e-Procurement: From Strategy to Implementation [Paperback]

Dale Neef (Author)

Book Description

Publication Date: May 26, 2001 | ISBN-10: 0130914118 | ISBN-13: 978-0130914118 | Edition: 1

e-Procurement is hot. And no wonder: companies are reporting that e-Procurement systems are saving them millions of dollars annually -- in some cases, billions. GE's Jack Welch claims that GE will save $10 billion dollars from e-procurement. Cisco Systems's John Chambers says it is Cisco's #1 priority. Now, there's a start-to-finish guide to implementing e-Procurement in any enterprise. Dale Neef covers it all -- from making the business case to architecting the solution, managing the risks to reaping the benefits. Neef begins with an up-to-the-minute overview of the promise of B2B e-procurement in supporting globalized, extended enterprises. He reviews the options for deploying e-Procurement, including internal solutions and e-Hubs; then identifies key issues associated with e-procurement in the enterprise. Learn how to make the business case for (or against) e-Procurement, and how to architect the optimal solution. You'll find detailed coverage of today's leading e-procurement technologies, including XML; and today's leading approaches, from ERP-based solutions to enterprise application integration. Neef covers the entire lifecycle of the e-Procurement initiative, identifying key pitfalls and areas of risk -- and proven solutions.

Editorial Reviews

From the Inside Flap

Preface

Business people these days are becoming weary of new fads, movements, and revolutions, and rightly so. We have, in less than a decade, been taken through such "revolutionary" transformations as total quality management, business process reengineering, enterprise resource planning, activity-based costing, and retail e-commerce. Companies have downsized, outsourced, empowered employees, shifted processes and organizational structures from vertical to horizontal, completed strategic sourcing initiatives, and purchased IT systems (often on the basis of dubious return on investment), with investments amounting to millions of dollars. And, of course, they have paid management consultants and software companies many millions more for advice on implementation and change management.

Yet, completing business-to-business transactions over the Internet is genuinely something very different. The unexpected emergence of the Internet as a tool for business has meant that we have once again been thrown inescapably into the fray of major investment and change. As I have argued before1 it is all part of an accelerated pace of change that will bring about a fundamental restructuring for all industries, worldwide, and participation is essential for the survival in the new economy.

I have written this book about e-procurement in part because I believe that there has been a mistaken emphasis on e-commerce (electronic retailing) in our approach to the use of the Internet. Swayed by the activity around online retailing-the fortunes to be made with dotcom startups, the venture capital that was available, the relative ease in which a Web site for retail sales could be built, the massive coverage of the subject by the business press-we have failed to understand that e-commerce is a relatively unimportant step in the development of the Internet. It is a vital part of an overall e-business strategy, of course, but online retailing-unless it is fully integrated into the supply chain-is simply a mildly effective extension of the sales process. Moreover, expanding revenues, given the margins made in most industries, is far less effective as a strategy than is fundamentally and permanently reducing major costs-something that affects the bottom line directly.

The real value of the Internet, as many companies are beginning to experience first hand, comes instead from business-to-business, buyer-vendor transactions that include electronic procurement and full integration of the electronic supply chain from customer to supplier. In fact, as electronic procurement and supply chain software continue to evolve, the relative value to companies of online retailing will almost certainly continue to shrink in relation to the enormous cost savings and fundamental restructuring of companies that will come about as a result of the evolution of Internet-based business-to-business activity.

The purpose of this book is threefold. First, it is simply to explain to those who have not previously dealt with the area of procurement the fundamentals involved with purchasing and replenishing materials. Though certainly not as glamorous as many (in fact, most) areas of business, procurement-whether for everyday office supplies or for materials used directly in the manufacturing process-is nonetheless an enormous expense for companies, large and small, and in every industry. In fact, so enormous is the expense and potential savings that e-procurement should from this time forward be seen as an integral part of your company's overall e-business strategy. I hope that the book can therefore serve as a primer for introducing the importance of the subject to organizational leaders and for elevating the subject from the tactical to the strategic.

