The Drivers and Barriers toEffective User Adoption ofProcurement Technologies

A collaborative research byZycus and MSU

MICHIGAN STATE UNIVERSITY

Table of Contents ................................................................................................................1

EXECUTIVE SUMMARY ................................................................................................................... 4

INTRODUCTION .............................................................................................................6

INTERVIEWS WITH PRACTICE LEADERS .................................................................................. 8

Motivation to Implement .................................................................................................................................... 8

Adoption Challenges ........................................................................................................................................... 9

Overcoming Challenges ...................................................................................................................................... 9

Challenges once EPTs are Implemented ........................................................................................................10

THE CURRENT STATE OF USER ADOPTION ............................................................................ 12

Drivers ..................................................................................................................................................................... 12

Barriers ................................................................................................................................................................... 13

Current EPTs Used ............................................................................................................................................... 14

A TECHNOLOGY ACCEPTANCE MODEL (TAM) PERSPECTIVE ............................................ 15

Perceived Usefulness ......................................................................................................................................... 15

Perceived Ease of Use ........................................................................................................................................ 16

Attitude ................................................................................................................................................................... 16

Intention to Use .................................................................................................................................................... 17

PRESSURES DRIVING EPT ADOPTION ..................................................................................... 18

Coercive Pressure ............................................................................................................................................... 18

Normative Pressure ............................................................................................................................................ 18

Mimetic Pressure ................................................................................................................................................. 19

SUPPLIER MANAGEMENT AND EPTS........................................................................................ 20

Supplier Characteristics ................................................................................................................................... 20

Social Capital ........................................................................................................................................................ 21

Cognitive Capital .................................................................................................................................................. 21

Relational Capital ..................................................................................................................................................22

Structural Capital ..................................................................................................................................................23

ENVIRONMENTAL CONDITIONS ................................................................................................ 24

Competitive Environment ................................................................................................................................. 24

1

Table of Contents

Supply Uncertainty ............................................................................................................................................. 24

Technological Uncertainty ................................................................................................................................ 25

Information Uncertainty .................................................................................................................................... 26

FIRM PERFORMANCE .................................................................................................................... 27

Cost Performance ............................................................................................................................................... 27

Quality Performance .......................................................................................................................................... 27

Delivery Performance .........................................................................................................................................28

Flexibility Performance ......................................................................................................................................28

New Product Development Performance ..................................................................................................... 29

PURCHASING PERFORMANCE ................................................................................................... 30

CONCLUSION .................................................................................................................................. 31

2

About the Author

Tobias Schoenherr holds a Ph.D. in Operations Management and

Decision Sciences from Indiana University, Bloomington, from

where he also obtained his B.Sc. and M.B. He also holds a Diplom-

Betriebswirt (FH) from the European School of Business,

Reutlingen University, Germany, and is an APICS Certified Supply

Chain Professional (CSCP). Dr. Schoenherr has taught operations

and supply chain management courses, both graduate and

undergraduate, at Indiana University, Eastern Michigan

University, the International Graduate Business School in Zagreb

(Croatia), and the Central European University, Budapest

(Hungary).

Dr. Schoenherr's research focuses on strategic supply

management, with the pillars of strategic sourcing, leveraging the

supply base, and strategic operations management. His work has

appeared in Management Science, the Journal of Operations

Management, Production and Operations Management, Decision Sciences, and Journal of Business

Logistics, among others. Dr. Schoenherr is an Associate Editor for the Journal of Operations Management,

and is on the Editorial Review Boards of the Journal of Business Logistics, IEEE Transactions on Engineering

Management, the Journal of Supply Chain Management, and the International Journal of Integrated Supply

Management. He has been active in several professional associations, including DSI, AOM, POMS, ISM and

APICS. Most recently he served as the Associate Program Chair for the 2011 DSI Annual Meeting, and as the

Proceedings Coordinator for the 2012 Conference of the Production and Operations Management Society.

He continues as POMS Proceedings Coordinator for the 2013 Conference.

Tobias Schoenherr has won several teaching and research awards and grants. For example, he received the

2003-2004 Panschar Undergraduate Teaching Award for Associate Instructors at the Kelley School of

Business, Indiana University, and the Outstanding Research in Business Award at the College of Business,

Eastern Michigan University. To support his doctoral dissertation research, he received a grant from the

Institute for Supply Management (ISM). He received ISM's Senior Research Fellowship for 2009, and MSU's

Lilly Teaching Fellowship for the 2010-2011 academic year. Most recently, he received the 2011 Richard J.

Lewis Quality of Excellence Award, the 2011 Best Paper Award at the Annual Conference of the Midwest

Decision Sciences Institute, the 2011 Best Reviewer Award for Journal of Purchasing and Supply

Management, a 2012 Award for Excellence from the Emerald Literati Network for a Highly Commended

Paper, the 2012 Michigan Campus Compact Faculty/Staff Community Service-Learning Award, the 2012

John D. and Dortha J. Withrow Endowed Emerging Scholar Award, and the 2013 MSU Teacher-Scholar

Award.

Tobias SchoenherrAssociate Professor of Supply Chain Management

Michigan State University

3

A two-phase research study was conducted in 2014 to provide insight into the drivers and barriers to

effective user adoption of enabling procurement technologies (EPTs). The first phase consisted of

interviews with seven practice leaders, which were followed by a large-scale survey study among

purchasing professionals in the second phase. A total of 144 useable responses were received.

