Reasons Why e-Procurement Projects Fail to Achieve their ROI

The typical ROI of an ERP implementation shows break-even in about two years. Real world experience shows that break-even usually doesn't happen until more than four years after implementation.  Many companies are forced to give up on these projects because implementation costs have run over and there was a lack of tangible results.

Sourcing strategy and technology are equally necessary in this scenario. Sourcing strategy finds and pursues the savings, while technology captures the data so that the savings can be sustained over time.  Initial aggregation of spend and negotiation of better deals with suppliers can help offset the costs of an ERP implementation.

Equally important is a thoughtful category rollout.  It's best to go with straightforward categories first, the ones most likely to meet with success, and refrain from choosing complex categories simply because their spend volume is great.

Electronic catalog content is important for a successful ERP rollout.  If the vendors don't have adequate content in their eCatalogs, or they fail to update and cleanse their data, users cannot buy, and the ROI of the ERP is undermined.

Effectively transitioning employees onto a new ERP system so that adoption rates are high and tools are used correctly requires a consistent message from all levels of the organization that this is priority #1. Communication needs to to be clear and consistent, training needs to be thorough and ongoing, and users need to see evidence that their efforts are paying off with feedback on savings and compliance rates.

Change management is the least expensive aspect of an e-Procurement project, and yet the lack of it is a leading cause of project failure.

Adapted from a White Paper by ICG Commerce, August 2009: http://bit.ly/dkCaXk