Why is an eAuction Tool so Hard to Embed in a Procurement Organization?

Last May I did an interview for Procurement Founders, where it came up that I have been with Scanmarket (now part of Unit4) for more than 12 years. During those 12 years I have onboarded many new customers, run hundreds of Tenders and eAuctions, and facilitated my fair share of S2C workshops and Webinars.
 
I have loved it all, but my true passion is eAuctions, and since the interview I have thought about how the eAuction landscape looked 12 years ago versus today, and I have to admit it can sometimes be hard to tell the difference between today and then.
 
Yes, the trend is upwards going, and more and more Procurement organizations are becoming aware of eAuctions, and want to try it out. Procurement organizations are also becoming more sophisticated in their usage, and their strategy. But it is also my impression that too many Procurement organizations fail to really adopt the usage of eAuctions, and it becomes a temporary focus point, but never an embedded part of the toolbox.

Why Are eAuctions so Hard to Embed?

I did a presentation on our Exclusive summit last summer, where I inspired by Jakob Gorm compared the different implementation strategies with the choice between a diet and life-style change. I came to think of another analogy this evening.
 
I think some Procurement organizations buy a license to an eAuction software with the same mindset that many people buy a fitness membership.
 
"It should be good for you/the organization", "Other people/organizations have had success with it", "How hard can it be", "I/the organization just have to use it twice a week to make it a good investment" and so forth.
 
And it is typically not hard in the beginning to go to the gym once or twice a week, or run a few eAuctions a year.
 
But it is hard to go to the gym on a regular basis for several years, and it is hard to make eAuctions an embedded part of a Procurement organizations toolbox.

The similarities between the kick-start of an eAuction license and the kick-start of an gym membership continues.

We think the big hurdle is the purchase of the license/membership and forget that someone has to use the newly acquired license in order for it to have any effect, and more importantly someone has to use the tool(s) correctly otherwise neither savings or weight loss/increased strength will be achievable.

You might be sitting rolling your eyes think “Everybody knows this”, “but of course”, and the likes.

And I agree it does not sound like rocket science, but somehow organizations still forget/subpress this as I during the last 12 years have seen more companies than I can count buy a eAuction license, refuse investing in training but still assume that the results will automatically appear because an eAuction tool is now available to their buyers…

But how should even an experienced buyer know how to run eAuctions if he/she had never logged into an eAuction platform before?! It would be the same as to expect that an experienced football player would just instantly know how to tango…

So, what can we do to make sure that the license/membership is put to good use.

Well first we must set a target(s). The target will determine the best approach. A target like “I want to lose 10kg”, is a very measurable target, but also too short-term, because what happens when the 10kg has been lost. Experience shows that our drive to go to the gym will start to disappear and we are soon paying for a membership we do not use. Similar with eAuctions, too many organizations have the goal to run X events per year/buyer etc.

What is the Right Approach to eAuctions then?

We need to get target(s) that are diverse and sustainable. Targets that will encourage and motivate us to keep going and seek continues improvement instead of just chasing the measurable short-term goal. The target must be to get eAuctions fully embedded in the Procurement organization in such a way that buyers perceive eAuctions in the same way as F2F negotiations, and he/she will select the method most appropriate for the given situation.

You might be thinking “Target settings is not an issue, achieving them is”.

I agree the next hurdle is how to achieve the goals. Again, we can draw parallels to the gym. A common approach in fitness circles is to get a personal trainer to help you get started. A professional who knows how to construct a program that can help you achieve your goals. Someone who can show you how to perform the exercises, so you don’t that to waste a lot of time figuring it out on your own. Someone who can push your boundaries and teach you how to keep going when things get hard. A personal trainer can kick-start your journey and teach you the fundamentals that you need to carry on after the first month or so. Personal trainer are expensive, meaning the majority of us cannot afford to train with a personal trainer several times a week for several months. But most of us can afford the first month or so, and we can then agree to have ad hoc consultations once per quarter or so to ensure we progress and develop… Cost wise I would still argue it is cheaper to pay for a gym membership and a personal trainer and achieve results than it is to pay for the gym membership but never go and thereby never get results.

I wish more companies would take the same approach when it comes to eAuctions. The objective (and targets) with buying an eAuction tool should be tied together with the budget allocated to achieve this and the budget for the tool is not enough to achieve the targets unless the objective is as simple as just having an eAuction tool in the toolbox.

What does it Really Take to Make eAuctions an Embedded Part of our Procurement Processes?

Well, It requires a tool, AND it requires knowledge and skills. Similar to a craftsman, you don’t become a carpenter just because you have a hammer in your hand (side jump from the gym).

Same with eAuctions, you can make the tool available to buyers and some will setup and run a few  eAuctions but the chance of success (good process, high savings etc.) is too random and not something a professional procurement department can reply on to reach their compliance, process, and savings targets.  

With the help of an eAuction expert you could educate your buyers in eAuction strategy. Invest not only in the tool but also in your most value able asset “people”. The eAuction expert could introduce all the tools in the toolbox, run the first few eAuctions together with the buyers to both ensure immediate results, but also to finetune the buyer’s skills in terms of adjusting the taught eAuction strategy to the specific project. This kind of investment will ensure that the buyers will have the required knowledge to continue to run eAuctions also after the initial period, where there is a lot of focus and fuzz about the new tool.

In Conclusion

If Procurement organizations are not willing to invest in both, then I would recommend changing perspective and forget about embedding eAuctions in the organization and instead perceive eAuctions the same way we perceive diets.

Something you use on an ad hoc basis to get quick immediately results e.g., loose way for a wedding/find the last savings needed to hit annual targets etc. Don’t buy a license, but buy a Fully Managed eAuction, where eAuction experts will do everything for you to ensure that your eAuction will become a success.