The key highlights from phase 1 include the following:

Implementation motivations include better integration, communication and visibility; better

ensuing knowledge management; and the increasing age of legacy systems, coupled with the

availability of industry-specific software

Adoption challenges included the preference for legacy systems, change management issues, the

demand for a user-friendly environment, no time to learn the new system, perceived loss of

control, and technology being seen as an expense

Companies aimed to overcome these challenges by formal and informal training, the promotion of

success stories, and the demonstration of specific benefits

Once implemented, additional challenges emerged, which included the fact that full capabilities of

systems are often not realized, specific reporting functionality is not offered, high supplier

interface costs, and data validity issues

Validity of data is challenged

The key highlights from phase 2 include the following:

By far the most dominant driver for the adoption of EPTs was the prospect for better integration

and visibility internally

As the implementation and adoption of EPTs is oftentimes a significant corporate undertaking,

disrupting how business is being conducted, change management issues pose a considerable

barrier

Spend analysis, financial savings management, and contract management were the EPT modules

most commonly used by our respondents; modules enhancing infrastructural issues were also

frequently implemented, such as modules for the procure-to-pay (P2P) process, supplier portals,

and e-invoicing; commodity risk management was least frequently used

Perceived usefulness of EPTs was very high, with EPTs improving one’s performance, productivity

and effectiveness on the job

Perceived ease of use was notably lower, which may be attributed to the different user interfaces

offered by EPT providers, with only some having made the transition to a userfriendly and

streamlined graphical user interface

Attitude toward EPTs was very high, facilitating the implementation and adoption of such

technologies

70% or more of the respondents agreed or strongly agree with the statements assessing their

intention to use EPTs

4

EXECUTIVE SUMMARY

About half of our respondents disagreed or strongly disagreed with the existence of coercive

pressures, with an additional 20% being neutral to the statements; this suggests that only a

minority of our respondents experiences coercive pressure to implement and adopt EPTs;

however, the majority of respondents acknowledged the existence of normative pressures;

mimetic pressures were present especially in the form of competitors implementing EPTs

Suppliers enabled via EPTs tend to be long-term, important and strategic suppliers; this makes

sense, since supplier enablement can consume a significant amount of monetary resources and

time; statements assessing the relationship quality to the suppliers were also highly rated, being

indicative of respondents being greatly satisfied with the suppliers enabled via EPTs

Cognitive capital with suppliers enabled via EPTs exists in less than half of our respondents;

relational capital seems to be more prevalent in buyer-supplier relationships facilitated via EPTs;

structural capital was present for at least 40% of our respondents

Across the board, respondents described their competitive environment as very intense; the

supply environment provided to our respondents is rather stable and predictable, with good

performance of the supply base; some companies are subjected to rapid changes in terms of

technological advances; about half of our respondents were faced with significant information

uncertainty

While companies tend to view them as being on par with their competitors on the cost dimension,

the quality dimension is where they differentiate; the majority of our respondents evaluated

themselves as better than the competition on delivery performance; most respondents saw

themselves as being similar or better than the competition on flexibility and new product

development performance

Savings targets, material target costs and other procurement targets and goals were achieved by

over 60% of our respondents; most of our respondents were generally pleased with the

performance delivered from suppliers

5

Procurement technologies have evolved significantly over the last 15 years, and new applications are

constantly being developed. However, the effective adoption and use of enabling procurement

technologies (EPTs) is still a “black box” for many companies, and postulated benefits remain elusive.

Many practitioners are overwhelmed by the proliferation of EPT offerings, are faced with user adoption

resistance, and are questioning the efficacy of EPTs. Within the context of our study, we define EPTs are

applications that are intended to facilitate and support the sourcing and management of goods and

services (we use ‘procurement’, synonymously with ‘purchasing’ and ‘sourcing’).

To address these challenges and to provide insight into the current state of EPT adoption, a two-phase

industry study was conducted in 2014. The first phase consisted of interviews with procurement leaders

and practitioners to map out the current EPT landscape, identify EPT best practices and pressing

challenges, and detect any additional trends on the horizon that may shape how procurement will be

conducted in the future. Of specific interest was how EPT can be applied as a competitive weapon,

enabling procurement to become more strategic. A total of seven companies leading EPT adoption were

interviewed. Industries included manufacturing, health care, biotechnology, telecommunication, and

higher education.

The outcome of the first phase then served as the input to the second phase of the research, which

consisted of a large-scale survey among procurement leaders and practitioners, to assess the derived

notions across a larger sample and to generalize the findings. A total of 144 useable responses were

received, enabling us to derive conclusions based on a larger sample.

Most respondents were on the executive supply chain management level, and held job titles such as vice

president/director for strategic sourcing, and senior sourcing manager. Almost all respondents were

located in the U.S. (94.9%), with the remaining respondents being located in Europe. The majority of the

respondents was between 30 and 59 years of age (Table 1), and had been working an average of 15.7

years in the field (of which an average of 7.1 years was spent with the present company). This establishes

our respondents as seasoned and knowledgeable professionals. Most of our respondents started using

EPTs about four years ago.

Age Group Age Group Percentage

20-29 years 8.3

30-39 years 28.5

40-49 years 25.7

50-59 years 33.3

60-69 years 3.5

>=70 years 0.7

Table 1. Respondent age groups.

