The e-Procurement Guru

EGS ‘athletes’ get a great run for the money

2011-07-04T09:36:00.000-07:00

If you didn’t get a ticket for the Olympics, never mind. It’s the taking part that matters most … especially if there’s money raised a good cause.

EGS’s super-fit … or rather, super-enthusiastic … team of runners put their best feet forward in the Hyde Park Jog to raise funds for the British Heart Foundation (BHF).

As well as clocking up the kilometres, we’ve also been collecting donations and sponsorship for this excellent cause. EGS is also kindly offering to double what we raise as a team.

Once the aches and pains wear off, we may even be at it again! No promises yet. But the BHF are lining up a season of runs and jogs across the country for anyone wanting to take part. What a great idea.

Is this the end for ‘bonkers’ procurement?

2011-06-23T02:13:00.000-07:00

“It is bonkers for different parts of Government to be paying vastly different prices for exactly the same goods. We are putting a stop to this madness which has been presided over for too long.”

That’s the Cabinet Office minister Francis Maude, quoted in The Daily Telegraph, as the government targets billions of pounds worth of savings in procurement.

Public bodies have been paying as little as £350 and as much as £2,000 for the same laptop, according to Mr Maud, says the Telegraph.

The problem of paying too much for the same thing made headline news last autumn. Sir Philip Green’s Efficiency Review sounded the alarm – and this blog provided its own insights.

The right tools and mindset is required to achieve big savings. And it’s been happening for years in local government. A lesson surely for central government?

Do you have a hunch you’re paying too much? Would you like to benchmark the numbers?

EGS has helped organisations reduce their key commodity costs by an average 20%, thanks to our Cost Reduction Analysis service. This compares like-for-like goods and services with those available in nationally-agreed contracts. But unlike most services of this nature, which simply hand you a report together with a bill, EGS will take it a step further.

The nationally-agreed contracts are all on EGS’s e-marketplace. So not only will we tell you which contracts will save you money, we will connect you to them online instantly. Savings start straight away. And there’s no need to go out to tender.

Contact EGS for a case study on our Cost Reduction Analysis service if you’re interested.

Why invoice scanning and OCR is no more than an interim solution

2011-04-01T05:46:00.000-07:00

The following article first appeared in Peter Whent’s blog “Small Business Syndrome”. Peter Whent is Chief Executive of EGS Group Limited. You can follow his blog here: http://small-business-syndrome.blogspot.com/

Invoice scanning together with Optical Character Recognition (OCR) – digitising paper documents to you and me - is presented by many as the answer to everyone’s electronic invoicing prayers. In fact one company which I won’t name, which claims to be a leader in e-invoicing, is actively promoting it as their strategy. There are several reasons why invoice scanning is not the answer and represents only an interim solution.

The holy grail in the world of e-invoicing is that an invoice should go from creation, to delivery, to approval, to payment without a piece of paper being created. In other words machine to machine with software doing the work along the way. Not a pipe dream at all. Today we deliver hundreds of thousands of true electronic invoices a year that follow exactly this path. And with some ground-breaking new interfaces and tools currently in testing, we expect that number to increase sharply in the months ahead.

Invoice scanning and OCR (in the context of invoice processing) became popular because companies couldn’t persuade enough of their suppliers to adopt a truly electronic method of submitting invoices. This meant they found themselves in no man’s land – paying for an e-invoice solution but still having to retain a small army of employees to handle paper invoices. Scanning and OCR takes the paper, scans it and uses OCR technology to lift the data off the page so that it is useful and uses it to create an electronic invoice. But here is why it is no more than an interim solution:

It is at best an inaccurate process. OCR software vendors will tell you they can read characters from paper with 99% accuracy. That may be so with a simple text document in a medium sized typeface. But when it comes to small print on invoices, the reality is that it is a lot less accurate. It only needs to read one character incorrectly in the wrong place for the invoice to fail in an electronic approval process. Someone has to manage these failures and exceptions. People involved in the process? Not what was promised from “electronic invoicing”.
OCR on its own is not enough. The next thing a well run AP department will want to do is validate an invoice before it goes into an approval process so that it doesn’t get lost within the approval process. Validation, which is an automated process, includes all those pre-flight checks before starting an electronic approval process – is there a Purchasde Order (PO) number? Does it relate to an existing PO? Is there a supplier reference? Is there a VAT number? Does the invoice add up correctly? And so on. Even the most sophisticated solutions with people checking every invoice struggle with this. Suddenly the failure rate has risen. More inaccuracies and exceptions to manage. More people involved.

Of course the net result of this is that you or your outsourced provider has to incur some real costs to bring this error rate down. Guess who ends up getting stuck with those costs? So suddenly your business plan doesn’t look so good. Where you were expecting to drive the cost of processing each invoice down below £1, human intervention has resulted in costs being much higher.

Scanning and OCR has its place. Even allowing for the absurdity of taking an electronic file, printing it out on paper as an invoice, sending the paper to your customer for them to use an expensive process to turn it back into an electronic file – it has its place. But only if you build your business case based on there being a concerted effort to migrate from scanning and OCR to real electronic invoicing. You should aim over a three year period to turn a ratio of 80% scanned and 20% electronic on its head and have 80% submitted electronically. This is all about being good at persuading your suppliers to send you electronic invoices or online invoices. That is a whole subject on its own!

