Money isn

Much has been made of e-procurement and the role it will play in the new economy as more and more companies turn larger and larger portions of their procurement process over to the on-line space. Until recently the technology available was not designed to properly reflect the specific needs of the procurement world and instead was usually just a reworking of previous on-line auction technology.

Today there are a lot of serious players in the e-procurement space including Mississauga, Ont.-based Bid.Com International Inc. which has recently entered the fray with its parameter driver [email protected] Buyer.

The problem with much of the previous technology was its price-driven design. Companies could come to your site to make a bid on your procurement needs but they were forced to play the dollar game. There was no room for the important value added services and product specifics that are so important to the procurement world. Your competitor may have been able to under price you but when push came to shove your offering was superior. Maybe you could deliver sooner, or maybe you had a longer warranty or a better one, but there was no way to pass on this information to a potential buyer.

Today’s e-procurement technology has advanced in leaps and bounds and finally has all of this factored in. Sellers now have the ability to show the true worth of their products.

“Nothing meets all the needs,” said Peter Sprukulis, senior vice-president of Bid.Com. “Price is a big factor, (but it is) not the only factor.

“Most companies believe that they have a product that should not compete only on price.”

Bid.Com’s offering allows the buyer to set up as many parameters for a given product as it deems necessary. You, as the buyer, give a specific parameter a value between zero and 100.

For example, if you needed 100 new PCs, you would go on-line – [email protected] Buyer is an ASP solution – and create parameters. You might give 1.5GHz CPUs a rating of 100 while 1GHZ CPUs would get an 80. Companies which could deliver the next day would get 100 while those that took a week would get 70 and those that took three weeks get a 30.

There is no limit to the number of parameters you set, according to Bid.Com. Once the parameters are all filled in, the bid is automatically given an adjusted dollar value. So a bid that came in at $120,000 for the 100 PCs could have a lower adjusted bid value than one that came in at $100,000 since it got higher scores on various parameters. This way more traditional sellers, who often have higher prices due to values added, and who might shy away from your e-procurement needs, can show you the true value of their goods.

tough market to crack

Though analysts said they like what they saw, the sense was that the market Bid.Com is entering is a tough one.

“I thought what I saw looked like it had a lot of the features that I see companies needing and saying they want,” said Emily Andren, senior analyst with the Gartner Group in Stamford, Conn.

That being said, she added the market is a tough one and there are other players who also have parameter-driven e-procurement solutions. But being a relatively new player in a relatively new market is not a death knell since companies such as Bid.Com have the ability to offer a completely new e-procurement solution, not a reworked older one, she added.

“The one thing that I know they are working on that they don’t have yet is the ability to put multiple line items into an RFQ (requests for quotation) so that people can bid individually or in groups.”

Multiple line functionality allows companies to bid on some or all of the items on a request list. It gives the seller added leverage.

“We can sell you certain things individually at this price but if you buy all of them from us then we will charge you less,” was how Andren explained it.

Kip Martin, senior program director of electronic business strategies with Stamford, Conn.-based Meta Group, sees a great future for e-procurement, especially for large businesses or those which are geographically separated.

Your company might have 10 sites which are all buying office supplies from different suppliers and not getting a volume discount, he said. Even worse is if they are all buying from the same supplier and don’t know it, he added. By moving the procurement to an ASP solution requests can be integrated, he said.

“When was the last time you got a (rebate) cheque from your suppliers,” he joked.

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