6

INTRODUCTION

Respondents primarily came from large companies, as illustrated in Table 2. Many of the firms were also

fairly established, with most of our respondents working in companies with a history of 100 years or

more. Primary industries represented in our sample included manufacturing, health care, and financial

services.

Annual Sales Percentage

Less than $50 million 2.8

$50.1 to $100 million 1.4

$100.1 to $300 million 2.1

$300.1 to $500 million 0.7

$500.1 to $1 billion 4.2

$1.1 to $5 billion 25.9

$5.1 to $10 billion 12.6

Over $10 billion 25.9

Prefer not to disclose 24.5

Table 2. Annual sales of respondents’ companies.

7

INTERVIEWS WITH PRACTICE LEADERS

In the first phase of this research we interviewed procurement leaders and practitioners to

obtain insight into (1) the motivation behind implementing EPTs, (2) adoption challenges, (3)

strategies to overcome these challenges, and (4) challenges still remaining once EPTs had

successfully been implemented. A total of seven companies leading EPT adoption were

interviewed. Industries included manufacturing, health care, biotechnology,

telecommunication, and higher education. Results from this first phase of the research are

summarized in the following.

Motivation to Implement

One of the primary motivations behind implementing EPTs was the desire for better

integration, communication and visibility. These benefits are however not only derived by the

EPTs themselves (which oftentimes offer a convenient way to synthesize, query and structure

data for better decision making), but also by the process of implementing the EPTs. Our early

research into enterprise resource planning (ERP) systems has shown that the methodical

approach that needs to be undertaken when implementing and integrating ERP systems in

companies can set the foundation for a sound enterprise structure. This structure, in turn,

can enable much more effective implementation of ensuing systems and processes. Parallels

can be seen in the EPT domain. With an integrated EPT, communication with other

departments can also be achieved, enabling cross-functional integration and collaboration. In

addition to this internal integration, external integration can be facilitated via links to

suppliers, creating benefits also for them, for example in the form of better and faster invoice

payment as part of the procure-to-pay process. Furthermore, respondents noted increased

contract compliance, due to the visibility generated into the company’s spend and associated

contracts in place.

Another primary motivation was better knowledge management. Information derived via

EPTs can be leveraged in negotiations for a more advantageous bargaining position,

supporting for example a buyer’s arguments via statistics and facts derived from the system.

Sourcing opportunities and improvements can also be identified more easily, such as whether

to rationalize the supply base (if a query reveals that for one commodity there are numerous

active suppliers) or whether to expand the supply base (if for a critical commodity there is

only one active supplier, who happens to be not very reliable). With better insight into

performance dimensionsand supplier base management, also across time, more directed

feedback can be provided to suppliers, helping them to increase their performance.

A primary driver of EPT adoption can also be the leadership of the company. As with most

initiatives, senior management support is essential for an implementation to flourish. As

discovered in our interviews, this sometimes meant a complete overhaul of the procurement

8

department, towards it becoming more strategic. As part of this movement, the

implementation of EPTs was seen as a key component.

A further motivation behind the implementation of EPTs was the lack of infrastructure

existent in the remaining legacy systems in place. For example, no tools were available to

capture spend data, and classifications into spend categories did not exist. The cost of

maintaining these legacy systems was also becoming increasingly expensive, as updates

were not released by prior vendors any more. In addition, a lot of industry-specific software

has come onto the market, which may have been a deterrent for adoption in the past:

companies just did not feel that the available solutions were able to reflect their unique

processes appropriately. However, great strides have been made since then, and unique

industry requirements can be easily accommodated. This has lowered the hurdles for the

adoption of EPTs, and at the same time, served as a motivation to take this step forward.

Adoption Challenges

While legacy systems served as a motivation to adopt new EPTs, they also served as a

challenge in this regard. Users were just more comfortable with their old systems, and did

not want to change. Several reasons can be attributed to this observation.

First, users have become so accustomed with nice and streamlined web experiences they

encounter when dealing with B2C sites such as Amazon. Unfortunately, until very recently,

many EPTs did not offer this same level of ease of use, but users expected these interfaces

also on the B2B side. This increased the hurdle for adoption. Second, users are oftentimes so

busy with their daily activities, so that they are not able to devote time to learning new

systems (or to becoming familiar with their true potential).

Third, many of our interviewees stressed the importance of culture, and how it may hinder

the adoption of EPTs. As such, individuals want to have their own control to manage vendors,

which may however be curtailed by the use of EPTs. Associated with this notion is the fear

that jobs would be cut due to the efficiencies generated by EPTs. And fourth, potential users

were offset by the expense of the new systems, and were not convinced about the long-term

return on investment these EPTs would have been able to deliver. They were of the opinion

that if the system is not broken, then why fix it?

Overcoming Challenges

Recognizing that there are significant challenges associated with the implementation and

adoption of EPTs, several strategies were suggested by our respondents on how to overcome

these. Underlying many of these strategies is the need to make users realize the value of the

9

tool, also specifically for their tasks. This can be accomplished via formal training, or more

informally, via town hall meetings or “lunch and learns”. An important element to drive

adoption is also to spend time with business unit leaders and senior staff, to get them on

board and support the initiative.