To see how a good e-invoicing deployment works download a case study here which shows how Essex County Council released 20 AP staff and will save £2.5 million next year by understanding the important distinction between scanning as a means to an end versus scanning as the answer. They now process tens of thousands of real electronic invoices – those that go from creation to delivery, to approval to payment without a piece of paper being created. Invoice scanning was merely a stepping stone which helped them to get there.

Suppliers rail against payment delays

2011-01-06T03:58:00.000-08:00

If you’re seething about late trains … what about late payments? The rail industry has them both.

According to The Daily Telegraph, Invensys Rail has told key UK contractors they will have to wait up to twice as long to be paid.

No leaves on the line this time to delay a trip to the bank – or chequebooks buried under the wrong kind of snow.

But, rather, it’s a case of bringing payment terms ‘in line’ with company terms … which means payments two months after the month in which the invoice was raised, according to the report.

Of course, this shunts cashflow pressures down the line to the smaller companies that are coupled to the business.

And they’re feeling it. The Telegraph quotes one supplier saying: "Invensys was already one of the worst payers on 55 days and now it's another 30 days."

Fortunately, EGS has a solution that doesn’t leave suppliers waiting in the cold, agonising over unforeseen delays.

With our electronic invoicing solutions, our customers’ suppliers have multiple methods for submitting invoices incredibly quickly and electronically.

Likewise, our customers find it easier to pay their suppliers within the time agreed within established contracts. Invoice approval is highly automated and becomes a streamlined, hands-free process.

It’s fair, accurate, transparent and predictable. Put simply, everything runs on time.

Why Sir Philip should shop locally for the big answers …

2010-11-02T08:47:00.000-07:00

I read about Sir Philip Green’s Efficiency Review with great interest – although the wasteful procurement practices in Central Government made for grim reading.

Sir Philip’s key findings included:
• Identical goods being purchased from the same supplier – but at different prices
• A lack of control and accountability over large budgets

I support the findings. But I would, however, make two points that I feel are important if the report is to have a tangible impact.

Firstly, the Government must move quickly to set out the next steps: highlighting inefficiency is one thing, doing something about it is another. The report has given the issue momentum and there is now a once-in-a-generation opportunity to make a real change to the way that Central Government procurement is conducted.

The second is that giving Central Government the tools to self-heal is not enough – there must be a change in culture before anything else can happen. Sir Philip highlights a culture of “no motivation to save money or to treat money as your own”. This can be overcome to some extent by using the right tools, but the mindset must change as well.

My experience of working with Local Government is that changing culturally deep-rooted processes and introducing tight control through the deployment of technology is the way forward.

Only then can organisations centralise procurement for commodity goods, enforce the necessary controls to ensure compliance and achieve huge financial savings.

Collaboration can play an important role too. Organisations – such as councils – that share services can achieve economies of scale and buying power that are normally only available to much larger enterprises. And this has happened across regions of the UK for EGS’s customers.

If Sir Philip’s report describes the ‘before’ state of affairs for Central Government, I would offer some of England’s County Councils as what the ‘after’ picture may look like.

Sir Philip states that: “the prize for the tax-payer is too huge not to chase”. I welcome this message and encourage the Government to look no further than Local Government to see a clear example of what can be achieved by embracing a centralised approach and procurement technology to introduce efficiency and control.

E-Procurement Guru joins BBC debate

2010-10-29T05:31:00.000-07:00

What do Sir Philip Green, efficiency, pension schemes and the meanings of company names have in common?

Answer: They were all topics discussed during the pilot episode of the new BBC series Show me the Money.

One of our E-Procurement Gurus, Peter Whent (pictured above left) joined host Declan Curry and other guests at the studio this month for lively analysis of big business stories making the headlines.

The debate centred on

How EGS is making local government more efficient
Sir Philip Green's report on savings
The new National Employee Savings Trust pension scheme
The significance of the name of a company

In due course, we’ll announce when this episode will be broadcast and provide a link to the BBC iPlayer. The series begins on Sunday evening.

"Show me the Money" will go hand in hand with the BBC 5 Live series "On the Money".

Expertise is worth its salt and pepper

2010-09-16T06:07:00.000-07:00

At the weekend, I visited an old pal from my football-playing days. He’d moved to a new house and was keen to show me around.

But it wasn’t the spacious hallway, plush carpets and five bathrooms that impressed me most. It was the contents of his fridge.

“Take a look at this,” he said, as the door of his giant American-style cool cabinet opened to a reveal a shelf packed with assorted, wild fungi. It’s mushroom season in the UK.

Now, I know what you may be thinking. Exotic mushrooms = magic mushrooms = hallucinates. Right?

Well, no. These were forest fruits of the culinary kind. And he had the recipes books as an alibi.

Back to the fridge …

I don’t know the Latin names. But we’re talking about a rack of chunky mushrooms the size of cricket balls. “Press in your finger and the flesh on these ones turns blue,” he invited.

Then there was a tray of what looked like mini, bright yellow cabbages. In between them were a smattering of toadstool-lookalikes with a fantasy quality. My mind wandered to those Yes album covers of the 1970s by Roger Dean.

