applications to meet the global marketplace, and as a result of doing that we inherently add complexity into the product compared to some of our best-of-breed competitors.”
SAP has not helped its cause in this area by its decision to shelve the release of its SRM 2007 product for all but a select few “ramp up” customers until the end of 2008 at the earliest. Leidig acknowledges that user-friendliness was one of the core objectives in that version. “We’ll fully leverage that investment in the next planned release of SRM,” he says.
SAP’s main competitor takes a different stance on the user-friendliness issue. Andrew Douglas, Oracle’s director of procurement operations and a former head of procurement at Honeywell Europe, believes smaller vendors are simply looking for a way to stand out in a crowded market.
“The enterprise software companies have expanded to include things that used to be niche a while back, so the niche players have to try to create some sort of differentiator,” he argues. “Very often it’s a two or three-year lifecycle and if it’s a good idea the ERP vendors will do it anyway.”
The trend towards “software as a service” offered by companies such as Ketera and Coupa has also had an impact on the issue of user-friendliness, since customers are no longer forced to upgrade their whole system to get the latest, easier-to-use updates. This puts further pressure on the ERP vendors. SAP responded by announcing its own on-demand model in 2006 following its acquisition of Frictionless, while Ariba has changed its business model to incorporate an on-demand offering.
“Software as a service is not a reason why software is more or less usable,” points out Andrew Bartolini, vice-president of global supply management research at Aberdeen Group. “The underlying factor is that companies that deliver an on-demand model are able to cycle their customers to the latest upgrades that have the latest innovations in a much more timely fashion.”
Aberdeen’s research appears to confirm the advantage of an on-demand model, suggesting best-in-class companies are 50 per cent more likely to use on-demand e-procurement solutions to manage services spend than industry average firms. It also reckons that best-of-breed packages outperform ERP systems in nine of the 10 criteria – including user adoption – that it believes makes a good e-procurement system, with ERP vendors only faring better on the issue of integration.
Adrian Turner, European head of corporate procurement at Apple, sees user-friendliness as an ongoing issue in the battle to encourage user adoption and believes some software companies are guilty of making their products too elaborate.
“They have to bring in the revenue so they try to make their packages all things to all men,” he says. “They add functionality to a very simple concept and that in turn makes the software increasingly unfriendly to use. Very often the concept is designed by an industry professional but the actual interface and usability is designed by a software engineer and that renders the whole thing relatively unintelligible.”
Buyer failings
Yet it would be wrong to pin all the blame for a lack of user-friendliness on the software companies, or for poor user adoption on the user interface. Mickey North Rizza, research director at AMR Research, believes users could do more in telling providers what they need. “The software companies are really trying to respond to what they think is important, but it is not showing itself in all cases,” she says.
There are other issues, too, that can make e-procurement packages unappealing to use and hamper user take-up. Deborah Wilson, research director at Gartner, identifies the biggest challenge as maintaining the content and correct pricing information. “People are afraid to narrow down the selection,” she says. “They’re afraid they’re going to offend somebody because they didn’t offer a pink stapler. We really have to get over that.”
Mark Thompson, global procure-to-pay systems manager at information company Reuters, oversaw the worldwide rollout of Oracle’s iProcurement suite seven years ago. The company initially struggled to ensure the system held enough but not too much content, he says. It solved the problem by allowing users to “punch out” to supplier sites where approved products are listed at prices that have been agreed in advance.
“We don’t have to maintain the content but we have control over it because we’ve agreed with suppliers that they won’t put anything new up, take anything off or change prices without consulting us,” he says.
The quest to incorporate services such as marketing, legal and training – which account for far more spend than indirect physical products in most companies – may also have a negative impact on user-friendliness. “The hard part is around complex categories and more complicated purchasing, such as print, where you not only need to have a very approachable user interface but also a very tailored business process or flow to guide somebody,” says Ariba’s Collison.
There is also a risk that the quest for user-friendly software could be at the expense of the very functionality and control for which it was designed, argues Jim Abery, vice-president of global procurement transformation at Capgemini.
“There is a trade-off between usability and what you’re actually trying to do from a procurement organisational standpoint,” he warns. “Often the more user-friendly you make something – particularly around services – the more you actually destroy the premise of why you put in a system like this in the first place.”
CASE STUDY: BELL CANADA
Getting users switched on
When telecommunications company Bell Canada installed the Ariba Buyer e-procurement package in 2004, it took the view that encouraging internal customers to use it should be the main priority.
“The user-friendliness of the tool itself was not a big issue,” says Jeff Gallant, the company’s vice-president of procurement. “The issue was whether the end user could find the items they were looking for based on the e-procurement team’s creation of the appropriate content.”
His team decided to populate the application with as much content as possible so that end users could find what they needed, gain confidence in the system and have a good experience, explains Gallant. Then, at the start of 2007, the company began a disciplined consumption management programme and reduced over 6,000 featured products to just 600, driving internal customers to standard products with optimal pricing.
“If you polled Bell’s end users six months ago they were probably very happy; if you poll them now they might show some frustration,” Gallant notes. “We found an additional 50-100 SKUs that we had to add back, but in the grand scheme of things we’ve done a nice job of taking unnecessary SKUs out.”
The procurement team has also taken a much tougher approach to maverick buying by limiting company credit cards to work in certain stores only and running reports on non-compliance, with those guilty of avoiding the system addressed by their managers. There are currently over 40,000 active users of the system.
Nick Martindale (nick.martindale@cpoagenda.com) is deputy editor of CPO Agenda
