* Table of Contents
1 Introduction 1
2 Elements of E-Procurement 1
2.1 Systems 1
2.1.1 ERP 1
2.1.1.1 The implementation process and life cycle 2
2.1.1.2 Key success factors (KSFs) 3
2.1.1.3 Project preparation 3
2.1.1.4 Technology selection 4
2.1.1.5 Implementation/ development: 5
2.1.2 EDI 5
2.2 Necessary Support Technologies 7
2.2.1 E-Catalogues 7
2.2.2 E-Auctions 8
2.2.3 Market Places 11
3 Strength and Weaknesses of Implementing E-Procurement 13
3.1 Strengths 13
3.2 Weaknesses 14
4 Critical Success Factors for the Implementation of E-Procurement 15
4.1 Supplier and contract management 16
4.2 End-user behavior and e-procurement business processes 16
4.3 Information and e-procurement infrastructure 17
5 Case Study 18
6 Future Outlook/ Conclusion 19
List of References II

Introduction
During the last decade and especially in the last couple of years, the internet has finally found its position in business operations. While the use of internet has been rather the exception than the norm, it is now becoming more and more common to streamline processes and eliminate wasteful processes through the use of the internet. This can especially be seen in the purchasing operations of many firms nowadays, as many companies see the importance of efficient procurement and change from slow and often expensive, paper-based orders to e-procurement. It seems as though this style of procurement can be of great advantage to every firm, but there are also drawbacks. The main task of this paper is to give an overview over the necessary mechanisms that need to be in place for e-procurement in order to equip readers with a thorough understanding of the topic – in this way they will be able to form an objective opinion and thus build a basis for further in-depth investigations of the different topics of e-procurement.
In order to bring across the main parts of e-procurement, the paper will be structured as follows. First off, there will be an introduction to the elements of e-procurement including a close up of the different systems necessary for e-procurement. Following will be the necessary support mechanisms that enable the procurement process between two firms. In addition to this main part of the paper there will be the general strength and weaknesses of an e-procurement, once these are lined out, a basic analysis of the critical success factors necessary for a successful implementation of an e-procurement system will be given. The paper will conclude in a short case study that shows a current situation of a real life company and the problems they face with e-procurement systems.
Elements of E-Procurement
Systems
ERP
Enterprise resource planning (ERP) is an integrated information system that supports organizations with business process and resource management (Arifin Hasibuan & Rasben Dantes, 2012). The system works like it integrate the organizations business units with each other to create a single unified package within the organization (Webopedia.com, 2013). With this implementation it is expected to provide optimum benefit and this is especially important in the contemporary globalization around the world in the various industrial sectors. Through this, the company can create competitive advantages over its competitors and that is also the main reason why companies invest in the software. Purchase of ERP software among businesses has grown fast over the past ten years and 2009 the software sales reach 24,5 billion dollars. (Arifin Hasibuan & Rasben Dantes, 2012)
Previous research also shows benefits such as data and application integration to replace legacy systems, faster deployment than in-house development and lower cost. It also appears that investments in this system are not necessarily generating benefits for companies. A previous survey shows that about 51% of companies in America have failed in the implementation of the ERP and that the level of success in China is only ten percent.(Arifin Hasibuan & Rasben Dantes, 2012)
The implementation process and life cycle

The implementation process is often divided into three main stages. Each main stage includes sub-stages that represent the five stages in the implementation life cycle and it looks like following: (Arifin Hasibuan & Rasben Dantes, 2012) 1. Pre-implementation
- Project preparation -Technology selection 2. Implementation - Project formulation - Implementation/development 3. Post-implementation -Deployment
1. Pre-implementation includes the two first steps of the implementation life cycle, project preparation and technology selection. Project preparation is about to set the goal, objective, budget and time for the project. Also identifying the maturity level of the organization and it is important to do an evaluation of the IT investment compared to the analysis of the existing information or IT system. Then the company needs to select the technology which is the second sub-stage. What sort of ERP software, database and hardware to support the ERP system and also choosing the ERP implementation strategy and methodology.(Arifin Hasibuan & Rasben Dantes, 2012)
2. The actual implementation step includes project formulation and implementation/development. In the project formulation sub-stage the company need to set the plan for the project which includes development implementation plan and what sort of functional requirements that is necessary. The fourth sub-step is the implementation where the system is adapted to work in a production environment. (Arifin Hasibuan & Rasben Dantes, 2012)
3. During the final stage, post-implementation which includes the last sub-stage deployment, in the life cycle stabilizes the system, errors are eliminated, and the system is updated and makes it work in the normal processes. (Arifin Hasibuan & Rasben Dantes, 2012)
Key success factors (KSFs)

