Selecting an electronic procurement (e-procurement) solution can be difficult, and a wrong decision can have immeasurable costs. While the optimal solution criteria can differ significantly from one organisation to the next, the process used to select the right solution rarely does. The following process steps can be used by any organisation to minimise the decision time, optimise cross-functional buy-in, and maximise the likelihood of making the right decision.
1. Identify the Strategic Objectives
Today’s commerce does not happen in a vacuum. Procurement professionals serve many different masters, often with very different goals and objectives. It’s important to understand the high level objectives any solution must meet, and resolve any discrepancies or conflicts early in your process, rather than when you’re in the heat of debate over which solution to select.
Begin by identifying the four or five key organisations that interface with and are impacted by the proposed solution. These will typically be: finance or accounts payables (A/P), IT, procurement, sales and marketing, and legal. The next step is to collect the ‘C-level’ initiatives for each of these five organisations. Leveraging this, identify three global success attributes. A good starting point is: cost reduction, agility and complete commerce.
2. Identify the Project Requirements
Any e-procurement selection must take into account the tactical requirements of the solution. However, it is important to push for the tactical definitions to be in the form of a business need, rather than simply defining the current process. The example below highlights what is meant by this:
Process: route a purchase order (PO) for approval to the manager when the value exceeds US$1,000.
- Business need: when a PO is submitted, a check is done against a set of flexible, configurable criteria to determine the appropriate approval routing.
The importance of this distinction is that the business need approach allows for re-architecting to create best practices that might be otherwise missed with the traditional process approach.
3. Define Your Selection Criteria
The next step is to align all of the strategic and tactical criteria into a selection matrix. Begin by grouping the 25 key stakeholder initiatives and tactical requirements in a way that aligns them with the corporate success factors and tactical needs. Before finalising your selection matrix, be sure to conduct a final ‘reality check’ as to whether the requirements align, meet your objectives and ultimately reflect what would be needed for a successful solution at a project and corporate level.
4. Obtain Organisational Buy-in
Once the criteria are established, and prior to solution review, it is recommended that they be circulated to the stakeholder organisations for buy-in. Explain the evaluation process that will be used and how the criteria will be measured (weighting and scoring). Doing this early in the selection process, particularly with upper-management, is a great way to establish a foundation for future decisions and to reduce the risk of inter-departmental conflicts.
5. Evaluate Solutions
Evaluate the solutions against your criteria and reduce the list to the final one or two. To help avoid a skewed reality, it is important to talk to other companies using the current solution. It is strongly recommended that at least two customers be interviewed as talking to just one may not give a valid reference point.
In addition, look at the long term viability of the solution vendor; consider their employee count, global locations and cash on hand. Understand the makeup of their customer base in terms of companies your size or larger.
6. Recommend and Select a Solution
Having completed your solution evaluation, you should be able to identify a clear solution leader that has cross-functional support and satisfies:
- Corporate objectives.
- Tactical requirements.
- Return on investment (ROI) requirements.
- Time to value guidelines
Make a recommendation, along with a structured business case that can be presented to upper management for approval.
Effectively following the process described above should give you the greatest chance of success, not only from the perspective of having the right solution, but also from establishing the right cultural expectations to maximise value post-deployment.
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