Reasons e-Procurement Projects Fail to Achieve their ROI (and ways to overcome them)

The typical ROI projection of an ERP implementation shows break-even in about two years.  Real world experience shows that break-even usually doesn't happen until more than four years after implementation.  Many companies are forced to give up on these projects because implementation costs have run over and there was a lack of tangible results.

Sourcing strategy and technology are equally necessary in this scenario. Sourcing strategy finds and pursues the savings, while technology captures the data so that the savings can be sustained over time.  Initial aggregation of spend and negotiation of better deals with suppliers can help offset to the costs of an ERP implementation.

Equally important is a thoughtful category rollout.  It's best to go with straightforward categories first, the ones most likely to meet with success, and refrain from choosing complex categories simply because their spend volume is great.

Electronic catalog content is important for a successful ERP rollout.  If the vendors don't have adequate content in their eCatalogs, or they fail to update and cleanse their data, users cannot buy, and the ROI of the ERP is undermined.

Effectively transitioning employees onto a new ERP system so that adoption rates are high and tools are used correctly requires a consistent message from all levels of the organization that this is priority #1.  Communication needs to to be clear and consistent, training needs to be thorough and ongoing, and users need to see evidence that their efforts are paying off with feedback on savings and compliance rates.

Change management is the least expensive aspect of an e-Procurement project, and yet the lack of it is a leading cause of project failure.

From a White Paper by ICG Commerce, August 2009: http://bit.ly/dkCaXk

Eight Leadershuip Skills that Matter the Most in the Real World

1. Competence  This is the most important leadership quality; it's not enough to have vision and purpose.  Competence has four pieces to it, intellectual, emotional, strategic and instinctive. This characteristic often is not transferable - the news is full of stories of successful CEOs from one industry failing when they try to apply their skills to a new industry.
 
2. Accountability Leading is mostly about the relationship between the leader and the led, and trust, accountability, and the faith others have in you is at the core of this relationship.
 
3. Openness This is a soft skill that can't be quantified, however, openness, candor, frankness, and honesty are bedrock qualities of leadership.  This includes the ability to speak plainly, to listen to new ideas, to tolerate errors on the learning curve, and to build relationships with people at all levels.
 
4. Language Connecting relationships takes place through language.  A leader's words can inspire, and they can divide.  They need to be able to persuade effectively, communicate with clarity and transparency.
 
5. Values This includes personal core values as well as the values that represent a leader's organization. Some examples include integrity, trust, passion for winning, respect, personal mastery, and excellence.
 
6. Perspective This brings balance to a leader. What can a leader bring to the organization from the past to the present and into the future? Yesterday teaches us, we dream about tomorrow, but our reality is today.
 
7. Power Cultivating the wisdom to use power wisely should be a goal of all leaders. Without power, a leader cannot effectively lead. Personal power comes from within an individual, positional power comes from holding a particular role.  Effective leaders use both these kinds of power.
 
8. Humility This quality is the least able to be taught.  Humility can be thought of as a sense  of modesty or as the absence of arrogance.  Leaders who have this quality can laugh at their own foibles, and they can be led.  They are not interested in having things their own way, but in finding the best way.

Adapted from Bethel, Sheila Murray. A New Breed of Leader: 8 Leadership Qualities that Matter Most in the Real World: What Works, What Doesn't, and Why. New York: Penguin Group, 2009.