Purchasing Magazine Benchmark Survey

November 7th, 2006 at 06:46am David Bush - Iasta

Last Friday, Purchasing Magazine released its findings from this year’s E-Sourcing Benchmark Study. I found the following data points of interest:

• The percentage of spend going through e-Sourcing tools almost doubled from last year which also is related to the fact that a higher raw number of sourcing events are being held this year over last.
• Reverse auctions had a major leap in usage over last year - more than doubling 2005 numbers to 31% usage. Additionally, 77% of all respondents plan to use reverse auctions as a supply management strategy.

db: This first stat is a very strange to me. I have been out of college for a while but I remember statistics well and this looks like a skewed data set for some reason and it created a huge anomaly. What I think is more likely, is that last year’s survey had a major problem for this question. In my opinion, the growth curve is more steady from 2004-2006, showing an increase of 19% over the two year span.

• Spend Analysis usage is steady at 38%.

db: This is great but do 62% of companies have good visibility into spend without true spend analysis software?

• e-RFx usage is up to just under 50%.
• e-Sourcing training is increasing with 62% of respondents feeling that they are adequately skilled to use e-Sourcing technology.

db: This is a hot button issue and very promising. What I find particularly interesting is that a rapidly growing number of companies are dedicating resources to e-Sourcing functions.

• On-demand or SaaS models for software delivery is gaining mainstream understanding and trust. 35% of buyer feel comfortable with sensitive information being housed outside the firewall.
• Advanced sourcing optimization usage rose 22% to 11% but is still tracking along at an anemic pace overall.

db: This follows very closely to what was found in the Iasta e-Sourcing Diagnostic from 2005. I outlined our findings back in March which stated that sourcing optimization was still emerging and under-utilized.

One quote from a respondent:

“We are looking at additional tool sets in order to run more complex bidding events,” said one buyer in the survey. “We are looking for a tool that will offer more bidding options and increase ease of use for our suppliers.”

The entire study was very positive for e-Sourcing across the board. I think it is very encouraging to see such widespread adoption and momentum for the usage of these tools and best practices that accompany them.

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Entry Filed under: Analysts/Research, Functionality, General, Supply Management Best Practices, Technology / SaaS, e-Sourcing Marketplace