Procurement is a cycle that consists of up to nine steps, depending on the value and complexity of the buy, as well as organizational policies. At a minimum, it starts with need identification (and requisition), proceeds to the generation and delivery of a purchase order (possibly after one or more approvals), and results in the acceptance of an invoice and an eventual (e-) payment. However, for more complex purchases, the process will usually include the generation of a goods-receipt or acceptance of labor hours through a time sheet or other mechanism; multi-way matching and reconciliation of the purchase order, goods receipt, and invoice; tax tracking; and rebate request preparation. Unless an e-procurement solution is an integrated end-to-end e-procurement solution, one cannot expect to obtain maximum value from the solution. This is because the efficiency and accuracy expected from e-procurement is lost due to remaining system inefficiencies. For example, the need to re-key data in an e-RFx application after it was keyed in during the creation of a requisition, or the inability to import contract metadata to verify pricing against a contract, eliminates the efficiency that e-procurement is supposed to provide. Without an integrated end-to-end e-procurement solution, significant aspects of the procurement cycle remain unaddressed. Anything less than end-to-end e-procurement can result in these types of problems:
The goal of procurement is to obtain the right product or service, at the right place, at the right time, at the right price in the most efficient manner possible. This is because, when done right, an organization will save time, money, and add value to their product or service offerings. However, if done incorrectly, the organization could add almost 5% to the bottom line.
That's why e-procurement, the electronic implementation of the procurement cycle, was introduced. Since technology was already improving efficiency and saving money in other areas of the enterprise, the vision was that the technology-enabled acquisition of goods and services required by an organization would enable the organization to acquire its goods and services at the best value obtainable.However, e-procurement has been around for over a decade, but even best-in-class organizations max out at 82% spend under management while average organizations implementing e-procurement only have 65% of spend under management. Why? Although it's hard to say for sure, it's likely because most e-procurement solutions on the market are not complete, or even true, end-to-end solutions. Many, like EIPP, P2P, and e-payment solutions, only satisfy the needs of part of the procurement cycle.