When you make an investment in your business, you’re not just looking to make a change, are you? You want to make your business more profitable and probably easier to manage, which are the two key aims of eProcurement software. And with surveys taken, it can certainly do that.
The True ROI Of eProcurement
In the closing stages of the twentieth century, there were lots of wild claims about the ROI of eProcurement tools. According to BuyIT in 1998, the average ROI was estimated to be between 200-400%. This would be a rather effective investment and you can see why so many businesses were willing to invest in the software. However, a year later, the potential ROI dropped to 8%. This is not a particularly high ROI and vastly different.
The issue was that there weren’t great monitoring tools in the 1990s to accurately measure these statistics but now there are. And what’s even better, is that the potential ROI on eProcurement tools is even greater than originally thought.
In 2018, 200 procurement professionals in the UK were surveyed to discover the cost savings that were made after an investment in eProcurement tools. More than eight out of ten of the respondents confirmed they had sufficient tools to monitor savings generated by eProcurement tools. From those who responded, the average cost savings were found to be £72 ($95) for every £10 ($14) spent. This is an ROI of 720%.
How Does eProcurement Get Such High ROI?
There are numerous reasons why eProcurement tools can help businesses, such as yours, achieve so much. Understanding eProcurement can help you not only to see the benefits of the software and tools but also to realize the true value of it to your business.
The first reason for the improved ROI when using eProcurement software is the cost savings you can achieve from suppliers. According to a recent survey, 53% of the ROI was made directly from lower costs with suppliers. There are several reasons for this, including the ease of supplier comparison and the increased ability to clearly identify the suppliers offering value for money. With eProcurement software, negotiations with suppliers also become more efficient, and better deals can be achieved.
eProcurement software enables you to better manage your supply, which as you know, will help you to ensure you are not paying premium costs for resources because they have been ordered late. This can be a very good cost-saving.
Another significant part of the ROI was the time saved on internal processes. Imagine how often it takes you to manually place an order with your vendors? That time is money, whether there’s a direct invoice for it or not. By making the process completely automated, you are no longer spending time on mundane and laborious tasks. Instead, you or your team, can look to doing more value-adding tasks such as generating sales.
In addition, the extra cash flow can be used in your business for more ambitious growth plans. Therefore, while 720% is a great ROI, the actual value could be much higher if you also include the potential growth because of the money and time saved thanks to eProcurement.
The ROI of eProcurement tools has long been debated with wildly different numbers given in the past. Now with the right tools, businesses can accurately measure the ROI of eProcurement software to see the positive impact it’s having on your business.
And with an ROI of 720%, is there any better reason why you shouldn’t invest in the ROI of your business? If you want to know more about the potential impact eProcurement software could have on your business, contact a team member here.
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