English 
Vietnamese eProcurement offers most organisations a genuine opportunity to derive quantifiable business benefits around cost control, process efficiency and procedural visibility. These benefits will be maximised both during, and as a result of, an implementation project if the strategic goals are clearly defined and sufficient groundwork is done to ensure the project is adequately scoped and welcomed by the work force.
Building the business case for any project is vital to ensure validity of purpose and measurement of benefits – eProcurement is no different. This whitepaper is put forward as a discussion document for organisations embarking on an eProcurement project. Any business case needs to address three levels of applicability, the strategic, business and cost benefits to the enterprise. This document helps identify some of the procurement first principles, planning steps, critical success factors, key performance indicators and change management strategies that can be of assistance in formulating and supporting the business case for eProcurement.
Quantifying the benefits and calculating the return on investment are the major challenges for many contemplating a change project of any substantial nature. Benefits of course can be quantitative and qualitative – reducing the cost per transaction and thereby the real cost of doing business is a quantitative benefit that is frequently chosen as the compelling reason for change. In our opinion, and supported by coalface experience, whilst not devaluing this explicit metric, most organisations will genuinely struggle to define and calculate a meaningful “as is” transaction cost. The risk then for the project is that the final expectation of financial savings is not achieved – not through failure of the implementation to deliver on its charter – but rather due to the inaccuracy of the working benchmarks to start with.
We encourage project sponsors to be conservative with the likely quantitative gains where “as is” data cannot be accurately and consistently derived. Driving down achievable quantitative metrics such as: number of PO’s issued; number of invoices received without PO references; number of suppliers traded with; etc are generally far more accessible at the start of the project and can therefore be focussed on, and reported against, throughout the project and on an ongoing basis.
Metrics related to headcount are particularly valuable. If you can identify how many accounts payable FTEs (full time equivalents) are required to process a certain number of supplier invoices without purchase order references then that is a daily “dashboard” traffic light that can be tracked by senior management. A red light tells everyone that something has gone wrong in the business process. Rapid forensic and remedial action can be taken before there is any headcount pressure.
In the Aberdeen Group research “Invoice Reconciliation and Payment Benchmark Report” dated June 2005 the estimated average cost of processing a supplier invoice is over £20. Improvement on a benchmark such as this is worth chasing.
Qualitative benefits are the soft and intangible improvements to the business that can easily be pointed to and yet not accurately valued – however they are just as critical to the business as the more tangible. The benefits of operational consistency, predictability of outcomes, critical data integrity, procedural transparency and process efficiency cannot be under estimated and all deliver gains to the bottom-line. Improving the daily life of the people is also a noble and worthy goal.
Impetus for change: Currently the majority of work in your procurement lifecycle, including financial allocations, is probably done at the end of the line during supplier invoice entry. If this was performed automatically at the beginning of the process, when an item/service was requisitioned/ordered, then the financial data would be timely, accurate and consistent and thereby demand reduced human involvement, administrative drain, time-lag and cost.
The purpose of this document is to raise some of the issues and challenges, gains and benefits of an eProcurement project and help arm the project sponsor with the sort of information they need to guide such a project through its inception
