E-Procurement: Lofty Predictions, Modest Growth

Compiled ByDeborah Austin E-procurement has not grown as first predicted, but eventually it will catch on, helping companies save money. So suggests the research paper "Moving Procurement Systems to the Internet" co-authored by professors Antonio Duvila, Stanford Graduate School of Business, Stanford, Calif.; Mahendra Gupta, Washington University, in St. Louis; and Richard Palmer, Eastern Illinois University, Charleston, Ill. In the next two years, e-procurement-enabled spending will increase by 433%, reaching 11% of total purchases versus today's 2%, they predict. Multiplicity of choices -- e-procurement software, market exchanges, business-to-business auctions, and purchasing consortia -- slows adoption. Businesses "are not just betting on the technology, but also on which technology," says Duvila. The upside is that users can match method to needs. "The final equilibrium may include several technologies, each one serving a different segment of the market." Perceived risks, such as with system integration, supplier/customer relationships and security, also slow e-procurement growth. When conservative players perceive lowered risk, adoption will flourish, they conclude.