An important part of the implementation is the Key success factors (KSFs). Previous research shows that there are 20 different KSFs that influence ERP implementation success. But a company can't fulfil all the KSFs in the implementation process so it is crucial for the company to be aware of the most critical factors. (Arifin Hasibuan & Rasben Dantes, 2012)
The ten most critical factors divided in the stages in the implementation life cycle according to the study made by Arifin Hasibuan & Rasben Dantes (2012) are:
Project preparation

* Team work: when the company put together the team for the ERP implementation it is important to choose people who have good skills and reputation, past accomplishments and flexibility because they are going to make crucial decisions. * Business process reengineering: recommended to do in the process of the ERP implementation to create a competitive advantage for the company. However, the maturity level of the organization, budget and time are relevant factors to make the reengineering work. * Top management support: for the implementation it is necessary that the top management indicate strong leadership, commitment and participation. They contribute with resources and authorization to make the implementation successful and they should also give clear directions for the project. * Project management: the organization needs good project management that includes setting clear objectives for the project, make a work and resource plan and close tracking of the project progress. The project should also clarify the specific modules that it's necessary for the implementation and the affected business processes. * Communication: it seems to be a critical success component in the implementation and is one of the most challenging tasks. Therefore it is important to share all information between the project teams and to spread the outcomes and goals with the implementation across the organization. Communication is the most important part so it's vital to start communicates from the beginning to have a successful ERP implementation. * Culture readiness: it's necessary to an organization citrus that it is ready to accept the changing process. Or else it can be resistance from the employees that will give negative impact on the ERP implementation.(Arifin Hasibuan & Rasben Dantes, 2012)
Technology selection

* Determine ERP implementation strategy: the strategy can be divided into clean sheets, customizing and best of bread but there is also an eminent classification with the parts big bang, pilot project and parallel implementation. It's up to the company to choose the most suitable strategy. * Determine ERP implementation methodology: companies have a lot of different ERP implementation methodologies to choose between in the market and the companies invest more in technology than non-technical issues. * Strong ERP product: it's all about to choose the right ERP product and often companies do an evaluation before they decide product. Another important thing is to implement ERP system that supports their operational processes.(Arifin Hasibuan & Rasben Dantes, 2012)
Implementation/ development:

* User training: an ERP implementation needs people with the knowledge to solve problems if something happens with system. Other there is a risk that the staff manipulates the system and creates their own processes.(Arifin Hasibuan & Rasben Dantes, 2012)
EDI
Electronic Data Interchange (EDI) is a key component of B2B supply chain management and ensures effective long distance communication between business partners that facilitates the rapid and accurate exchange of information crucial to the modern business environment where competetive advantage is typically derived from labour savings and customer relations management. EDI was originally developed from an initiative of the UN in the early 1960s called UN-EDIFACT and was seen as the foundation of a system that would help to advance international trade and assist in creating internationally agreed upon standards and guidelines for the interaction of independent business information systems (Pernica & Mosolf, p. 256) . With the rise of internet communications a framework has been approved and published by the United Nations Economic Commission for Europe (UNECE) in the United Nations Trade Data Interchange Directory (UNTDID). The system has been widely adopted and certified under ISO9735 and SME adoption rates have soared; indeed, any organization that desires to implement JIT, Quick Response (QR) or Efficient Consumer Response (ECR) technology must contemplate the information flows that accompany such systems. Batch transmission and processing become primary considerations and analytical tools that allow management access to real time data positively influence decision making and improve responsiveness to changing market or logistics conditions; business process re-engineering may be the ultimate end result (Kurokawa & Manabe, 2002). From the beginning the objectives were to move from a paper based exchange of business and trade documents to an integrated electronic system that allows partners to reduce costs, increase speed and efficiency of trade, eliminate errors and improve business relationships.
Typical types of documents exchanged via these systems are purchase orders, invoices and shipping notices but as the structures become more elaborate, instant inventory position information is becoming a valuable tool for JIT ordering, production and shipping and status data is a key component of EDI implementation. There now exists many standardized systems that partners can agree to employ so their independent computer systems can read and interpret the data being exchanged and ensure efficient processing of documents without human intervention, a key component of a truly efficient system (Ngai & Gunasekaran). These systems include ANSI, EDIFACT, TRADACOMS and XML and are available in different versions that are designed to suit the needs of specific industries or firms. EDIFACT is most widely used outside North America while X-12 is standard in North America. Organizations that desire to streamline their operations must consult their partners to agree upon specific EDI standards and versions in order to ensure their in-house software can accept and translate the incoming data and this can lead to both benefits and implementation difficulties that start with the consultation process.
Whether firms find their trading partners employing or pressuring them to install EDI, or determine that competitive disadvantages necessitate EDI, there are a number of considerations that need to be assessed, the most important of which are: * Are an increasing number of your trading partners deploying EDI? Are they pressuring you to become EDI-capable? * Would being EDI-enabled help you improve and shorten your time to market or increase your ability to enter new markets? * Would being EDI-enabled make you a more attractive proposition to new customers in existing or new markets, geographies, industry sectors? Level the playing field with bigger competitors? * Would more efficient Accounts Payable and Accounts Receivables positively affect your cash performance and the way you work with customers and suppliers? * Which of your business transactions are most time-intensive or time-sensitive? * Which trading partners do you want to have a long-term relationship with? * Which of your trading partners already use EDI? If they do, which EDI solution/network do they use? * Are your transactions significant enough to warrant in-house EDI or could you outsource the process? * Do you have senior management buy-in for EDI?
Despite the sometimes considerable costs of in-house or outsourced EDI implementation there remain some fundamental process improvements that deliver recognizable cost savings and CRM enhancement. From a financial perspective alone, there are impressive benefits from implementing EDI with trading partners and each additional transaction or partner multiplies those savings. But cost savings is far from the only benefit of using EDI; accuracy of transactions leads to efficiencies in the entire supply chain (customer service is enhanced) and strategic business level decisions become more informed and encompassing.
Necessary Support Technologies
E-Catalogues