“Aren’t you taking a risk?” I said, safe in the knowledge that we weren’t stopping for dinner. “Ah, you’re thinking of those people who died after mistaking these … for these …” he explained. He then led me on a detailed, David Bellamy-style forage through fields, forests and woods via a stack of expert handbooks, peppered with his own tales.

I made a very weak and predictable joke: “You’re a fun guy”.

“No, the correct term is mycologist”, he replied. And then the penny dropped.

Over many years, my friend had become a proven expert in something very specialist, where the risks were great, but the rewards were high.

The right restaurants would pay handsomely for his forest fare. I could visualise the ‘specials board’. But getting it wrong would effectively turn him into a mass killer – and destroy their business. It was his expertise that made the difference.

I could see an immediate parallel. Procurement solutions and electronic invoicing are too important to take a chance on a partner that lacks experience. The margin for error is tiny, perhaps non-existent.

If your organisation is making 100,000 online transactions per year and receiving a similar number of electronic invoices from a few thousands suppliers, then it has to go right … every time. And that’s where proven solutions, best-practice processes and leading expertise are well worth their salt.

Disclaimer: This article may inspire people to go mushroom-hunting – but it should not be taken as advice of any sort. Be aware that some fungi can KILL. The E-procurement Guru takes no responsibility in this matter. Always consult an expert before picking and eating what you find!

Close encounters of the procurement kind

2010-08-10T06:18:00.000-07:00

A new report in The Daily Telegraph says that Government procurement processes are 'alien' to some small businesses.

Apparently, an employers’ group claims that small creative firms are struggling to win design business, including contracts associated with the Olympics, because of the complex and lengthy procurement procedures.

Of course, design companies are a specialist breed. You cannot catalogue what they offer in quite the same way as Wellington boots or minibuses.

But the story highlights a problem that can be faced by all small companies attempting to sell goods and services to larger organisations.

They often speak different languages and share different business cultures. And, in particular, their processes and IT systems can be vastly different species. Worlds apart.

So, what can be done to make ‘first contact’?

The best purchase-to-pay (P2P) systems provide flexibility that suits everyone. Put simply, if large organisations take a few small steps … this can represent a giant leap for their suppliers.

Firstly, organisations can commit to creating a level playing field, fair to everyone. So, it doesn’t matter if your supplier is the world’s biggest furniture store, or the corner cake shop.
You can enable tiny suppliers to trade electronically, even if they don’t have a web site or even a computer – but just a mobile phone.
You can allow their goods and services to become visible online to your buyers – just as conveniently as those of the world’s biggest stores.
It’s possible to enable the small suppliers to receive orders instantly and electronically – with all the purchase order information they need.

You can make it easy for them to invoice electronically in moments – and also to check on the progress of their payments.

Put simply, they can carry on being a small business … doing what they do best and providing their specialist service, not being baffled by IT and red tape, or being squeezed out by system-savvy bigger boys.

Every team should have a Plan B

2010-06-21T08:54:00.000-07:00

The match is finely balanced … but then you go 1-0 down. And there’s only 15 minutes left. What do you do?

As football fans will know, you need a Plan B.

When your keeper spills the ball into the net, your star player gets sent off, or there’s a siege around your goalmouth, then something needs to change. And fast.

In the past, the England team has been accused of being one-dimensional … unable to make a tactical switch during a game and turn the tide. Throwing on leggy Peter Crouch and pumping long balls into the box doesn’t always save the day.

Manager Fabio Capello has tried his best at adding more to the team. In fact, many overseas managers are renowned for their on-the-fly decisions. There’s José Mourinho (now at Real Madrid), or another former Chelsea boss, Claudio Ranieri (now at AS Roma), who was even nicknamed ‘The Tinkerman’ for his tactical tweaks.

What happens in the dug-out can change games. And the same is true for ‘managed’ procurement systems. You have to be prepared for the unpredictable.

Here are four tactical examples:

• Maximising performance: Unexpected spikes in demand must be accommodated seamlessly – to avoid system slow-downs. Good hardware boosts performance. But the best tactic is to get the database working intelligently, so it answers queries efficiently, first time around.

• Smart positioning: Storage doesn’t cost premier-league prices – but server space fills up quickly. It’s essential to think several steps ahead and make accurate predictions about your upcoming needs.

• Keeping pace with the game: Any decent procurement system will always be improving. The trick is to keep re-evaluating the functionality and finding better ways of working – while second-guessing customer requirements.

• Defensive measures: It’s vital to keep checking the system architecture to avoid weak points and maximise resilience and redundancy.

But the main thing is knowing your opponent. In this case, it’s the system itself – and the fast-changing business arena. A mixture of strategic thinking and responsive, in-house expertise is the key to success.

Procurement may lack the pizzazz of the ‘beautiful game’ – but none of the importance. There are billions of pounds at stake – with a vast crowd of purchasers and suppliers watching on. The game has started. But it never ends …

Cabinet role available for the Pcard

2010-05-27T05:41:00.001-07:00

Here’s a quick promise from the Spend Management Guru: We’ll stop talking politics … starting with our next entry!

All the recent talk about political coalitions has got us thinking. When it comes to procurement, there are many technologies that appear to compete with each other … when they can actually work well together.