The second purpose of this book is to explore the phenomenon of the electronic trading communities-the volatile and fast-growing area of online e-markets, auctions, reverse auctions, and exchanges-that is effectively revolutionizing the relationship between buyers and sellers in virtually every industry, worldwide. A battle for control over the influence and utility of these online exchanges is now being waged between a powerful group of software companies, industry-leading alliances, and third-party application service providers in a volatile mix of competition and collaboration that is at once both explosive and effective, and that will eventually affect virtually every supplier and buyer in the economy.

And finally, this book is intended to help managers, executives, and other organizational leaders to take the first important steps necessary for defining and implementing their e-procurement and overall e-business strategies. I have therefore devoted several chapters to the development of strategy, to project approach and structure, and to the activities necessary to creating an effective plan of change management. As many have learned from past lessons with enterprise resource planning systems, business benefits come not only from the functionality of the software system, but often more importantly, from changes in the way employees do their work. Just as e-procurement should be seen as strategic rather than tactical, we should also avoid seeing it solely as a technical solution. After all, to be effective, the behavior of employees in the purchasing department (not to mention the behavior of those employees throughout the organization who today buy "off contract" with little concern for price or administrative overhead costs) will need to change dramatically. For this reason, I have dedicated several chapters specifically to "lessons learned" around project and change management, relating at a more detailed level some of the leading techniques that have worked well for successful companies and consultancies in the recent past. I hope these will be useful to the soon-to-be managers of enterprise-wide e-procurement initiatives.

I should, at the outset, admit that although the book examines the basic software platforms and major players in the e-procurement industry, the business-to-business e-procurement marketplace is extremely volatile. Software vendors merge, realign, and bring forward new offerings on an almost continuous basis. Electronic markets and auction sites are multiplying rapidly, while at the same time beginning to falter and collapse, as competitors vie for dominance. The models for e-procurement-enterprise-based, outsourced, or networked-are all in a state of evolution.

In short, it is a marketplace that is constantly changing and evolving, and therefore this book is by no means the last word on the subject. But the fundamental principles behind electronic procurement are sound and well understood, and it is critical for organizational leaders to understand these principles, the major players, the marketplace, and the key issues in order to be in a position to create an e-procurement strategy with confidence. E-procurement initiatives are seldom simple, compared with building a Web page, but their potential for cost savings are enormous, and few companies have the luxury of waiting for a much more settled marketplace before acting.

From the Back Cover

The comprehensive guide to Web-enabled procurement.

Achieving rapid ROI with e-procurement Discover start-to-finish planning and implementation strategies that work in real enterprise environments. Flexible, a gile e-procurement architectures Define technical architectures and business processes that can take advantage of rapid change and new opportunities. Electronic trading communities e-markets, auctions, reverse auctions, ex changes: who'll dominate and how will it affect you? Security and trust Overcome the security and trust obstacles that prevent many companies from fully leveraging e-procurement. Structuring the project Master e-procurement strategy, project scoping, prioritization, planning, analysis, and design. Managing change in an e-procurement project Change management lessons learned from ERP: making sure your new processes actually get used.

• The complete guide to Web-enabled procurement
• Proven solutions based on real enterprise experience
• Covers every e-procurement model: sell-side, buyer-managed, vertical and horizontal e-markets, ASPs, auctions, and mor e
• Explores today's leading e-procurement technologies, including XML
• Explains how to make e-Procurement work: in-depth, start-to-finish lifecycle coverage

e-procurement is hot and important—and no wonder! Leading companies are already saving millions of dollars annually with it. Best of breed CEO's like GE's Jack Welch and Cisco's John Chambers are on record that e-procurement will save their companies millions, perhaps billions, of dollars. Now, there's a start-t o-finish guide to implementing e-procurement in any enterprise. Dale Neef covers it all—from making the business case to designing the solution, managing the risks to reaping the benefits.

