Issues in eSourcing: Adoption and Penetration

There are many different ways to approach a topic which is trying to address the most burning issues in today’s eSourcing landscape. Things like international attitudes and restrictive policies, true spend visibility, lack of strategic teams and decentralization all can impact the effectiveness of eSourcing, if not properly addressed. Here are my Top Three Issues facing the sourcing world today – Adoption, Adoption, Adoption! In this post, I wanted to examine the more basic issue of technology adoption and organizational penetration. It is also one of the easier problems to fix, if dealt with methodically and productively. The following list of adoption barriers are sand in the gears of any sourcing organization that wishes to maximize efficiency and drive significant cost savings.

  • Choose the Right Application: As simple as this sounds, it is important to understand what you are trying to accomplish with an eSourcing tool. Will success be measured by running 2 or 3 auctions per year or are you attempting to automate and improve your sourcing process? Can you grow within the application to take on new and important functionality after the initial gold rush for savings? Finally, make sure that you pick an application that the team feels comfortable with the ease-of-use and meshing with the current sourcing process. The lower the bar for learning and training, the more people will be willing to tackle more aspects of the tool itself (and do it independently).
  • Executive Endorsement: Make sure the executive team is behind the process of eSourcing. Internal transparency and evangelism will help produce an atmosphere that the software is not a pet-project but a real initiative that has approval from the top. However, do not expect this process to stop once you have selected an eSourcing suite, be prepared to measure savings both created and implemented. Look at those areas not participating and ask the questions why – it may require evangelizing to a whole new set of stakeholders.
  • Structured Roll-out Program: Develop a plan, with or without your eSourcing vendor, that includes milestones and goals. It is also important to identify who are the most likely internal champions and give them stake a in keeping the process rolling and improving. It is important to have a good understanding what specific issues delay projects. Reviewing this regularly will speed up future adoption. Above comments also relevant here.
  • Lack of Training/Preparation: Get a core group of super-users “super-trained”. This will build momentum and help enforce best practices from the inside-out. Generally, the worst thing that can happen is an ill-planned auction that fails early in the application’s deployment and leaves a sour taste behind. When all the users understand what happens in eSourcing projects, they will take care to make them work properly. Also, one short hour of training can give massive returns on usage by breaking down the basic barriers to usage. Most procurement people are pretty smart and can start utilizing advanced features once they have a little momentum.
  • Organization and Recognition: eSourcing usage should be strongly encouraged but not mandated and eSourcing teams should be recognized for achievements and goals accomplished. The corporate culture should reflect that this is a tool that should require strong arguments for not using, not the opposite. Some companies tie bonus measures to quality and usage of the eSourcing applications. If used properly, other bonuses should occur due to more cost savings from a multitude of factors.
  • Centralized Data and Process: These programs work best when resources are centrally structured and enforced. This makes tracking, measuring and accountability easier to manage. Additionally, the eSourcing application should have a central data repository which consolidates all documents for consistency. Templates are a big part of helping people get their bids out to suppliers faster, to the template library should be robust and a integral part of everyone’s interaction with the software.
  • Utilize the Whole Application: It is not realistic to think every company will automatically just adopt 100% of the available functionality. However, each group should periodically analyze what is available and what is actually being used. Goals should be set to increase the breadth of the utilization and build a deeper understanding of the holistic nature of the application. All the different functions exist for a reason, use them and experience how it helps. For instance, if your tool includes optimization or contract management, why are no contracts being loaded in or no scenarios being built? There may be good reasons, but it is important to understand if those perceptions are valid.
  • Promote Supplier Benefits: Explain to suppliers why this is important for them to participate and embrace. eSourcing vendors should have plenty of documentation to communicate this. In many cases, using the eSourcing application correctly can allow procurement to give suppliers better information for adjusting their original bids which could increase the amount of business they will receive.
  • Drive Continuous Improvement/KPIs: It should be very clear that there are some primary benefits from implementing eSourcing into the procurement process. Create internal metrics to track success in categories such as savings, efficiency and knowledge transfer/risk mitigation. Like going on a diet, once you see a little progress the motivation is easier and the momentum grows organically. By tracking these items (again your eSourcing provider likely has many ideas for measuring these), teams will always be making improvements and increasing the ROI.

I believe adoption and usage is one of the most preventable and addressable problems that face eSourcing deployments today. For that reason, I chose to go into detail on ways to fix these problems rather than to fragment into three separate issues, as was requested by Michael for the Sourcing Innovation roll-up. If not properly addressed, lack of adequate adoption can rob your sourcing organization of millions of dollars from non-strategically sourced spend, inappropriately run projects and lack of usage. The morale of the story is to keep your eye on the ball, once the evaluation is over, the process of managing the eSourcing application has just begun. If resources are thin, let the provider map out a good plan for deployment, best practices and growth. Any one that says Adoption/Penetration is not one of the primary issues in eSourcing today, has their head in the clouds and does not understand the tactical problems that come with any software application.

2 Responses to Issues in eSourcing: Adoption and Penetration

  1. Did any have a more academic viewpoint on this topic based on
    – Theory of Reasoned Action
    – Theory of Planned Behaviour
    – Technology Acceptance Model
    – Diffusion of Innovations
    – Unified Theory of Acceptance and Use of Technology

    In the viewpoint of an AMB project I am checking if these model could be applied and under which format can buyers we influenced towards better adoption of this concept in their purchasing toolkit…. any suggestion is welcome….

  2. A complete list of all guest posts to-date are found in this post on sourcing innovation:
    http://blog.sourcinginnovation.com/2007/05/13/the-top-three-xii-summary.aspx

    Every guest blogger was a practitioner in some way – consultant, executive, or practitioner in the space.

    The point of this series was to explore issues, not academic solution models, so, no, a discusssion of the academic frameworks you mentioned was not present in any of the posts.

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