Take Pcards (payment cards) for instance. Five years ago, Pcards were seen by some as the paper-free alternative to purchase orders, offering speed and convenience.

But the arrival of Electronic invoicing (e-invoicing) has exposed some of the weaknesses of the Pcard:

• Pcards aren’t immune from ‘maverick’ spending on off-contract items
• There’s no ‘commitment’ from the spending showing up in finance systems (just later on the Pcard statement)
• Transaction charges are hidden
• Supplier information appears on card statements – not in the finance system.
• Details have to be re-keyed across to the finance system, adding an admin overhead.

In short, what’s saved on the swings is lost on the roundabouts.

But before anyone feels tempted to tear up their Pcard, along comes an alliance possibility.

When teamed with the right procurement system and e-invoicing tools, suddenly the Pcard becomes a very effective tool in specific circumstances.

For one-off items or purchases like travel tickets, it’s a winner. Purchases can be tracked and accounted for in the system. And it’s possible to set limits on where and when a Pcard is used, avoiding trigger-happy spending.

So, in our P2P Coalition comparison, Pcards don’t lead from the front, like Prime Minister or Chancellor. But they’d make a valuable contribution as Transport Secretary.

Knowing it arrived – gets the biggest vote

2010-04-23T09:27:00.000-07:00

To some, 2010 is witnessing the first “Internet General Election”.

It’s reckoned that Facebook, Twitter, web sites, podcasts and emails are playing a major role in the campaigns of political parties.

That said, traditional channels like direct mail are still rated as highly important.

There’s something reassuring about a piece of paper, an envelope, a stamp … and knowing that it WILL arrive (even if it’s binned two seconds later).

Electronic invoicing goes further. Suppliers don’t just send invoices – and hope for the best.

With a quality e-invoicing system, they can log in, confirm the arrival of their invoice … and watch its progress through the approval process. There’s no need to check and chase.

Something similar would appeal to the politicians. Imagine if they could track your movements … from opening their flyer … all the way to casting your vote at the ballot box.

On second thoughts, what a chilling prospect!

Sealed with a loving click. Love letters & invoices scanned and emailed!

2010-04-15T03:05:00.001-07:00

As you may have read, Finland's post office has taken a controversial decision.

It’s going to scan people’s mail – and deliver it to them by email. That’s everything from pay slips and overdue bills, to birthday cards and love letters. And it's not an April Fool's prank.

The idea has only got as far as a pilot scheme for now. That said, feathers have been ruffled and Big Brother-style concerns have been voiced. But it’s won support too.

If adopted widely … think of the poor posties that no longer have to fight their way through frozen wastes, reaching far-flung cabins. And what about all the forests they pass … the trees that no longer need turning into paper?

Clearly, the idea has merit. And it’s not a million miles away from the business of scanning paper invoices submitted by suppliers – and then receiving them electronically.

In fact, the principles are very similar for both schemes to work:

Security: It’s got to be 100% trusted and confidential.
Accuracy: Must be spot-on. Disastrous if a crucial date is blurred or a number mis-read.
Speed: It must be delivered faster if anything. No good if a wedding invitation arrives too late – or a cash-strapped supplier doesn’t get paid.
Cost: If it doesn’t save money, why bother? Automation means savings.

But there’s a big difference when it comes to how the information is read.

For tax statements and love letters, viewing the contents on screen may lose some of the hands-on impact (for better or worse). No quivering fingers tearing at the seal, or that whiff of familiar perfume. A flat jpeg image will probably suffice in most cases.

However, for scanned invoices in the UK procurement business, much smarter tools can be used.

Newer technologies such as Enhanced OCR will store an image of the invoice – and also harvest its contents automatically into a business-ready format for hands-free financial processing, saving hours of time.

While Finland’s post office may be taking a giant step forward … it’s yet to become really useful in a similar way.

Maybe one day, postal services everywhere will become truly responsive ... texting your builder to question his bill against the original quote, or activating the vacuum cleaner to spruce up the spare room when Great Aunt Maude writes to say she’s visiting?

Pulling out the designer bathplug will expose everyone’s duck islands

2009-06-15T04:27:00.000-07:00

Like most people, the e-Procurement Guru reacted with a mixture of amazement and cynical sighs to recent news of extravagant expenses claims by our MPs.

But what’s particularly interesting is a running theme among the shame-faced politicians … to blame ‘the system’ rather than admit to personal greed.

Of course, things only started to change when ‘the system’ … a procurement system of its own unique kind … became visible to everyone via the media. But what if the House of Commons had a state-of-the-art, purchase-to-pay (P2P) system? And how could all the clever tools and spend analysis capabilities be used? Now, at this point, we started to have some fun, albeit tongue-in cheek … For example, maybe the Commons expenses team could have identified their precise spending on bathplugs, plasma screens and horse manure. Next, they could have consolidated suppliers and negotiated more favourable open contracts – perhaps even reducing prices by as much as 30%!

All possible. But joking aside, where a P2P system could really add value would be to allow visibility to all stakeholders (including the public!) and to enforce compliance. This is where the new-look MPs’ expenses system is sure to be headed. Less colourful. But fewer column inches to worry about. Plus significant savings for the public.And that’s the bottom line. Visibility + compliance = less maverick spending = savings.