The most widespread technology supporting e-procurement are e-catalogs. They are online versions of standard printed catalogs of companies (supplier offers) with the list of products and their specifications, prices and sale and delivery terms [Ageshin, 2001]. There are special companies, which provide the service of the e-catalogs creation and development (e.g. http://www.ecatalogs.ca/). E-catalogs streamline the procurement process and provide several benefits to their users: * Reduced costs of printing and postage of the catalogs. Additionally, the risk of running out of the prepared catalogs or the waste of too many copies is avoided. * Online accessibility 24/7 * Easy distribution via E-mail, Pen Drive, Web, CD/DVD, etc. * Possibility of additional features: video, music, flash file, zooming, etc.
Besides above mentioned advantages, online catalogs have also some limitations [Rajkumar, 2001]: * Time constraints in terms of browsing all available catalogs by customers. * Problems with using different catalog formats and data access mechanisms. * Difficulties with price and product specification comparison between different suppliers.
In order to reduce those limitations, the catalog aggregation can be implemented. It combines offers from approved suppliers into one catalog, which is centrally managed. This integrated solution allows easier product search. Due to the high cost of aggregation, it requires enough frequent orders and standardized format of suppliers’ offers (readable for search engine machines) [Rajkumar, 2001].
Alternative option is given by virtual catalogs. Those type of catalogs searches information from different catalogs and gathers relevant data into the new unified form. The data is presented in a form of links to particular sources. In comparison to the aggregated catalogs, virtual catalogs are cheaper, do not require standard form of offers and provides the most up- to-date product information [Rajkumar 2001].
E-Auctions
An auction is a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder and an online auction is the internet-based form of auctions. [McFee, Mcmillan; 1987] Basically, auctions ask and answer the fundamental questions in economy: who can acquire the goods and at what price? [Cramton, Shoham, Steinberg; 2006]
The history of online auctions goes back even before the release of the first web browser for personal computers. That time, instead of selling items through the web users were trading through text-based newsgroups and email discussion lists. The first web-based auction with significant sales began in May 1995 with the company Onsale and in the same year, in September eBay also began trading. Because these online auction systems have increased the variety of goods and services that can be bought and sold its role and importance is increasing in purchasing. There are already numerous websites conducting online auction practices with such important clients as Google or Yahoo! and their number keeps increasing. [Lucking-Reily; 2003]
Regarding the method of the auction, there are various types of auction methods which can be followed [McFee, Mcmillan; 1987] such as: * English auctions: the participants openly bid against each other and each bid should be higher than the previous one * Dutch auctions: descending price auction: the auctioneer starts from the highest price and lowers it until someone accepts it * first-price sealed bid: the highest bidder pays its submitted price but the bids are unknown by the participants * Vickery auction: similarly to the first-price sealed bid the highest bidder wins but it pays the second highest bid (cover price) * Reverse auction: the role of the buyer and the seller is reversed but the method is the same as English auction * Bidding fee auction: Each participant is required to pay a fixed amount to be able to place a bid. The highest bidder wins the auction and it also has to pay a final bid price
They differ in the way bids are set, how the winner and execution price is selected, what information are transparent. All of these are existing e-procurement methods however the most frequent types are the forward (either English or Dutch) and the reverse auctions. Forward auction refers to the case when the seller offers its products for sale and buyers have the opportunity to bid on them. This method is most common in case of excess capital equipment or inventory stock. On the other hand, in a reverse auction system buyers have the opportunity to post request for the items they would like to procure and sellers can bid on them. [McFee, Mcmillan; 1987]
Considering the contracting between the counterparties, we can distinguish between two types of contracts: cost-plus and fixed-price auctions. In case of the former the auctioneer is responsible for all costs occurring during the process while in the second case the auctioneer pays a fixed amount to the provider. The type of the contract has significant importance when considering the question of moral hazard: if it is a cost-plus one, providers have no incentive to minimize costs. However, in case of a fixed-cost contract even if price is set in advance circumstances can easily change which persuades the provider to bargain for fee changes - which leads to serious cost-overruns. [Rajkumar; 2001]
In practical use, e-auctions replaced the conventional methods of sealed paper tenders. Similarly to the paper-based version, the participants are invited – no one can attend an e-auction without invitation. Within the on-line system suppliers receive a Request for Quote (RFQ). These forms are standardized making the evaluation and comparison simpler. After the bidding phase is closed purchaser evaluates the offers based on price, performance, delivery conditions, specificities of the offers, etc. and short-lists those who are invited to participate in the auction. At the time of the e-auction the suppliers log into the system which consists of an online bidding system, security system and a reporting tool. Then during a given time-period the chosen suppliers are able to bid. Generally, the identity of bidders is unknown by each other but they might be aware of their relative place in the auction. At the end of the auction – based on one of the methods – the winner and the price are identified. All prices once submitted in the system are legally binding therefore at this phase the suppliers cannot withdraw their offers. [Ministry of Finance, Trinidad & Tobago; 2009]
