Originally posted on on the e-Sourcing Forum [WayBackMachine] on Wednesday, 15 August 2007

CAPS Research recently released a very good Critical Issues Report titled “E-Tool Optimization” that summarized the outcome of a recent CAPS Research Critical Issue Partnership Event on e-Tool Optimization which asked “How do supply management professionals ensure they are getting the most out of the e-Tools available?”.

The report started off by summarizing some of the drivers for e-tool optimization – which include the need for cost reduction, complexity management, internal and external requirements such as Sarbanes-Oxley (SOX), risk mitigation, cross-functional applicability, and user benefits – and the payback – Return on Investment (ROI). One of the surprising outcomes of the event to CAPS, but promising to those of us focussed on innovation, was that, despite the cost-consciousness of a good supply management professionals, the discussion of e-Tool ROI had little to do with dollars and cents, but focussed on the other benefits, such as improved processes and visibility, that contribute to savings in a more indirect, and less measurable, way.

The report also noted that the challenges in getting the most out of the tool do not necessarily lie with the technical capabilities of the tools themselves and that it’s often more a matter of selecting the proper e-tool system or supplier that fits your needs and the functionality you, and your organization, require. To this effect, the report also notes that some of the more prevalent instances where global firms have had success are when they used supplier analysis, spend analysis, contract management & approvals, electronic ordering & invoicing, SOX requirements & reporting, and e-Sourcing and e-Auctions applications.

However, one of the best insights the repot has to offer are the strategies for setting priorities and the lessons learned.

The strategies for setting priorities in the determination of which areas should be targeted first when time, finances, or executive support are limited, are as follows:

• Think Globally
  Taking into consideration the potential scope of use could impact a decision to move forward. If a system is implemented globally, the benefits are that it can be monitored globally, from a central perspective to assess overall organizational impact.
• Align with Executive Initiatives
  Many firms report success in gaining support for e-Tool enabled initiatives when the proposed benefits align with current executive initiatives.
• Consider Current Status
  Understand the status of each process and system and address those where there are gaps and where objectives are not being met.
• Determine Areas of Impact
  Assess the current and future areas of impact and focus on the tools likely to have the greatest direct and indirect benefits.
• Consider User Priorities
  Who will ultimately use the tool and how does it align with their needs and daily routines?
• Supplier Onboarding
  Consider the impact on suppliers with regards to the process and operational changes that will be required on their part and determine if the suppliers are capable and if resources will be required for training or change management.
• Project Ownership
  Make sure that someone owns each process, or it may not be taken care of.

The lessons learned summarized in the report, which I will only list since most are self explanatory, are:

• Process First, Then Technology
• Know Your Limitations
• The Right Data is Priceless
• Actively Engage Others
• Consider Global Issues Up-Front
• Gain Compliance and Buy-In

The report also contains some great case studies on Philips Lighting Company, Pepsico, Sonoco Products, and GlaxoSmithKiline that are worth a read on their own. And since CAPS Research reports are free, I suggest you do so.