But without the correct P2P system in place, it’s too easy for wasteful expenditure to go undetected, year after year. Where did all those budgets go?

Lastly, to put our politicians’ demands into perspective, take a look at the exotic backstage perks allegedly demanded by our honourable rock and pop stars. Makes those House of Commons lunches seem rather modest.

Rule 3: Giving suppliers visibility of their invoice in progress

2009-04-14T06:31:00.000-07:00

Unlike many other retailers, Amazon has not yet been hit hard by the consumer credit crunch. In fact, its fourth-quarter profits rose by nine per cent, having enjoyed its best Christmas ever.

Aside from its broad product range and outstanding user interface, what consumers really appreciate is its tracking mechanism - it’s hugely reassuring to check your account and see the words ‘item dispatched’ next to your order with a predicted delivery date. But being able to check the status of a transaction easily can be life-critical if you’re a supplier. In today’s cash-strapped economic climate, it can make all the difference to cash-flow, business survival and fingernails.

The ‘disaster scenario’ that suppliers dread is waiting weeks for payment – only to then call to discover the invoice has been either misplaced, entered incorrectly on the system or is waiting to be checked because it fails to tally with the original order.

At the same time, what purchasing organizations really don’t need is hundreds of anxious suppliers phoning up each day to plot the progress of every payment. Thankfully, there is a pain-free solution to all of this … that takes us back to the Amazon example.

Imagine being able to visit a web site where you can ‘flip’ purchase orders into electronic invoices automatically, so there’s no room for errors at the payment end? And how about streamlining the payment process, so ‘human approval’ is quick and easy? And what if everyone – buyers and suppliers – can track payments online, 24-7 so they know exactly when payments are being made?It’s an approach that the London Borough of Enfield, helped by EGS, and many other organisations are now adopting, fully aware that it will ease the financial pressures faced by their valued suppliers. If you want to improve supplier relationships – and reap the rewards of their greater loyalty and better service – then improving the efficiency and visibility of your payment process will work wonders. There are few things that focus the mind so sharply as fast payment. Especially now.

And it means there’s a better chance your favourite suppliers will be around provide the goods and services you need tomorrow.

Rule 2: Make e-invoicing easy for ALL suppliers

2009-04-07T06:26:00.000-07:00

Here are some facts that will put this issue into context: There are approximately 20 million European businesses. Of these less than one million have greater than 250 employees. The rest are small companies. Over one third of the total 30 billion invoices per year within the EU involves a small company, yet they have to date been neglected by many of the recent e-invoicing initiatives.

In addition, there is still widespread beliefs amongst SMEs that e-invoicing is tricky, unsafe and disliked by the tax office. The dematerialisation of the invoice into HTML, PDF or XML with transmission across the Internet can appear a big leap from printing and posting. Not surprisingly the tried and tested practices remain hard to replace.

Actually, e-invoicing doesn’t have to be difficult, is more secure than ordinary post and can be the tax man’s preference if implemented correctly. At EGS we work with many large buying organisations to ensure that even the smallest suppliers can simply, safely and legally issue electronic invoices. Those suppliers unable to create structured e-invoices on their own can generate and send e-invoices using other EGS services, including:

A paper to electronic transformation facility where their printed invoice is scanned, the image analysed by optical character recognition software and the output file validated against purchase order and master data records before being transmitted to their customer
A purchase-order-flip facility, which simplifies the on-line creation of an invoice using data taken directly from the purchase order. This done via a browser at EGS's supplier portal

This really is a win-win for both parties:

The buyer achieves the efficiencies associated with full end-to-end e-invoicing from all of their suppliers.

The supplier speeds up their bill presentment, gets online visibility of the progress of their invoice in their customer’s authorisation and payment processes and has access to comprehensive records and reconciliation data

This should make every happy – even the VAT inspector.

Next time: we will look at rule 3 - give suppliers and buyers visibility of the electronic invoice approval process.

Rule 1: Sell the benefits to suppliers - don't assume if you build it they will come

2009-03-26T12:15:00.000-07:00

We all know that persuading suppliers to participate in e-procurement is in itself a change programme. Let’s face it; your supplier base is probably a mixed bag ranging from multi-national suppliers through to one-man bands, and convincing this range of suppliers to change the way they work is no mean feat.

Like anybody else Suppliers need a reason to participate and having someone dedicated to supplier change is essential. A good structured communication plan is essential, and engaging those suppliers at the correct time is vital, and timing that communication crucial. Suppliers can be keen, but if they don’t see the return in investment in orders being generated they become pretty well turned off.

Any organisation today needs to reduce expenditure, and buyers need to ensure that they are not increasing supplier costs of doing business with them, but ensuring that any changes they instigate offer some benefits.

One example I came across the other day was with a photographer who by doing business with their local authority was reluctantly faced with e-enablement, and the thought of having to raise electronic invoices was a complication he didn’t need. The outcome is that he has seen a month on month increase in cash flow and can actually sends the invoice from his blackberry whilst out on location, as he stated “brilliant – so quick and efficient”, and now takes just 20 minutes a month instead of a day.

Next time: We will look at rule 2 - make it easy for suppliers of all sizes and all levels of technical ability to generate and send you electronic invoices.