E-auction offers several advantages for both sellers and buyers using this system. In general, as in case of all e-procurement systems, geographical distances are diminishing and counterparties are brought together from all over the word which helps identifying services and products and qualified global suppliers. It lowers the transaction costs and via the increased competition an e-auction ensures a better price mechanism. [Rothkopf, Whinston; 2007]
Another benefit from the technology is the enhanced market transparency: by collecting several bids the real market value can be determined more easily. Also, the common format the bids have to be made make it easier to compare the offers and ease a lot on the work of the Purchasing department: it simplifies bid collection, bid comparison and centralized data storing. As in case of any type of automated systems it reduces the probability of human error and shortens cycle time. [Cramton, Shoham, Steinberg; 2006]
By auctions it is also possible to set and evaluate sophisticated bids and offers which would be too complex for traditional procurement systems without computational techniques. One of the main convincing powers of e-auction sites is their ability to cope with the multiple requirements of the buyers and sellers. For example, in case of an inquiry it is a frequent problem how specific it should be but with “multi-attribute procurement auctions” it is possible to set multi-dimensional product characteristics. Another attribute of such sides is the imbedded application of certain business rules (minimum/maximum award, minimum/maximum number of suppliers by item, possibility of price adjustment). However, the definitely most important recent development in this area is the combinatorial procurement auction. In such auctions bidders are able to bid on combinations of products, set conditions or offer quantity discounts – the number of possibilities is endless granting chance for all kind of business strategies and bringing game theory in the question. [Rothkopf, Whinston; 2007]
On the other hand, e-auction system has its drawbacks, as well. First of all, it intrudes the cooperative supplier/buyer relationship and exchanges it with a faceless system where – regardless the previous common businesses – all bidder has to go through the whole process. It result in a diminishing willingness among historical suppliers to participate in the auction or if they win a tender to give their best try. [Rothkopf, Whinston; 2007]
Information asymmetry has a significant negative impact on the performance of e-auction systems. Buyers are usually unaware of the real costs of their suppliers (both regarding their product/service and their cost of placing the bid) as well as their ability of fulfilling the contract. The continuous development of these systems and the more and more sophisticated auction methods increase the chance for computational failure. Also, it is difficult to track and prevent the collusion of the bidders (which might take the form of bid rotation, bid rigging or phantom bidding). And described in connection with the contract types, moral hazard has serious risk. [Rajkumar; 2001]
Probably the most common reason for failure of implementing these systems is the lack of communication among the counterparties and the lack of knowledge on the technology. E-auctions are as complicated and difficult to implement as useful and beneficial they are once introduced to daily practice. Experts constantly emphasize the importance of clearly defined and documented goals and requirements. They also recommend increased communication: holding trainings and open Q&A Sessions for the current and potential suppliers. It reduces their aversion toward the system and helps them creating the most value through it. Potential is another key word: when implementing this new technology companies should be open for contacting new suppliers. [www.esourcingforum.com]
The development of e-auction systems is an ongoing process which is happening on several fields. Currently researches pay the most attention to the development of feedback systems. In their opinion, these feedbacks would form a relevant opinion of buyers and sellers and their reputation could be used as an indicator of quality – one of the most frequent risk factors in procurement.
Market Places
Marketplaces are digital intermediaries, where buyers can contact suppliers and make a deal in the B2B market of various industries [Dai, Kauffman, 2000]. They can take on a form of independent trading exchanges, portals or vertical markets. A marketplace software also uses and aggregates other e-procurement technologies, such as e-auctions or e-catalogs [Rajkumar, 2001].
Benefits are provided both for the buy and sell side: * Aggregation of possible suppliers * Easier search and comparison of suppliers and their offers * Facilitation of making a deal process (cost-reduction) * Introduction to customers on the low costs * Analytic tools * Better inventory, capacity and production management
Marketplaces have to fulfill several important requirements in terms of data and transaction security, efficiency and transparency [Rajkumar, 2001].
There are 3 types of marketplaces, that can be distinguished: 1) Facilitated by an independent 3rd party, e.g. National Transportation Exchange 2) Created by a single company to support its purchasing needs e.g. WallMart 3) Cooperation of vertical industries, e.g. GM, Ford, Daimler
The first type is managed by an independent entity. It creates an environment, which is more similar to free market, thus prices of offers are supposed to reflect market value. The problem is of gathering the critical mass of the buyers and sellers. The other two types offer benefits of low cost in terms of persuading possible suppliers to be present at the particular marketplace. It is especially valid for small firms, which are dependent on the big ones [Ageshin, 2001].
Exhibit 1 shows the framework of e-procurement and the role of marketplaces in it. The buy side can exchange information with the sell side directly (through e.g. e-catalogs) or through virtual marketplaces. Both sides are also using their internal procurement systems to process the purchasing data.
Exhibit 1. E-procurement framework

