drivers & inhibitors for the uptake of e-sourcing tools – the cips i-source project

E Sourcing ToolsResearch into their current use within the UK

Public and Private Sector Procurement Communities

Professor Andrew Douglas – Bristol Business School

Some history• Internet invented 1969• Internet commercially available 1984• E Bay commenced 1995• E Auctions first used 1998• E Auctions and E Tenders become commercially

available in the UK from 1999• Over 30 ‘E Sourcing Suppliers’ selling in UK by

1984, EU give positive guidance re use of E Auctions

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In 2004

• Bristol Business School (BBS) and the CIPS carry out first research into the effect of E Auctions have on Buyer-Supplier relationship called I-ADAPT

• Findings are unambiguous – Relationship is not harmed in fact evidence points to it being enhanced. Reasons being-– Buyer has to be more diligent in their pre-auction preparations– Suppliers recognise most likely to lose new business on service,

quality, delivery etc. - not price– Auctions goods and services not in ‘strategic ‘ category


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So in late 2009 we decided to carry out some new research

How are E Sourcing tools being deployed in the Public and Private sectors within the UK?

What is the penetration?Who is using them?What do users see as the key enablers?What do both users and non users see as the key inhibitors?


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So how did we go about it?Our Literature Review showed-

• Numerous E Sourcing Suppliers / Consultancies who write on the subject

• Whole new business has been built around ‘Strategic Sourcing’ over last 10 or so years extending beyond large consultancies

• No evidence of similar independent academic research• An abundance of academic research on Innovation, little

of it linked to Purchasing and Supply , none to E Sourcing


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So how did we go about it?

We produced and piloted a data gathering questionnaire that –

• Aimed to cover a broad spectrum of public and private sector respondents

• Was designed to identify innovation factors, sources and types

• Was aimed at obtaining 80-100 respondents


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How did we get on?

• 90 respondents from 350 e mail requests and 5 from CIPS e-newsletter – so 99 in total

• 33% Private sector - 67% Public sector• Public sector mix of health, local & central govt.• High incidence of multinationals in private sector• No respondents from Construction Companies• Mean response time 6.4 minutes• 95% of respondents had no problem completing

questionnaire


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Our Results and Analysis


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First a profile of our Respondents


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Job TitlesWhat is your job title?

Answer Job Title %

1 CPO / Director 15%

2Head of Procurement / Purchasing Manager

52%

3Sourcing Lead / Category Manager

3%

4 Senior Buyer / Buyer 5%

5Purchasing Systems Lead / Specialist

9%

6 Other (Please State) 15%

Total 100%


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Mean average of 6.6 years in the role

No. of Buyers/Commodity Specialists

How Many Buyers / Commodity Specialists do you have in your Organisation

# Answer %

1 0‐5 25%

2 6‐10 30%

3 10‐20 15%

4 More than 20 30%

Total 100


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No significant association between business sector and no. of buyers

Annual Spend

What is your organisation's typical annual external spend value?

# Answer %

1 £0‐£50M 24%

2 From £50M up to £250M 36%

3 From £250M up to £500M 21%

4 Above £500M 19%


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No significant association between business sector and annual spend

Organisations surveyed spend over an estimated £100 billion pa

Now their responses


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Are you currently using any E Sourcing Tools?


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No

93% of Yes group using E Tenders

Lets look at the 61% who are using E Sourcing Tools


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E Sourcing Tools Adoption Longevity

How long have you been using E‐Sourcing Tools in your organisation?

Duration E‐Tender users E‐Auction users

1 Less than 1 year 20% 8%

2 1 to 3 years 43% 47%

3More than three years

37% 45%


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E Auctions although less used have a more mature adoption profile

Spend addressed using E Sourcing ToolsWhat percentage of your spend with suppliers is allocated using E‐Sourcing

Tools?Question E‐Tenders E‐Auctions

1 Less than 3% 17% 39%

2 From 3% up to but not including 10% 23% 46%




6 75% or more 12% 0%


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% of Buyers using E Sourcing Tools

What percentage of your buyers are actively using E‐Sourcing Tools?

Question E‐Tenders E‐Auctions

1 Less than 25% 39% 59%

2From 26% up to but not including 50%

8% 22%

3From 51% up to but not including 75%

20% 11%

4 75% or more 33% 8%


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How do you get your E-Sourcing Tools?


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Previous experience of Users

Have you used E‐Sourcing Tools in a previous organisation?