The golden rules for getting suppliers to adopt eInvoicing - Introduction

2009-03-09T01:50:00.000-07:00

They have recently introduced “Park by Phone” in my local town car parks. It sounds great. Pay for your parking by mobile phone, no need to carry change, receive an alarm 10 minutes before your time expires and pay for more time remotely.

Being curious about technology, I asked the traffic warden how she knew who had paid. She proceeded to show me how, on a mobile device, she could call up a list of anyone who had paid by phone in the car park we were in. The list revealed that no-one had paid by phone – everyone was still buying tickets at the machine. Not to be defeated she pulled up the list for a car park nearby where phone parking was “really popular”. The list revealed that only one person had paid by phone. Two car parks – capacity 400 – both full – only one person had paid by phone – hmmm!

How often have we seen ideas which are great on paper and which are executed crisply from a technological standpoint, fail because the really important link in the chain, the end-user, didn’t get it? Remember Hutchison’s Rabbit, a mobile revolution in the 1980s which withered on the vine because no-one used it? I am sure everyone reading this could think of as similar example.

This is a very current issue in e-procurement. Several companies have technology that does the job well on both the e-procurement and e-invoicing front. EGS is one of these. However the winners, particularly in the e-invoicing space, will be those companies who are able to get suppliers to join their eco-system. On the face of it the proposition is compelling for suppliers. No more paper invoices to create; invoices are received and processed instantly by buyers and payments are made faster. Surely suppliers should be beating a path to our door – but they aren’t. There are several reasons why not but one of those is that suppliers already have an invoicing method that works, so many see adopting e-invoicing as a cost.

We have spent a lot of time focusing our minds on this subject. We call it “supplier adoption” and it is a complex subject – too complex to tackle in a single blog entry. But complex or not, it is a nut that we must crack to be successful.

We have developed a list of “Golden Rules” that we believe we have to make work in order to maximize supplier adoption. In a series of blog entries of the next few weeks we will look at each of these rules in detail.

Next time: We will look at the first of these rules which examines selling the benefits of e-invoicing to suppliers.

If you can't innovate - we can

2009-02-14T23:59:00.000-08:00

I attended the Regent conference in London last week. Always a high profile affair with the great and the good from the world of IT in attendance. This year we even had the pleasure of Jeremy Paxman as our compere. Great fun for the audience - but speakers got a grilling from him that wouldn't have been out of place on Newsnight.

Jon Moulton of Alchemy gave an entertaining talk about IT in a recession. He believes that companies don't innovate in a recession because they are focusing all their energy on survival. I think this is true to an extent, but take issue on this as a generalisation.

Companies innovating for themselves may see this activity as less important in a downturn. But many companies outsource much of their IT activity. If you are paying for it, you don't expect your service provider to stop innovating on your behalf.

Tens of thousands of users across many companies rely on EGS's "on demand" platform for their e-procurement and electronic invoice processing. Because our proposition is fundamentally a cost reduction one, we are seeing more pull from our customers than ever. Our development team are as busy now as they have been at any time in the last 5 years building innovative new features for our customers.

Perhaps Jon Moulton's hypothesis would be better expressed as "Companies want to innovate in a downturn but choose not to because they have to deploy their money and resources on staying alive". Sounds to me like a very good reason to look for an outsourcing partner or a managed service.

And finally......like Jon Moulton, I was intrigued by sponsors Barclays Bank's gift to delegates of an empty Barclays carrier bag. A fitting metaphor for the parlous state of the banking industry.

A small dash of technology but a large helping of expertise

2009-02-03T09:08:00.000-08:00

Last week we were invited to host and moderate a “Learning Lab” session at the SharedServicesLink.com conference on Electronic Invoicing held in London. We spent 3 hours with a number of companies who are on the brink of implementing e-procurement or e-invoicing solutions. We kept the session very practical drawing on the decades of experience our team have of deploying such solutions across our customer base.

A very interesting thing happened at the end of the session. A member of the audience took one of our team to one side and told him that he had evaluated our technology alongside several other companies a few months earlier. There was nothing to distinguish one company’s technology from the others. They all had much the same features. For reasons he was unable to remember EGS was not taken forward to the short list. But here is the really interesting part. He told our man that having listened to us for 3 hours that afternoon, he was so impressed with our knowledge and our practical advice, that he was not only going to put us back on the short list, he was going to put us to the top of it.

We thought this was interesting. We have always had complete confidence in our ability to deliver what we promise, when we promise. What was most significant about this and what this customer believed set us apart, is that our accrued expertise and domain knowledge enables us to help organisations make the big decisions. That doesn't come out of a box or from clever developers. It takes years to accrue.

So the lesson learned is that it is not always about the technology. Much of our value is the expertise that we bring with the technology.

Are you a "must-have" or a "nice-to-have"

2009-01-20T05:41:00.000-08:00

Recently at EGS we have been trying to look into the future. No not a sudden conversion to astrology - we have been reviewing our product road map as we try to decide what the next generation of our e-procurement platform will look like. As ever we are driven by our customers on this. We are lucky to have a very active user group which has no shortage of ideas. Our job is to sort the “nice-to-have” ideas from the “must-have” ideas. The definition of those categories got us thinking.

Last week a few of us attended the UK’s networking event of the year – Entrepreneur Country. 300 invited businessmen from all walks of life descended on the Institute of Directors to share ideas, view demos and hear presentations. You won’t be surprised to hear that the current market conditions were a recurring story of the day.