The EPTs can also be promoted internally, for example via newsletters, the intranet, or via

posters in elevators or hallways. What has also proven to be beneficial is the provision of

concrete examples of successful implementations (e.g. in another business unit or

department). Whenever possible, hard data (such as savings) should be used to demonstrate

the benefits and the bottom-line impact of EPTs. Important here is that examples are specific

and relate to the end users’ context – this was noted since oftentimes new initiatives are

perceived to be only benefitting other people, and not oneself. The immediate impact needs

to be illustrated. The hiring of qualified implementation consultants was noted as a further

strategy. Such consultancies have likely experienced and managed similar challenges before,

and have developed specific and actionable expertise on how to address the challenges.

Challenges once EPTs are Implemented

Even once successfully implemented, there may still be challenges presenting themselves.

Some of these encountered by our interviewees included that users are not using the full

capabilities of the system, especially also since new functionalities (updates) are released on

a continuous basis. Users felt a lack of direction, since once EPTs are implemented, the team

responsible for it dissolves, and leaves the operations to the individual units. This

observation stresses the importance to drive EPT adoption also after implementation. Our

research has shown that this is an often-overlooked area, and a lot of the effort that was

expended during the implementation is not paying off because of the lack of adoption

among users.

Another shortcoming (and ensuing challenge for the continued use of EPTs) is that complex

reporting is many times not supported, and more sophisticated (external) systems are

needed to complement the EPTs. This defeats the purpose of having an integrated system in

the first place, since now users have to rely again on secondary systems that are not

connected to the EPTs.

Sometimes expectations placed on the new EPTs are not met, maybe since their advantages

and efficiencies were exaggerated in the process of convincing internal users of the

approach. This stresses the importance to communicate realistic expectations in the

implementation phase. In addition, the processes associated with the new EPTs are

perceived as cumbersome and inconsistent (for example for approvals). In these instances,

criticisms need to be taken seriously and changes to the system need to be made if

10

warranted. Also, initial apprehension to new processes is not surprising, since it requires

individuals to learn the new software, potentially taking away valuable time from other tasks

that are on their to-do lists.

A further challenge encountered by our interviewees, once EPTs were implemented, consisted

of the costs to suppliers to interface with the systems and tools. This aspect is heightened due

to suppliers oftentimes being required to integrate with many of their customers, many of

which may have different EPTs requiring different setups and interfaces. This represents a

significant learning and cost for the suppliers (for some of them, it may be cost prohibitive).

Even once EPTs are in place, the validity of the data is challenged. This may be due to the fact

that users have less insight into the system infrastructure being the EPTs, in contrast to their

prior systems. Users in the firms of our interviewees also sometimes felt forced to use the

system, and rather would make their own decisions; they felt that their autonomy was

curtailed. A general challenge associated with EPTs was that of firewalls and data security.

11

The second phase of this research project, which relied on responses from 144 purchasing

managers, aimed to assess the current state of user adoption among a larger sample of

companies, specifically in terms of drivers for and barriers to the adoption of EPTs, as well as a

general assessment of which EPTs are used. This section reports on these aspects.

Drivers

Based on our understanding of EPT capabilities, complemented with the insight derived

through the preceding interviews, we developed a set of drivers that could motivate firms to

adopt EPTs. These drivers were presented to respondents, who were asked to indicate their

extent of agreement with each factor serving as a motivator / influencer for the use of EPTs.

Extent of agreement was measured on a five-point scale, anchored at “strongly agree”

(value=5) and “strongly disagree” (value=1). Figure 1 summarizes the results, ordered by the

factors that received most agreement.

By far the most dominant driver was the prospect for better integration and visibility

internally. This emphasizes the ability of EPT to accomplish such promises. With better

integration and visibility, processes can be streamlined and optimized, and decisions can be

grounded in a much better foundation. Complete insight and knowledge of processes helps

take uncertainty out of the equation, enabling more confident, more informed, and more

thorough decision making.

Associated with enhanced integration and visibility is the ability to identify opportunities for

improved sourcing performance. For instance, inefficient sourcing arrangements can be

identified, such as when a stable commodity is sourced from a multitude of vendors – the

0% 50% 100%

5 - strongly

agree

4

3 - neutral

2

1 - strongly

disagree

Better integration and visibility internally

Identification of opportunities

Achievement of savings targets

Conviction about the value of EPTs

Common information repository & dashboard

Enhanced contract compliance

Revamping of outdated legacy systems

Better integration and visibility externally

Management directive

Encouragement by senior leadership

Colleagues using EPTs for their work

Press coverage about the value of EPTs

Figure 1. Drivers to EPT adoption.

12

THE CURRENT STATE OF USER ADOPTION

0% 50% 100%

Expensiveness

5 - strongly agree

4

3 - neutral

2

1 - strongly

disagree

Company culture

No “buy in” from users

Change management issues

Lack of upper management support

Cumbersome processes

Validity of data

Time constraints

No need felt

Expectations not being met

Current systems not a good fit

Overwhelming,

difficult to

manage

Suppliers

not

willing

to

connect via

EPTs

Unclear

business case

or

value

Data

security (e.g.

firewalls)

Legacy

systems are

better

Figure 2. Barriers to EPT adoption.

opportunity for supplier reduction may be present, with the remaining suppliers receiving a

greater share of the business, likely yielding cost reductions. This can then be directly

reflected in the achievement of savings targets. Other dominant drivers, as illustrated in

Figure 1, are along similar themes.

Barriers

As the implementation and adoption of EPTs is oftentimes a significant corporate undertaking,

disrupting how business is being conducted, change management issues pose a considerable

barrier. Many of the barriers noted in Figure 2 relate to this notion (the same scale as for the

drivers was used). As such, for a successful adoption to take place, a receptive company

culture needs to be created. This can be accomplished by, for example, executive leadership

and commitment, a clear communication of the benefits and the business value of EPTs,

promotion of success stories, and the provision of formal and informal training opportunities.

