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Study Shows E-Procurement Paying Big Dividends

Jan. 13, 2005

Companies investing in online e-procurement applications average a 300% return on investment, according to a study by Deloitte Consulting. The acquisition of goods and services online, e-procurement includes capabilities such as online self-service catalogs, participation in buying networks, and online auctions. The survey is based on 200 responses from executives in companies across industries, 85% of whom exceed $1 billion dollars in revenues. The group reported an average ROI of 300% over the first two to three years of implementation of e-procurement, based on an average implementation cost of $2 million to $4 million. Other findings from the study:

53% of respondents stated that they consider e-procurement equal to or more important than e-business selling.

85% of respondents are highly satisfied with the benefits achieved from the use of e-procurement capabilities. In stark comparison, only 5% of those who had not implemented such systems are satisfied with their internal efforts.

54% of businesses expected even more could be done to leverage the Internet and e-procurement capabilities to their advantage.

70% of companies have reported plans to integrate strategic sourcing programs into their e-procurement initiative.

Only 31% of survey respondents rated their procurement processes as being above average or world class.

68% of respondents reported that competing initiatives such as ERP implementations and putting the final touches on Year 2000 compliance, could slow or limit the adoption of e-procurement in the near-term.