E-Sourcing Forum » Sourcing challenges in SMB

Sourcing challenges in SMB

October 22nd, 2007 at 06:30am David Bush - Iasta

If you are a small business (as defined by Aberdeen as sub $1b in revenue), then you are probably getting tired of being classified as a Laggard in every study that comes out. I came across a nice short brief by Aberdeen which packages up the details of the smaller enterprises very well. It also offers compelling evidence of why you need eSourcing. It is a free report and I recommend saving it, if you are thinking about eSourcing and trying to build the business case.

Interesting statistics were mined by Aberdeen in reference to this market:

Performance Level	Large	Mid-Market	Small
No eSourcing application	20%	57%	41%
No Sourcing process	13%	49%	39%
Spend Strategically Sourced	51.3%	39.9%	26.9%
Spend e-Sourced	23%	16.9%	18%
Avg. Identified savings	11.2%	10.6%	13.1%
Avg. implemented savings	9.8%	9.4%	8%

On average, half of all companies of this size have no eSourcing applications and 40% have no sourcing process compared to about 15% within large enterprises. Aberdeen’s number 1 recommendation is to implement a standardized sourcing process. They claim this will drastically reduce the estimated 40% savings leakage. There is no doubt that an eSourcing tool will help with that savings goal, even without touching reverse auctions.

One thing that I found interesting and perplexing was to see that SMB companies were claiming larger savings numbers than claimed by large ones. Is this because they strategically source less by nature and thus have larger reductions when they do? Or, could the savings reported be reported higher than the real numbers? Calling Andrew Bartolini…please comment!

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