Our related research has also shown that users should be involved as early as possible in the

process, ideally prior to the implementation. Users should be provided with a voice, and be

able to provide feedback to the choice of EPTs implemented. With this up-front involvement, a

sense of ownership is likely enhanced, putting EPTs on a more thorough foundation for

eventual user adoption.

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Figure 3. Popular EPTs.

0% 20% 40% 60% 80% 100%

Commodity risk management

Supplier directory

Supply base management (SBM)

E sourcing

Supplier portals

P2P (Procure to Pay)

Supplier master data management

Category management

Contract management

Financial savings management

Spend analysis

5

4

3

2

1

0

- to a very limited extent

- not using at all

- to a great extent

Current EPTs Used

EPTs can come in many variants. Figure 3 offers an overview of which EPT capabilities were

most often utilized by our respondents. The modules presented were developed based on our

understanding of recent developments and the insight obtained in phase 1. Survey respondents

were then asked to indicate their extent to which they use these EPTs. A scale anchored at “to

a great extent” (value=5) and “to a very limited extent” (value=1) was used, with respondents

having however also the option to indicate if they do not use a particular module at all (value

=0). Spend analysis, financial savings management, and contract management were the

modules most commonly used by our respondents. This echoes the primary drivers from

above, in that EPTs are able to offer enhanced integration and visibility. These are formidable

aspects that enable the activities of spend analysis, financial savings management, and

contract management.

Modules enhancing infrastructural issues were also frequently implemented, such as modules

for the procure-to-pay (P2P) process, supplier portals, and e-invoicing. Electronic enablement

of these aspects affords purchasing managers to automate as much as possible, to then be

able to focus on more critical and strategic initiatives. Commodity risk management was least

frequently used.

14

Figure 4. Perceived usefulness.

0% 20% 40% 60% 80% 100%

Using procurement technologies enhances my effectiveness in my job

Using procurement technologiesimproves my productivity

Using procurement technologiesimproves the performance in my job

I find procurement technologies to be auseful tool in my job

5 - strongly agree

4

3 - neutral

2

1 - strongly disagree

User adoption can be explained theoretically with the technology acceptance model (TAM),

which is a frequently used framework in the information systems literature. We aimed to bring

insight from this perspective also, and presented a set of questions to our respondents that

tapped into the notions underlying TAM. The TAM consists of the dimensions of perceived

usefulness, perceived ease of use, attitude, and the intention to use the technology. Perceived

usefulness refers to an individual’s belief that EPTs will improve their job performance,

perceived ease of use to an individual’s realized effortlessness to use EPTs, attitude to one’s

positive or negative disposition relative to performing the behavior, and use intention to an 12individual’s plan to perform a specific behavior . To assess these dimensions, respondents

were provided with a set of statements to which they were asked to indicate their level of

agreement. A similar five-point scale as above was used (anchored at “strongly agree”

(value=5) and “strongly disagree” (value=1).

1 Fishbein, M., and I. Ajzen. 1975. Belief Attitude, Intention and Behavior: An Introduction to Theory and Research.

Reading. MA: Addison–Wesley.

2 Davis, F. D., R. P. Bagozzi, and P. R. Warshaw. 1989. “User Acceptance of Computer Technology: A Comparison of two Theoretical

Models.” Management Science 35(8):982–1003.

Perceived Usefulness

Perceived usefulness, which is defined as an individual’s belief that EPTs will improve their job

performance, was assessed by four statements. As can be seen in Figure 4, all four statements

received a strong agreement or agreement by around 80% of our respondents, suggesting the

widespread usefulness of EPTs. Encouraging are also the results indicating that EPTs improve

15

A TECHNOLOGY ACCEPTANCE MODEL (TAM) PERSPECTIVE

Figure 5. Perceived ease of use.

0% 20% 40% 60% 80% 100%

I find it easy to get the procurementapplications to do what I need to do

My interaction with procurementtechnologies is clear and understandable

I do not have any difficulties usingprocurement technologies for my job

Using procurement technologies for myjob is easy

5 strongly agree

4

3 neutral

2

1 strongly disagree

one’s performance, productivity and effectiveness on the job. This should serve as a further

motivator for non-adopters to venture that route and realize the significant benefits from

EPTs.

Perceived Ease of Use

Perceived ease of use describes an individual’s realized effortlessness to use EPTs. Four

statements were again used here to assess this dimension (Figure 5). While agreement was

still there with all four statements, the agreement was notably lower than with the statements

assessing perceived usefulness. A lot of respondents were neutral on these points, with also a

significant portion disagreeing with the ease of use of EPTs. This suggests that while many

users perceive EPTs as easy to use, a large portion do not find them easy to use. This may be

attributed to the different user interfaces offered by EPT providers, with only some having

made the transition to a user-friendly and streamlined graphical user interface.

Attitude

Attitude refers to one’s positive or negative disposition relative to performing the behavior,

and was assessed with three statements (Figure 6). Answers on these statements were

encouraging again, with about 90% of the respondents agreeing or strongly agreeing with all

three statements. Such a great attitude, represented among our respondents, should facilitate

the implementation and adoption of EPTs.

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Figure 7. Intention to use.

