e-procurement - a tool for the recession

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.