Source: Rajkumar, T.M. (2001), E-Procurement: Business and Technical Issues. Information Systems Management

Strength and Weaknesses of Implementing E-Procurement
The internet becomes more and more important all over the world. Nowadays not only classic online-tools, e.g. internet-presence and email, are used, but as well increased usage of the topic e-business gets adopted into daily business. Through selective use of online application, as the procurement through internet, new chances can be found and massive cost savings can be reached. Especially the medium-sized businesses can benefit from those chances and through cost reduction and process optimization and bear up under the increased global competition. Many opportunities and advantages are given, though it must be taken into consideration that disadvantages many companies are facing can be crucial and influencing success and existence of firms.
In the following a deeper analysis on strength and weaknesses, the internal view on e-procurement, but also opportunities and threat, as external factors is presented. There is no generalization, because often it depends on what industry you operate, on size of the firm, and on the raw materials you source. Therefore not each aspect is applicable for each firm.

Strengths
E-Sourcing through internet offers firms of different industries to decrease purchasing costs and an increase of efficiency simultaneously.
Especially cost savings are the main motivation to choose this way. E-Procurement minimizes the costs of sourcing itself but also to compare prices at a lower rate of costs. More time can be invested for strategic operation and processes. Often, not only internal process costs decrease but also the base price for products and services become less. Through precise implementation of e-procurement-solutions not only little prices, but also less transaction costs, as much as increased process speed can be achieved. Especially the reduction of necessary process steps and therefore the involved labor costs and the minimization of errors through data entry are essential for decreasing the costs. E.g. data typed in one time, can be used any time again. Transmission errors, deferments and wrong delivery can be reduced [Wagner, 2004]. Additionally, reclamations are minimized and the reputation and functioning of the firm and the relationship between buyer and seller is enhanced [Helfrich, 2012].
Even for the suppliers themselves advantages are given; ordering processes are more standardized and carrying out operations function faster [Wagner, 2004].
E-Procurement serves as a helping tool to increase transparency and score a higher ROI in less time. Products traded on the market are better manageable and resulting from information that is easier to access, again prices are faster and easier to compare. As increased transparency occurs, the decrease of barriers to switch provider are closely connected. [Opulchik, 2005].
The increased level of flexibility is strength of using e-procurement. Less warehouse stock, that comes with less warehouse costs. Through electronic and immediate documentation ordering processes are easier to be controlled and corrected, if needed. Working- and waiting-times through hierarchy’s can possibly be decreased additionally [Wagner, 2004]; flexibility also in terms of comparison of several suppliers and therefore different price offers. New sources of purchasing are quickly and in an uncomplicated way developed [explido WebMarketing GmbH und Co. KG, 2013].