0% 20% 40% 60% 80% 100%

I intend to use procurement technologiesto manage relationships with suppliers

To the extent possible, I would like to useprocurement technologies to manage my

supply base

I intend to use procurement technologiesmore often for my job in the future

I would like to be able to useprocurement technologies

5 strongly agree

4

3 neutral

2

1 strongly disagree

Figure 6. Attitude.

0% 20% 40% 60% 80% 100%

I have a positive perception about theuse of procurement technologies

The use of procurement technologies isbeneficial to me

Using procurement technologies for myjob is a good idea

5 - strongly agree

4

3 - neutral

2

1 - strongly disagree

Intention to Use

Use intention is defined as an individual’s plan to perform a specific behavior, and was

assessed with four statements (Figure 7). The results were also encouraging here: 70% or

more of the respondents agreed or strongly agreed with the statements assessing their

intention to use EPTs.

17

Figure 8. Coercive pressure.

0% 20% 40% 60% 80% 100%

We may not retain our importantsuppliers without the use of procurement

technologies

Our most important suppliers encourageus to use procurement technologies

Our most important customers encourageus to use procurement technologies

We may not retain our importantcustomers without the use of

procurement technologies

5 strongly agree

4

3 neutral

2

1 strongly disagree

Normative Pressure

Normative pressures are founded in the behavior of professional industry associations, which

may reflect a new way to do business. To tap into this dimension, respondents were asked to

respond to three statements (Figure 9). At least half of the respondents indicated this pressure

to exist.

18

Literature suggests that innovations may not only be adopted based on the free will of

individuals, but that also certain pressures may be at play to influence behavior. A large body

of research exists that theorizes the influence of institutional pressure, which is defined as a

stimulus that can influence an individual or a firm3. Institutional pressure can consist of the

three dimensions of coercive, normative and mimetic pressures. To assess the relevance of

these pressures in our context, we presented respondents with a set of statements tapping

into these dimensions. A similar five-point scale as above was used (anchored at “strongly

agree” (value=5) and “strongly disagree” (value=1).

Coercive Pressure

Coercive pressure can emanate from suppliers or customers a firm is dependent on, and was assessed

as such with four statements (Figure 8). About half of our respondents disagreed or strongly disagreed

with these pressures, with an additional 20% being neutral to the statements. This suggests that only a

minority of our respondents experiences coercive pressure to implement and adopt EPTs.

Dimaggio, P.J., and W.W. Powell. 1983. “The Iron Cage Revisited: Institutional Isomorphism and CollectiveRationality in Organizational Fields.” American Sociological Review 48(2):147–60.

PRESSURES DRIVING EPT ADOPTION

Figure 10. Mimetic pressure.

0% 20% 40% 60% 80% 100%

5 - strongly agree

4

3 - neutral

2

1 - strongly disagree

Best in class companies use procurementtechnologies

Competitors that have adoptedprocurement technologies for supplymanagement have benefited greatly

The competitiveness of our competitorshas increased due to their use of

procurement technologies

Figure 9. Normative pressure.

0% 20% 40% 60% 80% 100%

5 - strongly agree

4

3 - neutral

2

1 - strongly disagree

Procurement technologies are becomingpart of the norm to conduct business

Industry associations encourage the useof procurement technologies

Others in our industry have adoptedprocurement technologies to manage the

supply base

Mimetic Pressure

Mimetic pressure refers to the desire to follow suit and to keep up with best-in-class companies

and competitors. Three statements were used to assess this dimension (Figure 10). While best-

inclass companies are aimed to be emulated (by about three quarters of our respondents),

pressures from competitors exists, albeit not in as great of an extent (this is perceived to be

the case by about 40% of our respondents).

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Figure 11. Supplier characteristics.

0% 20% 40% 60% 80% 100%

5 - strongly agree

4

3 - neutral

2

1 - strongly disagree

We have a long term relationship withthese suppliers

These suppliers are important to us

Formal contracts govern the relationship

We consider these suppliers as strategic innature

We value the relationship with thesesuppliers

We are tightly connected to the suppliers

I am familiar with how my suppliersinteract with my procurement

The suppliers were receptive to the use ofprocurement technologies

We are well integrated with the suppliers

The suppliers were convinced of the valueof procurement technologies

The suppliers were experienced in the useof procurement technologies

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In a further set of questions we wanted to explore our respondents’ relationships with the

suppliers that are managed via EPTs. To do so, we asked questions pertaining to the

characteristics of these suppliers and the relationship quality with them, as well as to the

social capital that may exist in these relationships. A similar five-point scale as above was used

(anchored at “strongly agree” (value=5) and “strongly disagree” (value=1).

Supplier Characteristics

Figure 11 summarizes the results to statements characterizing the relationships with those

suppliers enabled via EPTs. The message is clear: these suppliers tend to be long-term,

important and strategic suppliers. This makes sense, since supplier enablement can consume a

significant amount of monetary resources and time.

Statements assessing the relationship quality to the suppliers were also highly rated, being

indicative of respondents being greatly satisfied with the suppliers enabled via EPTs (Figure

12).

SUPPLIER MANAGEMENT AND EPTS

Figure 12. Relationship quality.