Option E‐Tenders E‐Auctions

1 Yes 23% 40%

2 No 77% 60%


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Their Key Enablers


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Enablers considered most important for E Tender Adoption1. Clear benefits to my organisation2. Positive Buying team3. Access to Software tool4. Being part of a defined purchasing strategic

decision / sourcing process5. Senior management support


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Enablers with mid importance for E Tender Adoption1. Buyer(s) skilled in E-Tenders2. A recognised 'champion / facilitator' was

identified within the team3. Developed sound success criteria and

measurement techniques.4. No security concerns


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Enablers with least importance for E Tender Adoption1. Positive experience of other purchasing

departments in our organisation2. Good links with a positive supplier base3. Access to external support services4. Undertaking a pilot activity


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Enablers considered most important for E Auction Adoption1. Clear benefits to my organisation2. Being part of a defined purchasing strategic

decision / sourcing process3. Access to Software tool4. Senior management support5. Developed sound success criteria and

measurement techniques


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Enablers with mid importance for E Auction Adoption1. Positive Buying team2. Access to external support services3. A recognised 'champion / facilitator' was

identified within our team4. Undertaking a pilot activity


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Enablers with least importance for E Auction Adoption1. Positive experience of other purchasing

departments in our organisation2. Good links with a positive supplier base3. No security concerns4. Buyer(s) skilled in E-Auctions


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Their Key Inhibitors

ie. What stops you extending the deployment of E Sourcing Tools?


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The most significant inhibitors to extending the use of E Sourcing tools 1. Software tool not integrated with purchasing process2. Prohibitive cost of access to Software tool3. Current supplier relationships / attitude do not support

using these tools4. No buyer(s) skilled in E Sourcing Tools5. Prohibitive cost of access to external purchasing

services6. Buying team resistant to using tools of which they have

no experience or information


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The least significant inhibitors to extending the use of E Sourcing tools 1. We have heard mainly negative comments about E-

Sourcing Tools2. Will affect the strength / balance of our supplier

relationships3. No clear benefits to my organisation4. Concerns over network security5. Past Procurement innovations have failed to return on

their investment


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Their potential future usage of E Sourcing Tools

What are your future plans regarding E‐Sourcing Tools?


1a) Stay at current adoption levels

19% 22%

2b) Continue to expand the use

81% 78%

3 c) Discontinue usage 0 0


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Now lets look at the 39% who are not using E Sourcing Tools


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Their previous E sourcing Tools experience?

Have you used E Sourcing Tools in a previous organisation?

option E‐Tenders E‐Auctions

Yes 35% 48%

No 65% 52%


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Their Key Inhibitors

ie. What stops the deployment of E Sourcing Tools in your Organisation?


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The most significant inhibitors to using E Sourcing tools 1. Software tool not integrated with purchasing process2. Prohibitive cost of access to Software tool3. No buyer(s) skilled in E Sourcing Tools4. Lack of senior Management support5. No clear benefits to my organisation6. Current supplier relationships / attitude do not support

using these tools


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The least significant inhibitors to using E Sourcing tools 1. Procurement team see these tools as a threat to their

own buying skills / competence2. We have heard mainly negative comments about E-

Sourcing Tools3. Concerns over network security4. Past Procurement innovations have failed to return on

their investment5. A fear that these tools may fail6. Will affect the strength / balance of our supplier

relationships


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Their potential future adoption of E Sourcing Tools


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Do you plan to adopt E Sourcing tools in the future?


In the next 12 months 43% 13%

In the next 24 months 29% 39%

In the next 3 ‐ 5 years 11% 6%

Not in the foreseeable future

17% 42%

In Summary


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In Summary our research suggestsKey Enablers1. Clear benefits to my organisation2. Positive Buying team3. Access to Software tool4. Being part of a defined purchasing strategic decision /

sourcing process5. Senior management supportKey Inhibitors1. Software tool not integrated with purchasing process2. Prohibitive cost of access to Software tool3. No buyer(s) skilled in E Sourcing Tools


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In Summary our research suggests

• E Sourcing tools have been adopted by more than half of Public sector and medium to large enterprises

• Most user organisations have at least 1-3 years experience• Tenders are used by most buyers, Auctions by much fewer• Vast majority of access is through external hosted sites• Majority of usage covers 25% or less of Orgs. spend• Most users had no previous experience from other orgs.• Most users aim to extend usage


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Questions

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