Last fall I interviewed a vendor and their contented customer with the plan to write an article highlighting a successful e-procurement application. The software application had cut the customer’s internal requisition approval process from 10 working days to two, which in turn had enabled them to reduce their inventory. For publishing-related reasons, I waited until this issue to run the article. When I tried to check back with the two people I had interviewed to confirm the information was still current, I found an entirely new story.
In these past eight months, the vendor’s entire management had been replaced and they had stopped supporting the product the customer had praised so highly! The customer’s company, a division of a large global wireless telecommunications product manufacturer, had been bought out by management and had a new name!
My initial contact at the user company was now a part owner and still complimentary about their e-procurement application, though it was no longer being used.
“It saved us time and hassle and was very productive for us,” he recalled. Although the product was intended by the vendor to integrate the procurement process all the way into the suppliers’ hands and then back into the shipment, this company had used only the part that addressed their specific problem. That problem was a bottleneck in the internal approval process for purchasing thousands of components at the multi-site company with managers who were in other time zones or often away from their desks where the paper purchase requisitions were waiting.
Meanwhile, the new CEO at the vendor says they plan to launch a new product in the fall focused on a specific area and based on about seven months of R&D. If that R&D hasn’t included hours and hours and hours of identifying just what problems their prospective customers need solving, there is little hope of their success.
As their former customer admitted, an entire e-procurement application is a challenge as it involves breaking existing paradigms to implement something different. Instead, they identified the problem they had and matched it with as much of the software as they needed.E-procurement got overplayed in 2000 and received a black eye as a result. However, as journalist Malcolm Wheatley reported in the June 15 issue of CIO (U.S.), now it is actually quietly booming. He noted that studies by AMR Research Inc. show that 17 per cent of the companies that don’t yet have sourcing and procurement applications plan to implement them in the next year.
I think there is a two-fold lesson in the article I haven’t written. Prospective customers, identify your specific problem and apply only enough of the software tool that provides the solution. Vendors, find out what trouble your prospect is having, and address it as specifically and simply as possible.