0% 20% 40% 60% 80% 100%

5 - strongly agree

4

3 - neutral

2

1 - strongly disagree

The relationship we have with thesesuppliers is better than the relationship

we have with other suppliers

We are happy with the buyer‐supplier

relationship

The buyer supplier relationship can bedescribed as very good

The relationship we have with thesesuppliers serves as a model for other

relationships

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Social Capital

Social capital refers to a more tacit dimension in buyer-supplier relationships that may be

nurtured by EPTs, primarily via the enhanced and likely closer interaction. Social capital can be

develop based on close interaction, and may thus facilitate exchange. We consider in the 4present research the three dimensions of cognitive, relational and structural capital .

Cognitive Capital

Cognitive capital refers to the compatibility of goals, objectives, philosophies and approaches between

parties. We assessed this dimension with four statements, as summarized in Figure 13. Most

respondents in our sample expressed a neutral sentiment, neither agreeing nor disagreeing,

with about 25 to 45% of the respondents falling into the two agreement category. This

suggests that social capital with suppliers enabled via EPTs is there, but only in less than half

of our respondents.

Figure 14. Relational capital.

0% 20% 40% 60% 80% 100%

5 - strongly agree

4

3 - neutral

2

1 - strongly disagree

The relationship is characterized bymutual respect

The relationship is characterized bymutual trust

The relationship is characterized byclose personal interactions

The relationship is characterized bypersonal friendship

The relationship is characterized byreciprocity

Figure 13. Cognitive capital.

0% 20% 40% 60% 80% 100%

5 - strongly agree

4

3 - neutral

2

1 - strongly disagree

We share the same vision of business inthe relationship

We share compatible goals and objectives

We share similar philosophies/approachesto business dealings

We share a similar corporateculture/values and management style

4 Nahapiet, J., and S. Ghoshal. 1998 “Social Capital, Intellectual Capital and the Organizational Advantage.”Academy of Management Review 23(2):242-266

Relational Capital

Relational capital refers to mutual trust, respect and friendship that may be in existence

between parties. Statements assessing this dimension (Figure 14) received a greater level of

agreement than cognitive capital. As such, relational capital seems to be more prevalent in

buyer-supplier relationships facilitated via EPTs.

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Figure 15. Structural capital.

0% 20% 40% 60% 80% 100%

We promote an interaction betweenpersonnel across different levels

We promote an interaction betweenpersonnel across different functions

We promote frequent and intensiveinteraction

5 - strongly agree

4

3 - neutral

2

1 - strongly disagree

Structural Capital

Structural capital refers to the existence of frequent and close interactions between parties,

and was measured with three statements (Figure 15). For at least 40% of our respondents,

this dimension of social capital was present. This suggests the facilitating role of EPTs in

creating an infrastructure to generate such capital. EPTs can clearly enhance interactions

between buyers and suppliers.

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5 - strongly agree

4

3 - neutral

2

1 - strongly disagree

Figure 16. Competitive environment.

0% 20% 40% 60% 80% 100%

The competitive intensity in our industry ishigh

There are many substitutes in the marketfor our products

Our customers have significant bargainingpower

Suppliers of critical inputs have significantbargaining power

Each year many new competitors enter ourindustry

Supply uncertainty assessed the unpredictability of issues related to suppliers, and was

measured with five statements (Figure 17). In general, the supply environment provided to our

respondents is rather stable and predictable, with good performance of the supply base. This

favorable performance may have been enabled via EPTs, through better supplier measurement

and management.

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ENVIRONMENTAL CONDITIONS

Since a firm’s actions may be determined by environmental conditions, we aimed to

characterize these with a set of four questions. Specifically, we asked respondents to our

survey to characterize their competitive environment, as well as the uncertainty associated

with supply, technology, and information. A similar five-point scale as above was used

(anchored at “strongly agree” (value=5) and “strongly disagree” (value=1).

Competitive Environment

Statements assessing the competitive environment of the firm drew from Michael Porter’s Five

Forces, and tapped into the general competitive intensity of the industry, the availability of

substitutes, bargaining power of customers and suppliers, and the threat of new entrants

(Figure 16). Across the board, respondents described their competitive environment as very

intense. It is maybe this environment that pushes companies to become innovative and to

adopt new technologies, such as EPTs.

Supply Uncertainty

Figure 18. Technological uncertainty.

0% 20% 40% 60% 80% 100%

If we don’t keep up with the changes intechnology, it will be difficult for us to

remain competitive

Our industry is characterized by rapidlychanging technology

The rate of process obsolescence is high inour industry

The production technology changesfrequently and sufficiently

5 - strongly agree

4

3 - neutral

2

1 - strongly disagree

Figure 17. Supply uncertainty.

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Technological Uncertainty

Results from the four statements assessing technological uncertainty (Figure 18) are indicative

of the rapid change that some companies are subjected to in terms of technological advances.

This may create a mindset that may make the company more receptive to the implementation

of EPTs. We suggest that in those companies that are characterized by rapid technological

change, EPTs will receive less pushback.

0% 20% 40% 60% 80% 100%

Suppliers consistently meet ourrequirements

Suppliers produce materials with consistentquality

We have only limited inspection ofincoming critical materials from suppliers

We have a low rejection rate of incomingmaterial from suppliers

5 - strongly agree

4

3 - neutral

2

1 - strongly disagree

Figure 19. Information uncertainty.

