Published: 18 September 2000
Analyst(s): Dan Miklovic, Barbara Reilly, Tom Berg
Management Summary As enterprises look to the Internet to enable their business-to-business (B2B) commerce, purchasing via the Internet (i.e., "e-procurement") has become significantly more popular -- and necessary. The growing interest in e-procurement is resulting in many CIOs being instructed by their senior management to "get an e-procurement strategy." In response, many CIOs are entering into alliances with vendors. Unfortunately, many of those alliances are the result of hype or the lure of a position for the CIO in the vendor company. Although the perception is that an e-procurement strategy has been established, all too often such "quick fix" alliances are not to the enterprise's long-term advantage. Given the prevalence of enterprise asset management (EAM) vendors in the purchasing process, this trend is most evident in blue-collar MRO (maintenance, repair and operations) procurement. Procurement is more than purchasing, and e-procurement is more than just purchasing paper clips online. Enterprises must remain flexible, while implementing solutions today, to start to gain the benefits from e-procurement, which are real and can be substantial, particularly in organizations where blue-collar MRO costs are the most significant cost outside of direct materials. Yet, given the turmoil in the market -- and the pending shakeout among marketplaces, solution vendors and the technologies themselves -- enterprises should craft a strategy that will allow them to shift as the e-procurement landscape shifts. More importantly, enterprises must ensure that they implement an e-procurement system that enables collaborative commerce, not just online buying of office supplies. Real and sustainable benefits will come from better integration with suppliers for collaborative design and planning, not just from lowering the cost of processing a purchase order. To address the challenges of e-procurement, this Strategic Analysis Report examines the following Key Issues: ...
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