Weaknesses
With all those advantages, e-procurement comes with weaknesses as well. It often occurs that there is little expertise internally on the adoption potential for a certain industry, size of firm or/ and types of raw materials. There are several circumstances and combinations where e-procurement fails and leads to high financial losses. It often breaks down or comes with high investment of time and money due to installation of complex software systems and time intensive training for employees. Moreover an internal operations and processes in terms of cooperation between sales, marketing and IT are mandatory. Though, often prior actions mentioned are not taken into account or treated with ambiguity [Wagner, 2004].
If circumstances are bad, the opposite of what is expected can occur, and as the case may be the period of ROI might be longer than usual. As mentioned above, the possible risk of a false investment is given at any time for all types of e-procurement. In some cases the operations don’t succeed as resources and know-how are missing. Often the implementation of e-procurement systems fails, because there are insecurities regarding standards, legal requirements and possible utilization potentials.
Even if investments are made to train the specific responsibilities to e.g. learn the use of the software, it occurs that those responsibilities don’t bring the necessary overall understanding for the complexity of such processes [Opulchik 2005].
E.g. in case of auctions, the supplier gets disadvantaged as he never knows the bid of his competitor. He gets the requirements and basic rules, but having in mind the competitor might offer a lower price with better conditions, he could be trapped and make losses [Deutscher Drucker, 2010].
In relation to the requirements of the design of a lean ordering process the disadvantages of online ordering systems become apparent: there is little support for internal order processes, no control of budgets and support for approval procedure, no individual price and therefore less negotiation flexibility, e.g. discounts. Besides, little individualization of product catalogues is possible.

Critical Success Factors for the Implementation of E-Procurement

Now that the advantages are made clear, it is crucial to look at the factors that – once the decision to implement e-procurement – are critical for its success. As was found by Puschmann and Alt, 2005, technical problems within a single system appear to be of less importance opposing to structural changes within the organization during the e-procurement implementation process, the focus should thus be on the structural factors necessary to make e-procurement a success. These necessary success factors can be – according to Angeles and Nath, 2007 – divided up into three distinct categories: 1. Supplier and contract management 2. End-user behavior and e-procurement business processes 3. Information and e-procurement infrastructure
These categories will be updated with other critical factors that are necessary for a successful implementation of an e-procurement system.
Supplier and contract management
According to Angeles and Nath (2001), supplier and contract management deals with “[…] managing the number of strategic suppliers and the associated contracts”. Fitting within this topic is a statement that Rajkumar (2001) makes: “As a result of implementing Internet-enabled procurement technologies, organizations have found that their supplier relationships are redefined, and that, in general, the number of suppliers is reduced.” This clearly strengthens the point that Angeles and Nath make when stating that a well-defined practice for supplier consolidation and change management is needed. This can and should, in turn, result in better contract terms and significant savings (Angeles, Nath, 2007).
What is also crucial to mention within this topic is the fact that based on the variety of possible technologies it is necessary to include the other parties (suppliers) involved in the e-procurement process in the planning, in order not to exclude them from future business (Angeles, Nath, 2007) through incompatible technologies. By doing so, companies can build well accepted technology standard (Panda, Sahu, 2012).
The last important item of this category is the fact that firms need to break down their spending into “[…] more granular categories, specific end-user constituencies, and particular geographies“(Angeles, Nath, 2007). In this way, it is easier to find the appropriate area in which e-procurement can be implemented. In other words, value adding processes need to be optimized for e-use, and non-value adding processes should be purged (Panda, Sahu, 2012).
End-user behavior and e-procurement business processes
This category is, quoting Angeles and Nath, “[…] related to analyzing end-user behavior and examining business processes germane to e-procurement”. The importance of this category stems from the fact that it dictates the redesign of businesses processes affected by e-procurement. In this regard, an analysis of spending (who spends how much money on what and with whom) within the firm is necessary prior to the implementation of e-procurement as it gives the basis for accountability once the e-procurement processes are implemented (Angeles, Nath, 2007).
Another important item mentioned under this category is the centralization of control over contracts, product data, catalogs, and price updates in order to receive a greater amount of control (Angeles, Nath, 2007). Panda and Sahu (2012) state, however, that “the need for demand aggregation should also be weighed against the degree of decentralization desired for purchases“, making the implementation strategy imperative for a successful e-procurement implementation.
What is interesting to note is, that Angeles and Nath state that most of the firms using e-procurement use it predominantly for indirect rather than direct goods.