0% 20% 40% 60% 80% 100%

We are constantly in search fornew information

Information obtained becomesquickly obsolete

Information is uncertain andcontinuously changing

5 - strongly agree

4

3 - neutral

2

1 - strongly disagree

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Information Uncertainty

Information uncertainty was measured by three statements tapping into how important it is to

always have the most updated and relevant information (Figure 19). About half of our

respondents expressed agreement or strong agreement with these statements. This might yet

be another indicator for why some companies have an easier time adopting EPTs than others:

those companies for which information is constantly changing may realize the need for EPTs

even more, due to EPTs’ capability to enable efficient management of information.

Figure 20. Cost performance.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

5 - far better

4

3 - similar

2

1 - far worse

Labor Costs

Raw material costs

Total product costs

Quality Performance

In terms of quality performance, which was measured by five statements (Figure 21), most respondents

rated themselves as better or far better than the competition. This is an interesting observation against

the results for the cost performance dimension. As such, while companies tend to view them as being

on par on the cost dimension, the quality dimension is where they differentiate.

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FIRM PERFORMANCE

We also wanted to assess the performance of their companies from our respondents, and asked them a

set of questions pertaining to cost, quality, delivery, flexibility and new product development

performance. Respondents were asked to evaluate their performance compared to their major

competitors on a five-point scale anchored at “far better” (value=5) and “far worse” (value=1).

Cost Performance

Cost performance was assessed in terms of labor, raw material and total product cost (Figure 20). The

results indicate that the wide majority of our respondents are either similar or better than the

competition.

Figure 22. Delivery performance.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

5 - far better

4

3 - similar

2

1 - far worse Response to changes in delivery due dates

Delivery speed

Delivery reliability

Figure 21. Quality performance.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

5 - far better

4

3 - similar

2

1 - far worse

Perceived overall product quality

Product conformance to customerspecifications

Product performance

Product features

Pre‐sales service and after sales service

28

Delivery Performance

Delivery was measured based on delivery reliability and speed, as well as the response to changes in

delivery due dates (Figure 22). The majority of our respondents evaluated themselves as better than the

competition on this dimension.

Flexibility Performance

Flexibility performance was assessed with three statements, results for which are summarized in Figure

23. Most respondents saw themselves as being similar or better than the competition on this dimension.

Figure 24. New product development performance.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

5 - far better

4

3 - similar

2

1 - far worse

Number of new products introduced eachyear

Lead time to introduce new products

Lead time to implement new or changeexisting processes

5 - far better

4

3 - similar

2

1 - far worse

Figure 23. Flexibility performance.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Production volume flexibility(increase/decrease volume)

Production variety flexibility(increase/decrease product mix)

Flexibility of manufacturing operations

New Product Development Performance

New product development performance assessed a firm’s capability to develop and introduce new

products to the market. Here again, most respondents saw themselves as being similar or better than

the competition on this dimension.

29

A last performance dimension we assessed pertained to the performance of purchasing itself. For this

purpose, respondents were provided with a set of statements describing common purchasing

performance assessment dimensions, and were then asked to rate their degree of their agreement with

these statements. Similar as above, the five-point scale was anchored at “strongly agree” (value=5) and

“strongly disagree” (value=1). Savings targets, material target costs and other procurement targets and

goals were achieved by over 60% of our respondents. In addition, most of our respondents were

generally pleased with the performance delivered from suppliers. These favorable performance

evaluations may have again been enabled via EPTs, due to their integrative nature and ability to create

visibility

Figure 25. Purchasing performance.

0% 20% 40% 60% 80% 100%

5 - strongly agree

4

3 - neutral

2

1 - strongly disagree

Savings targets are achieved

We have a lot of value‐addedrelationships with suppliers

Procurement targets and goals are met

Overall procurement performance is high

Raw materials and parts are received inconformance with specifications

Procurement meets its material targetcost

Customer departments are satisfied withthe attention and dedication that

procurement shows for their problems

Raw materials and parts are received inaccordance with the requested delivery

dates

The quantity of materials purchased ininventory meets the company’s quantity

performance objectives

Suppliers contribute a lot to ourinnovation capabilities

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PURCHASING PERFORMANCE

This research report provided insight into a recently conducted study into the drivers and barriers to

effective user adoption of enabling procurement technologies (EPTs). In the first phase, a series of

interviews were conducted with practice leaders. This was followed-up in a second phase with a large-

scale survey, yielding 144 useable responses. With these data, we were able to provide a current

assessment of the drivers and barriers of user adoption, and what types of EPTs are currently being

utilized. We further aimed to explain user adoption with the TAM framework, and explored institutional

pressures that may be at play. In addition, we described supplier characteristics that are enabled via

EPTs, and provided an overview of the environmental characteristics the responding firms were faced

with. Moreover, we provided an assessment of the company and purchasing performance on which our

respondents reported. With the insight presented in this report, we have generated a deeper

understanding of enabling procurement technologies and the adoption among users. It is our hope that

these insights will prove useful in your endeavors related to EPTs.

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CONCLUSION

Zycus is a leading global provider of complete Source-to-Pay suite of procurement performance

solutions. Our comprehensive product portfolio includes applications for both the strategic and

the operational aspects of procurement - eProcurement, eInvoicing, Spend Analysis, eSourcing,

Contract Management, Supplier Management and Financial Savings Management. Our spirit of

innovation and our passion to help procurement create greater business impact are reflected

among the hundreds of procurement solution deployments that we have undertaken over the

years. We are proud to have as our clients, some of the best-of-breed companies across verticals

like Manufacturing, Automotives, Banking and Finance, Oil and Gas, Food Processing,

Electronics, Telecommunications, Chemicals, Health and Pharma, Education and more.