Finding the right fit—MAY 2012 PRINT EDITION

Steps for selecting the correct e-procurement solution

May 30, 2012
by Glenn Wolff

Selecting an e-procurement solution can be difficult, and a wrong decision can cost an organization. While the optimal criteria can differ from one organization to the next, the process for selecting the right solution rarely varies. To ensure the best process, any organization can use the following steps to minimize the decision time, optimize cross-functional buy-in and maximize the likelihood of making the right decision.

Identify the strategic objectives
Commerce doesn’t happen in a vacuum, and procurement serves many masters, often with very different goals and objectives. It’s important to understand the high level objectives any solution must meet and resolve any discrepancies or conflicts early in your process, rather than when you’re in the heat of debate over which solution to select.

Begin this process by identifying the four or five key organizations that deal with and are impacted by the e-procurement solution you’re proposing. These organizations typically include: finance/AP, IT, procurement, sales/marketing and legal. The next step is to collect the C-level initiatives for each of these five organizations. Leveraging these initiatives, identify three global success attributes the e-procurement solution could target. A good starting point is cost reduction, agility and complete commerce.

Identify the project requirements
Any e-procurement selection must consider the tactical requirements. But it’s important to push for the tactical definitions as a business need rather than defining the current process. For example, the process may be to route a purchase order for approval to the manager when the order’s value exceeds $1,000. But the business need is that when an order is submitted, a check is done against a set of flexible, configurable criteria to determine the appropriate approval routing. The importance of making this distinction is that the business need approach allows for restructuring to create best practices that might be missed with the traditional process approach. The right e-procurement solution allows companies to buy the right goods and services from the right suppliers, all at the right time and the right prices. And they’re flexible enough to be easily adapted as business needs evolve and change.

Define your selection criteria
The next step is to align the strategic and tactical criteria for an e-procurement solution into a selection model. Begin by grouping the 25 key stakeholder initiatives and tactical requirements in a way that aligns them with corporate success factors and tactical needs. Before finalizing your selection matrix, do a final check as to whether the requirements align, meet your objectives and ultimately reflect what would be needed for a successful solution at a project and corporate level.

Nail down organizational buy-in
Once you’ve established your e-procurement solution criteria, and before solution review, circulate those criteria to stakeholders like IT, finance and legal for buy-in. Explain your evaluation process and how you will measure (such as weighting and scoring). Find out what their concerns are. For instance, finance may want to ensure any solution can be used with existing back-end systems that manage financial data, such as ERP. IT will likely want to know that no special hardware or resources will be required. Doing this early in the selection process, particularly with upper management, is a great way to establish a foundation for future decisions and to reduce the risk of inter-departmental conflicts.

Evaluate solutions
Evaluate the solutions against your criteria and reduce the list to the final one or two. To help avoid a skewed reality, it is important to talk to other companies using the current e-procurement solution. It also helps to interview at least two customers about the solution, as speaking with only one may not give a valid reference point. Also, look at the long-term viability of the solution vendor. Consider their employee count, global locations and cash on hand. Work to understand their customer base in terms of companies your size or larger.

Recommend and select a solution
You should be able to identify a clear solution leader that has cross-functional support and satisfies the following criteria:

• Corporate objectives;
• Tactical requirements;
• Return on investment (ROI) requirements; and
• Time-to-value guidelines.

Make a recommendation on an e-procurement solution, along with a structured business case that can be presented to upper management for approval. Effectively following the process described above should give you the greatest chance of success, not only from the perspective of having the right solution, but also by establishing the right cultural expectations to maximize value post-deployment.                  b2b

Glenn Wolff is general manager, Canada for Ariba.