The 5 essential parts of an eProcurement business case.
Get that all-important sign-off with a thorough and credible business case.
If you’re reading this you already know why your organization needs to automate and optimize processes through eProcurement. But convincing executive decision-makers who might not agree (yet) relies heavily on one thing: a compelling business case that quantifies return on investment (ROI).
A business case is your chance to make the benefits of eProcurement clear to your organization and present them in a way that gets the official sign-off. How do you do that? By covering these five fundamental parts:
1. Craft an attention-grabbing executive summary
First impressions count so make your executive summary engaging and concise. Summarize the purpose of your business case, what it will cover, and what you are proposing.
Include a thought-provoking fact or data point that exemplifies the value of eProcurement, for example: “eProcurement solutions can cut the average purchase order processing cost from $90 to $31.”
Conclude your executive summary with the main message you want your audience to get from your business case.
2. Identify issues with current procurement practices
This section should discuss the challenges or issues with your organization’s current approach to procurement. Use data about the current process to articulate its flaws and how it limits procurement’s ability to deliver cost savings and better purchasing outcomes for your organization.
Procurement problems differ from organization to organization, but common challenges include:
- A lack of spend management
- Inadequate risk mitigation
- Manual and error-prone paper-based workflow approvals.
It may be helpful to briefly outline your current procurement process if your target audience is not familiar with it. This will ensure everyone understands where the problems lay and help them understand their impact.
3. Demonstrate the impact of those issues
Now that you’ve identified the issues, it’s time to spell out how much they are costing your organization.
It’s critical to quantify the impact of your procurement problems with data. A general description of the issues provides important context, but measurable insight into their impact, such as how much wasted time or money they result in, will put real meat on the bones of your argument.
For example, these are some of the points you might make to explain the potential impact of a lack of spend management:
- A lot of time is spent on transactional processes and data gathering, with little time spent on strategic, higher-value work.
- Staff often purchase through unapproved channels because it’s easier and quicker than buying through a paper-based system or ERP.
- A lack of centralized visibility means different departments can’t consolidate purchasing, save money, and avoid waste.
- It’s almost impossible to get the spend insight needed to negotiate stronger supplier contracts.
- There is limited data for planning, forecasting, and reporting. The data that can be gathered must be compiled from multiple systems.
4. Show how eProcurement is the answer
Now that you’ve identified the problems and what they cost your organization, you need to offer a solution. Explain how and why an eProcurement solution addresses the issues you’ve outlined, using quantifiable examples to illustrate the benefits where possible.
Again using a lack of spend management as an example problem, here’s how you could explain the benefits of an eProcurement solution:
- An eProcurement solution is a purpose-built tool that can manage the entire procurement process, providing the visibility and control needed to manage spend effectively.
- An eProcurement marketplace makes it easy to purchase from approved supplier catalogs. Non-catalog, blanket order, and RFQ capabilities are also available.
- Purchase-order automation means that staff currently performing purchase order and invoice data entry can refocus efforts on relationship management, increase electronic payments, increase pCard rebates, and so on.
- eProcurement also offers templated, customizable spend reports for detailed or high-level reviews.
Tip: Use third-party research to quantify the measurable value of eProcurement. Download our eBook, How to make the case for eProcurement, for lots of examples from reputable sources.
5. Lay out the costs involved
It’s important to present a cost/benefit analysis of the eProcurement solution you’re presenting to show business leaders that your perspective is balanced and well reasoned.
Break down tangible and direct costs (such as the price of the eProcurement solution, along with any implementation expenses) as well as more intangible costs (including any ongoing expenditure associated with managing the solution).
It’s important to highlight which costs are new and which are simply reallocated. For example, an existing procurement team member may shift their focus from data entry to managing supplier onboarding for the new solution.
Be prepared for the unexpected
Creating a business case can take time and effort, but effectively covering the five fundamental elements explored here will give you the foundation for success. However, even the most comprehensive business cases face some pushback, so it pays to be prepared.
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How to make the case for eProcurement is a step-by-step guide to making digital procurement transformation a reality in your organization, from getting buy-in from key stakeholders and building a business case to countering common objections.
Get the guide today and kickstart your digital procurement transformation journey.
November 30, 2022