And it was here that the theme of “nice-to-have” and “must-have” appeared again. It struck me that a year ago at similar events all the buzz was around companies like Blyk (cheap mobile service with ads), Flurry (mobile email) and Buddi (GPS pet tracking). None of these companies make you money or even save you money – they just make life a little easier. Great fun when times are good, but when times are difficult you can easily do without them. Surely the definition of “nice-to-have”.

At Entrepreneur Country there was a lot of interest in EGS and the savings our services deliver. One of the key speakers described EGS thus: “EGS….if ever there was a company to work with in a downturn”. As I reflected on that I thought to myself, what would happen if you turned off EGS’s service to our customers? The simple answer is at worst their entire supply chain would fail and at best it would cost them a lot of money in a number of ways. Surely that is the definition of “must-have”

So as we build our Development Roadmap for 2009 our challenge is clear. Keep building “must have” tools into our “must have” service.

And finally....... The Entrepreneur Country dinner saw over 100 people sumptuously fed and watered at The Mint Leaf on Haymarket. Now the food there is “must have”!!

How to procure temporary staff electronically

2009-01-12T06:40:00.000-08:00

At EGS, all of our customers are implementing some type of corporate service for the provisioning of temporary staff. The use of electronic procurement tools is key no matter which flavour of managed service you select.

We estimate that UK business spends over £25bn per year on temporary labour. We know that the procedures associated with the provision of temporary specialist staff have to date been paper intensive, relying heavily on signatures and paper audit trails. The reconciliation of invoices remains a time-consuming, imprecise manual task leading to delays in payment with high risks of errors and fraud.

The more innovative of EGS’s customers are now achieving major savings by replacing the paper-based practices with an integrated, closed-loop process comprising of the three central electronic P2P procedures:

Order Placement, which provides the base document for financial authority against which timecards can be approved and invoices presented. The requirements for specialist workers are complex, but not impossible to capture in a structured purchase order format. Contrary to often cited concerns, when correctly implemented e-ordering speeds up the procurement process and can be used for even the most time critical of requirements, such as, sourcing emergency social care.
Receipting, or in this case, the authorisation of timecards. The compiling, routing and authorisation of timecards is particularly well served with internet accessible workflow. Why would you do it any other way?
Invoicing - no need for consolidated invoices (they never did reduce work, anyway). Invoices are kept simple and delivered electronically. If the purchase order is in place and the timecard authorised, the invoice can be automatically matched and sent on its way for timely payment. As the PO is approved and timecard is fully auditable, Buyers can safely “self-bill” if they choose.

And, of course, management information is then available. We all need the flexibility of temporary resource to supplement our permanent staff through the peaks and troughs in workload and unanticipated absences. However, without the visibility and control that comes with e-procurement your temporary staff may well be costing you much more than you think.

And you thought e-procurement was just for buying stationery!!

What will shine in '09?

2008-12-29T08:46:00.000-08:00

As 2008 draws to a close we thought we would take the opportunity to gaze into the EGS crystal ball. We can’t tell you where the FTSE will end the year but we can have a better than educated guess at what the hot topics in procurement are going to be for 2009. Two areas excite us about the next 12 months – here they are.

1. Electronic invoice management

We have seen this issue gradually gather pace in 2008 and we think it masks a bigger issue. The bigger issue is that everyone is desperately trying to rein in costs and is suddenly catching on to how much can be saved by process automation. Traditionally not very exciting, but ask the CFOs of many large and medium sized corporations if they are excited by the huge savings they can make. E-invoicing will lead the way. With hybrid solutions combining true e-invoicing and scanning & OCR, implementation, uptake and therefore savings can be very quick.

2. Outsourcing

Outsourcing comes and goes with fashion – but we think that in the current climate, Chief Execs will be trying to turn fixed costs into variable costs as well as getting infrastructure costs off their balance sheets. So outsourcing of support functions such as procurements, IT, Finance will make a big comeback.

What is for sure is that any company that helps companies to reduce cost will have a receptive audience in 2009. We think the winners will be companies that are flexible enough to break their business model to embrace new opportunity. Those companies that own their own technology will be best placed. The other winners will be those sitting on some cash, for one other likely phenomenon of 2009 is that merger and consolidation opportunities will present themselves.

Whatever 2009 brings for you, we wish you all a very Happy New Year and we hope you will continue reading our opinions in 2009.

OCR & invoice scanning - one small step back technologically, one giant leap forward financially

2008-12-12T10:12:00.000-08:00

So it’s official - the holy grail of P2P is finally realisable- a true closed loop from requisition to payment managed seamlessly through an automated and paperless process. It’s true - we have customers putting this into practise and making big savings as a result. Whilst there are still challenges, we think that the technology challenge has largely been overcome, judging by the number of transactions we are seeing our customers process.

One area that has captured our attention lately is electronic invoicing and the readiness and capability of suppliers to engage. Several years ago we built a ‘pure’ e-invoicing solution that enables suppliers of all sizes and capabilities to generate and transmit an e- invoice, whether from a PO Flip via our supplier portal or through an automated xml invoice. Once again no technical challenge - the challenge here that has got us thinking is the speed with which our customers can convert their supplier base to one of the ‘pure’ e-invoicing options. The problem here is that the supplier is required to be proactive when it comes to e-invoicing and will need to see a commercial upside if they are to change their processes to create e-invoices. Naturally they are resistant which can slow down uptake and therefore the savings that flow from it.

