What do firms like Skadden Arps; Nixon Peabody; and Covington & Burling have in common? Each has implemented an eProcurement system. These and many other professional service firms are transforming the way they do business by establishing electronic links between their firms and their suppliers. Business rules, such as preferred suppliers, pricing, budgets, and approval levels are established and communicated to internal users via eProcurement systems. Remote users can access this information to get the goods and services they need. The result is lower total costs.

Cost Reductions Realized from eProcurement Implementations: Every dollar saved in purchasing drops directly to the bottom line Technology: 8-12 % Stationery and supplies: 5-12% Advertising & Marketing: 11-18% Facilities: 11-25% Increased productivity results in increased billable hours On-line catalogs and ordering Self-service inquiries Interfaces with other systems Increased partner payout Better control of processes Budget adherence Capture client matter number for billing purchases to the client

What is E-Procurement for Law Firms?
E-procurement is electronically enabling the entire procurement cycle for the goods and services used by law firms - from recognition of need, through to the payment of the invoice. Electronic catalogs are created and loaded on the firm's system to provide an approved list of items from which individuals can request items. On-line requisitions are generated and approvals to purchase the goods are routed electronically. When the approval process is complete, requisitions are converted into purchase orders, which can be sent to suppliers through a variety of electronic means (email, Fax, EDI, XML). As goods are received, an electronic receipt is entered in the system. Finally, when the invoice is received (either electronically or manually), it is matched in the system to approve payment.

An eProcurement system comprises a "front-office" component, which allows end-users to generate Requisitions and Direct Orders, route them for approval, and perform self- service inquiries. It also includes an integrated "back-office" component, which handles the traditional purchasing process, request for quotes, blanket orders, contracts, and also includes capabilities for invoice matching.

Savings from Supplier Agreements and Productivity Improvements
Early adopters of eProcurement are achieving real savings. Significant gains are being realized through long-term purchase agreements with suppliers. This is now possible because eProcurement systems capture all purchase information and provide a complete buying history. This process provides the purchasing group the information they need to leverage purchase volumes and negotiate prices. There is significant potential for savings in the categories of technology, office products, and sales and marketing media. eProcurement systems provide the category data (i.e., annual usage, unit price, industry benchmarks) that allow the purchasing group to negotiate the best prices.

Increased productivity is another benefit of eProcurement. In addition to the savings achieved by automating purchasing, there are incremental savings gained when users can make requests through their Web browser and when direct ordering is enabled. Employee self-service streamlines the flow of information, reduces non-value added activities, and eliminates unnecessary paperwork. Other administrative expenses are reduced through online inquiries, approvals, receipts, and invoice-matching activities.

What goods and services are typically purchased through an E-Procurement system? Technology Products Stationery, Forms, Office Supplies, Office Products Advertising and Marketing Miscellaneous Services Staffing Facilities Supplies

Implementing eProcurement
A typical implementation of an eProcurement system takes six to eight weeks. Rapid implementations provide a number of benefits: faster return on Investment, reduced chances of cost over-runs and greater user acceptance of the new system. Implementation methodologies should be based on a best practice analysis of numerous installations. While the installation of the software is accomplished in a matter of days, added services usually extend the engagement a few weeks for system configuration, catalog content management and training. Another important component is supplier education. Shortly after system installation, the eProcurement provider should conduct a supplier summit to help educate the firm's vendors on catalog content and format. Total number of days of on-site service by the eProcurement provider should be about twenty to forty days.

Factors to Consider When Selecting an E-Provider: Does the company have a track record working in the legal industry? Does the company utilize a methodology for rapid deployment of the system? What are the company's credentials with respect to support and service? What is the company's business model (will they be around three years from now)?

eProcurement System Functionality
Look for an eProcurement system that supports the entire procurement cycle. Many systems have been developed over the past few years, and while having web-based capabilities, lack complete procurement functionality. Be certain the system you select has standard tools for purchasing, including management reports. Another important factor is the ability to interface with existing systems -- ensure that the system has the capability to easily connect with legacy systems such as accounting and human resources applications.

Factors to Consider When Selecting an E-Procurement System: Does the system include a back-office Purchasing System (supporting blanket orders, contracts, RFQ's, leases, service orders, etc.)? Does the system allow you to work with your preferred suppliers? Can the system capture client/matter numbers and interface to your payables system? Can catalogs be maintained by you, the supplier or the eProcurement provider? Can the system perform 2 way/3 way invoice matching? Does the system support web-based receiving? Does the system support web-based inventory control?

About our author...

Ken Block is Director of Legal Markets for PurchasingNet, Inc. Call him at (732) 212-1500, ext. 3150 or e-mail KBlock@PurchasingNet.com.