Information and e-procurement infrastructure
This factor has to do with “[…] aligning e-procurement needs with business needs and catalog information selection options.” (Angeles, Nath, 2007). In other words, it is necessary to select the right e-procurement solution for your business (be it buy-side, sell-side, or marketplace services), while initially it might seem clear which side you are on, eventually, some companies will engage in more than one of these types (Angeles, Nath, 2007). In the end, the decision which way a company should go depends on a clear cost benefit analysis.
Another item that is of crucial importance in order to engage the other parties (customers or suppliers) is to have sufficient safeguards in place in order to protect each party’s confidential data – like financials in the bidding process (Panda, Sahu, 2012). If these safeguards are not in place, suppliers and buyers are most likely to be reluctant in the adoption of e-procurement technologies, especially since it is crucial to integrate the e-procurement system with existing IT systems within the firm (e.g. financial systems) (Panda, Sahu, 2012)

Of course, it is not enough to change the above mentioned measures, as Rajkumar (2001) mentions that there are other factors that need to be taken into account next to the structural/process changes. Panda and Sahu (2012) state, for example, that top management support is necessary in order to supply the required funds to the e-procurement system implementation process. It is also imperative that the new technology should be sold in a compelling way in order to decrease the likely resistance within the company and its stakeholders (Panda, Sahu, 2012). Hand in hand with this point goes “training and education” in order to ensure a smooth changeover from the traditional procurement process to the e-procurement process (Panda, Sahu, 2012). The last two points mentioned by Panda and Sahu (2012) are performance measuring and involving key stakeholders. The latter part is also mentioned by Rajkumar (2001) when he states that management needs to take into consideration input from key users of the systems and to involve them right from the beginning – because if this would not happen, all efforts would be worthless.
Summing up, it becomes obvious that there are eleven different factors (Panda, Sahu, 2012; Rajkumar, 2001; Angeles, Nath, 2007) necessary for a successful implementation of an e-procurement system: 1. Top management support 2. Implementation Strategy 3. Project Management 4. Business Process Reengineering 5. Technology standards 6. Security 7. System Integration 8. Change Management 9. Performance measuring 10. Training and Education 11. Adoption by Stakeholders
Case Study
The decision to implement an EDI system can be related to cost savings, competitiveness, CSR or other factors such as industry wide compliance requirements as was the case with my SME in the global food supply chain. With more than 3000 SKU’s coming from over twenty countries destined for retail grocery chains and broadline wholesale distributors in twenty countries the complex logistics chain can become daunting. The implementation of EDI by the largest customers to streamline their ordering processes created an opportunity to take advantage of synergies and ensure we kept our systems compliant. However, when put into practice, the perceived benefits of EDI can sometimes be overstated. In our case the system functions well for divisions that deal with non-perishable goods but for fresh products such as seafood the system shows its inadequacies. Products may not even be caught by fishermen when EDI orders are placed and typical catch volumes and weighted distribution quantities can vary widely; EDI compliance however stipulates non-conformance (under-shipping, etc.) incurs penalties. Additionally, delivery dates can be dependent on logistics chains that are severely hampered by geographically remote processing operations and most importantly, factors such as water temperatures that determine apex catch volume dates (ie. Salmon runs). The penalties imposed under these conditions were considered unfair and led to wide scale repudiation of delivery date and quantity requirements but only through consultation with partners. Overcoming the hurdles of implementation meant that issues such as IT development, departmental integration, employee redundancy and partner compliance presented themselves. Firstly, new strains were placed on IT and support personnel and training was required to bring the system on stream. Secondly, internal departments such as A/R and HR were not prepared for the scope of the system and required employee training and re-adjustments regarding redundancy in the face of job repetition. Finally it became a task for us to now try and force compliance from our logistics partners such as warehouses and trucking firms and managing several different EDI systems from multiple customers was no small feat. However, despite the challenges of becoming EDI compliant we feel that the cost savings and data analysis benefits have been considerable and customer acquisition has become easier. Additionally, we feel that staying on the forefront of emerging technologies in the EDI field presents a strong image to our partners that our long term experience and flexibility are positive factors that influence their choice of partner.
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