Neef begins with an up-to-the-minute overview of t he promise of B2B e-procurement in supporting globalized, extended enterprises. He reviews every option for deploying e-procurement, including sell-side one-to-many systems, buyer-managed/hosted markets, independent portals, online trading communities, ve rtical and horizontal e-markets, auctions, reverse auctions, ASPs, and more. Coverage includes:

• Making the business case for e-procurement: process efficiencies, compliance, leverage, and beyond
• Designing the optimal e-procureme nt solution
• Identifying the most appropriate role for integrators and consultants
• Leading approaches, from ERP-centered solutions to enterprise application integration
• e-procurement opportunities in the public sector
Key pitfalls, areas of risk-and proven solutions

In e-Procurement: From Strategy to Implementation, Dale Neef has written the essential start-to-finish guide for transforming e-procurement from promise to a very profitable realit

See all Editorial Reviews

Product Details

• Paperback: 207 pages
• Publisher: FT Press; 1 edition (May 26, 2001)
• Language: English
• ISBN-10: 0130914118
• ISBN-13: 978-0130914118
• Product Dimensions: 9.4 x 5.7 x 0.5 inches
• Shipping Weight: 1.2 pounds (View shipping rates and policies)
• Average Customer Review: 4.5 out of 5 stars  See all reviews (4 customer reviews)
• Amazon Best Sellers Rank: #683,572 in Books (See Top 100 in Books)

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5 of 5 people found the following review helpful:

4.0 out of 5 stars Nice Price, Text Rich, Poor Diagrams, Great Classifications!, March 28, 2003

By 

"linux_rocks" - See all my reviews

This review is from: e-Procurement: From Strategy to Implementation (Paperback)

This book can be divided into 3 main parts. The first 4 chapters essentially put forward the case for e-procurement with an opening chapter containing some 33 references alone!

The intermediate section ranges from main players on the market, the software landscape & architecture, models, classification schemes and government/military tendering processes. If this chunk don't win you over then I don't know what will.

Finally, the last 4 chapters deal with issues that an intrepid implementer of an e-procurement initiative should consider. Guiding principles, structures & phases, elements to productive executive workshops and the all important change management issues. Dale places great importance on change management even going so far as to quote Mark Twain. This section is quite admonitory but the author is a management consultant by trade so I guess it's quite logical for him to advise us on issues that we should be considering before getting our hands dirty. Perhaps it will earn him some business ;-)

One thing I noticed about this author is that he is very competent at is finding synonyms. For example "maverick purchasing" can also be termed "off-contract buying" or even "rogue procurement". All of which help the reader to become more fluent in the lingua france of B2B electronic trade and keeps the narrative fresh and interesting. Early on he broadly classifies goods into white-collar ORM and blue-collar MRO introducing these colorful terms in large bold print - a common characteristic of this book.

Chapter 5: "The E-Procurement Software Landscape" requires more work IMHO. The sheer fact that I found myself tabulating the main players like Commerce One & Ariba, the solution/s they offered (whether enterprise or network based), it's name and their strategic partners would tend to indicate that the author should have done so. The main diagram provided is a pie-graph showing macroscopic market detail but it just too encompassing. Don't get me wrong - the information is provided (in text format) but it's all over the shop (no pun intended). A table would have gone down well.
Chapter 6: "The Architecture of Web-Based Procurement" is fantastic. It should have come earlier. Dale breaks down the environment broadly into "one-to-many" and "many-to-many" type approaches. Another class he introduces is the "buy-side", "sell-side" and "independent portal" type offerings. He further sub-classifies the buy-sponsored focus into 'desktop' (e.g. Concur Procurement) and 'central' type offerings. He provides us with a powerful classification scheme here but I felt he could of tied examples of each type closer to said classes. One other thing that I found surprising was the fact that he only mentions the 3 main pricing models in passing (subscription fee, transaction charge & percentage of exchange fee). I though he would of elaborated on this like he did with the mentioning of vertical e-markets like the Covisint alliance (forged by the "market creators" Ford, General Motors, Daimler-Chrysler and Renault-Nissan) and the corresponding horizontal e-market offering: OrderZone.com/ (which comes compliments of W. W. Grainger). Once again the information is provided all right but I felt that a suitable table could have easily consolidated the stuff at chapter end.
Chapter 8: "Government and E-Procurement" is riveting and current. If you're in favor of lowering the cost of government (raise hands) this exploration should give you warm, tingly feelings all over. Firstly, he introduces us to how government traditionally puts out tenders, then comes the e-procurement advantage bit and finally he rounds of with the one-and-only example of Singapore's "GeBiz" portal. This is a common technique that Dale employs of teaching us about the old bad way, then introducing us to the new good way and finally topping off with a great example. Also covered at the end is military procurement, which in current times is quite poignant. Need I say any more?
Finally, concerning predictions, Dale is not afraid to stick his neck out and make a few non-obvious ones. He sees no particular model becoming *the* dominant one but rather continued coexistence of "...the buyer-sponsored enterprise model and the third-party sponsored exchange model..." and foresees "...dramatic changes in terms of focus and consolidation..." to boot. He upholds Gartner Group's forecast that each vertical will only be able to support a max of 3 players and hence foresees "consolidation of the vertical e-marketplaces" which "...has already begun." Auctions in said verticals most evolve "...toward fuller functionality or extinction." The broad distinction between direct and indirect goods will remain but "...continuing to blur" Government can help "set standards" (like XML which he praises because it "...will greatly help intersystem connectivity.") and the whole e-government thing will "...soon see significant growth." In general though, survivors "...will need to offer supply chain management expertise as opposed to simple purchasing leverage."

