Increasing the use of electronic procurement (referred to as ‘e-Procurement’) is of strategic importance for achieving the smart and sustainable growth objective of the EU 2020 Strategy.
First, it can significantly simplify the way procurement is conducted, deliver better procurement outcomes and save costs by improving the efficiency of public expenditure. According to a recent Communication from the European Commission, “Contracting authorities and Public entities that have already implemented e-Procurement report savings of between 5% and 20% of their procurement expenditure. The total size of the EU’s procurement market is estimated to be more than 2 trillion euro, so each 5% saved could result in about 100 billion euro of savings per year”. Additionally, it can improve the transparency and accessibility of tender opportunities and thus increase the participation of SMEs in public procurement procedures. Finally, it can contribute in stimulating greater competition across the Single Market and providing new sources of economic growth and jobs.
Today, Europe is facing a significant gap between the availability and the use of e- Procurement solutions. Such a gap is even more perturbing knowing that the use of e-Government services is in general at a significantly higher level. According to Eurostat, the average usage of e-Procurement by enterprises in the 27 Member States only reached 13% in 2010, while the average usage of e-Government services was higher than 80% the same year.
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3 February 2013 | Anna Reynolds
A survey revealed 53 per cent of small and 59 per cent of medium-sized business owners believe a company’s procurement strategy should be the responsibility of senior management, despite one in three senior managers admitting they are unprepared to take on this role.
The research suggests that financial responsibility is being handed down from owners to senior managers, but 45 per cent of senior managers said they are yet to receive formal financial training. Those higher up in the organisation are also untrained in this area, according to 57 per cent of board members.
Rowan Lemley, product marketing manager at Basware told SM: “As small and medium businesses get larger, positions evolve and people find themselves acting as CFOs or CPOs without having the necessary expertise. There is less of an impetus to invest in procurement because it is not a function required by legislation, unlike accountancy.”
Lemley noted that small businesses often fail to invest in their process infrastructure and with no buying strategy, this can result in a company “stagnating”. He also said purchasing frequently ends up the responsibility of HR, which means less control and transparency over spend, while many small businesses “don’t know where to start” in terms of gaining procurement skills.
The survey also found several differences between regions. In Europe 44 per cent of organisations said expenditure was controlled by departments and functions compared to just 18 per cent in the US. Further, 38 per cent of European employees said they are not allowed to spend company money, with just 3 per cent of employees prohibited from spending in the US. A similar number of respondents from both Europe and the US said they wanted a greater understanding of how to manage company money (28 per cent and 33 per cent respectively).
The research surveyed 558 business owners and 1,368 employees with financial responsibility in small to medium sized firms across the UK, US, Sweden, Germany, Belgium and the Netherlands.
Every company, large and small, industrial or service oriented, understands that innovation will be a key driver for competitiveness in the coming years.
The importance of innovation is clearly displayed in two recent studies conducted by Capgemini Consulting in 2012: “Innovation Leadership Study”, conducted in partnership with the IESE Business School, and “Innovation in Procurement”. According to these studies, the number of nominations of “Innovation Executives” (a new senior level position focused on innovation) increased by over 30% between 2010 and 2011! This cross-functional position not only works to strengthen the traditional key roles held by R&D or Marketing Directors, but it also works to increase the focus on innovation across all business functions.
In order to better understand best practices and encourage dialogue among business leaders, Capgemini Consulting recently assembled approximately 30 senior executives from 20 different industrial and service companies in an intensive all day workshop. The topic of the workshop was innovation. Here are the five key themes that emerged from this event:
Innovation is an important part of a business’s overall corporate strategy. Therefore, it must be led by the business’ executive leadership team whose main challenge in leading the effort will be in managing the change that innovation brings. Middle management leaders, closer to a business’ operations, must also be involved in the process. Specific governance must be implemented to define roles and responsibilities of different innovation leaders.
2. Tapping Into and Exploiting Potential
In order to generate new ideas and opportunities, companies need to view their organization as part of an EcoSystem which contributes to the innovation process. The scope of this Ecosystem can be clearly delineated to include internal employees, clients, partners and suppliers. On the other hand, it can also be less defined and include only professional networks or business incubators. Given the potential for complexity here, multi-functional teams with senior leadership will need to be drawn in to support this new view of the organization.
3. Collaboration and Cross-Functionality
Innovation should not be viewed as an isolated effort or pursued within existing business silos. Rather innovation needs to be the combination of internal skills and capabilities oriented towards a common objective. To succeed, senior leadership must foster an environment that encourages dynamic collaboration. Here, cross-functional teams, structured processes, and knowledge management are key success factors.
4. Partnerships and Trust
Innovation requires transparency and openness to facilitate the free exchange of information and ideas as well as to make people feel comfortable in participating in the effort. Moreover, it requires organizations to adopt a legal and partnership framework that ensures “win-win” outcome for all parties involved.
5. Innovation Beyond Technology
Often we simply view innovation as a technological breakthrough with the past. But this view is a bit too myopic. In fact, business model innovation is one of the most important, and far too often most underappreciated innovation opportunities today. For example, transformation of a product-based business into a service-based business is an innovation that truly redefines the business model and can have an even greater impact on the organization than new technology can.
These five topics, deemed to be vital by the senior executives that participated in Capgemini Consulting’s event, were the central themes of the workshop. In the continuing spirit of transparency, openness and collaboration, we are pleased to share these ideas with you and hope that you use them to further innovation within your own organizations.
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