We went back to the drawing board driven by one thought; our customers, want to get as many invoices into their automated workflow, as quickly as possible. To bridge the gap we have launched an invoice scanning and OCR service. In English, we are turning paper invoices into e-invoices (not into images of invoices – there is a big difference)) which will provide a means of accelerating the volumes of e-invoices captured. Those suppliers who are slow to move to pure e-invoicing can continue to provide paper invoices which we convert to e-invoices meaning suppliers need to do nothing new.

We do not see this as the ultimate solution, but rather, as an interim one. However from the buyers perspective it has the same effect as virtually total e-invoice uptake. Meanwhile the parallel activity of moving suppliers onto ‘pure’ e-invoicing continues. The fact that the EGS OCR solution delivers invoices into a single validation and workflow, along with ‘pure’ e-invoices, provides customers with a means of significantly increasing the ROI. This additional component of the P2P solution will, we believe, bring our customers even closer to the vision of a truly automated and paperless process that unlocks real savings.

To own or not to own your platform

2008-12-01T06:32:00.000-08:00

We often debate in the office whether owning our own platform (as we do at EGS) is the right strategy or not. Surely we would be better off outsourcing it all or using third party software so that we could focus on the sales side of things. Backers of the "third party opinion" were silenced by the events of the last week. Never have we been more grateful to be the owners of all of our code and intellectual property.

With a hastily announced and implemented 2.5% reduction in standard rate VAT, businesses are facing a £300 million bill as they have to change pricing and accountancy systems, not once but twice in just over a year. Offers of help (at a price) are not hard to find from the ever-opportunistic consultancy industry. Those businesses that rely on COTS (commercial, off-the-shelf) software are also at the mercy of their overworked suppliers who may, or may not, view a short-term change to VAT on a small island off-the-coast of Europe as important.

Fortunately at EGS we do not use other vendors products to guarantee HMRC compliance of our eProcurement platform. With only one week to respond to Mr Darling’s announcement, the benefits of having purpose built applications supported by a fully staffed in-house software development team became quickly apparent. Sure we had some late nights and a team worked through the weekend - but at least we had the opportunity to do so. Were pleased that the changes were in place for business-as-usual at EGS on Monday morning, 1 December 2009. Unfortunately some of those relying on third-parties face several more weeks of disruption. Luckily we all have plenty of notice for the next VAT change in 13-months’ time.

e-procurement - a tool for the recession

2008-10-23T07:01:00.000-07:00

The last major downturn was caused by the Internet – or more accurately the wild overvaluation of businesses spawned by the new Internet economy. With another downturn looming, this time around, the Internet could turn out to be a force for good.

From the late 1990s until now, peoples' primary obsession with the Internet has been to make money. First it was e-commerce, then email broadcast marketing followed by Internet advertising and pay per click advertising. The list goes on.

Recently, smart companies have started looking at ways they can use the Internet to save money rather than make money. An area where this has been most successful is e-procurement. By automating the process for routine purchases of anything from stationery to IT consumables and office furniture, companies can cut out huge layers of cost. Savings are compounded by automating the receipt and processing of supplier invoices.

Here is the hard evidence. Essex County Council, a customer of EGS, will save £500k a year by automating the receipt and approval processing of their invoices. This year they will process over 25,000 invoices without a person or a piece of paper being involved - this is forecast to rise to over 200,000 invoices in the next year. They are one of many organisations which save money through e-procurement.

But here’s the really good bit. Savings can be realized so quickly, that payback of set up costs can be measured in months. Our largest customer saves 7 times more in a year than we charge them. Even allowing for a few months to get up and running this could translate into a payback in less then 6 months. At a time when capital budgets are being slashed, these economics should stand out in the crowd. We expanded on this in a June press release entitled: "EGS customers achieve rapid Return on Investment". The full release can be viewed on our web site.

We have been beating this cost saving drum for some time. What alerts us to the fact that this message is resonating loud and clear is our recent experience. We have hosted 2 events in the last month; a webinar and a physical conference. Both were over subscribed. People are suddenly very receptive to the e-procurement mantra: “Automate process and make huge savings”.

So we are hopeful that a sea change is taking place. Suddenly the Internet – the villain of the piece in the last downturn - could be one of the heroes of this downturn.

Welcome to the EGS Blog

2008-08-07T06:05:00.000-07:00

EGS is one of Europe's leading providers of e-procurement and Spend Management solutions. Over 40,000 users across 100 organisations will purchase in excess of £1 Billion of goods and services this year using an EGS solution. This corresponds to more than 1 Million purchase orders.

The EGS Blog Team draws on a variety of experience from procurement specialist who have managed £1 Billion budgets , through e-billing and invoicing experts to hard core technologists whose aim in life is to make it the fastest most efficient and most secure on the planet.

Our blog will tap this talent-pool to discuss the latest trends, ideas and events in our sector. We hope you enjoy it and find it useful. We would be delighted to get your feedback and hear your ideas.