To summarize therefore what you will procure is 196 pages spread over 14 chapters with an average of 5 citations per chapter. 10 diagrams, 8 short case studies and about 5 graphs. Common industry terms are introduced and defined in large bold print, TLAs are kept to a minimum and the cover has some pretty trees on it!

This book is very suitable for people who do not come from a business background - like me for example ;-) After reading this hardback I certainly increased my business vocabulary and was able to "talk the talk" with the best of them. I obtained extremely useful classification schemes that greatly helped me with business model deconstruction & system analysis and became familiar with the main players on the market at the same time.

Personally I would of loved to see more on auctions and their variations, perhaps including some game theory - but perhaps that's just wishful thinking!

Quote of the book though, definitely has to go to the chap deep inside an e-procurement project who shrewdly observed: "I like the supplier savings here, but I don't plan to be one of the transactional savings."

Blue collar MRO anyone? :-)

5 of 5 people found the following review helpful:

5.0 out of 5 stars The best e-procurement book in the market!!, September 5, 2001

By 

Writer in the making (Kansas City, MO USA) - See all my reviews

This review is from: e-Procurement: From Strategy to Implementation (Paperback)

I am a professional in the e-business thought leadership arena, and have searched high and low for a solid book on e-procurement. Neef's book has it all!!

It is well orginized, and backed up with solid data and research. Whether your an e-business professional or an executive looking to understand what B2B commerce and e-procurement can mean to your business, buy this book.

4 of 4 people found the following review helpful:

5.0 out of 5 stars Excellent Book, December 12, 2001

By 

Bill "Bill" (USA) - See all my reviews

This review is from: e-Procurement: From Strategy to Implementation (Paperback)

Mr. Neef did an excellent job with this book. It is not a down and dirty technical book that describes the inner workings of an e-procurement system. Then again, I think that is why I like it so much. After reading this book I feel I know the business behind e-procurement and that is THE most important issue when it comes to any system.

As a result of reading this book I have a better understanding of what e-procurement is all about. I also feel I have gained an appreciation for the different types of systems as well as where the entire e-procurement market is headed. He discussed the importance of things such as Decision Support and Business Intelligence. He supported most, if not all, of his points with solid research.

I am an systems engineer and not a business person. I got a lot out of this book. I would recommend it to both members technical groups as well as business people. The technical person will gain an appreciation for the business aspects of e-procurement. While the manager/business person will be given good direction and insights into e-procurement. I would imagine this to be of benefit to anyone whose organization is contemplating e-procurement or just some one generally interested in the area. This is even a good read for the manager who is not currently involved with e-procurement. It may show you how much you DO need it.

KUDOS to Dale Neef.