Consulting » Financial directions – FDs are all talk on e-procurement

Financial directions - FDs are all talk on e-procurement

UK FDs have overall responsibility for implementing e-procurement, according to new research by American Express. But, although 75% of FDs believe the benefits of e-procurement outweigh the costs, only 3% of UK and German companies currently order and pay for goods and services on-line.

Amex interviewed FDs in the UK and Germany from 200 companies with a turnover of $25m+, exploring attitudes towards B2B e-procurement, specifically the barriers and benefits to implementation.

Currently, more than three-quarters of UK companies, and over half of German companies are still using traditional paper-based systems, despite the majority of respondents admitting that e-procurement facilitates price comparisons and speeds up invoice time and settlement.

But e-procurement roll out is slowly becoming a reality, with over half of FDs surveyed predicting implementation in the next 18 months. The growing desire of customers to negotiate contracts with companies on-line is major driver of implementation, with 84% of UK FDs saying that they had seen slight or marked increases in requests for on-line transactions.

Over half (55%) of FDs believe that e-procurement would bring savings of up to 10% on direct purchasing costs, while nearly a third estimate savings of up to 20%. Furthermore, 72% of respondents believe they will be able to save 25% on indirect purchasing costs.

Despite the potential savings, a substantial proportion of FDs are missing out on the benefits of e-procurement due to confusion, fear and lack of understanding.

Almost half of UK FDs believe e-procurement to be ordering on-line only. The survey suggests that by omitting billing and payment functionality, these FDs are missing out on substantial process and cost savings.

Furthermore, 75% of UK FDs admit to being oblivious to e-procurement best practice and industry recommendations. Those who do understand ‘best practice’ take it to mean: determining a strategy before choosing a channel (25%); appointing a dedicated team (20%); and having a preferred supplier policy (9%).

Key barriers to installing e-procurement systems include technical compatibility (85%); that e-procurement is not at the top of the boardroom agenda (74%); and the fear of transacting on-line with unknown companies (69%). Only 17% of respondents cited cost of implementation as an issue.

The survey flags intrinsic differences between UK and German attitudes to new technology. German companies are ahead of their UK counterparts, with 34% having automated at least part of the purchasing process (UK 9%). But German FDs place the responsibility for implementing new technology with the IT department, whereas UK FDs are more proactive in IT strategy, with 37% of UK FDs designating the IT function as part of their remit (compared to 10% of German FDs).

For information on The American Express B2B eProcurement Report, contact [email protected]


Fees for non-executive directors (NEDs) at FTSE-350 companies range from #16,000 on average for the smallest companies up to #33,000 for companies with turnover of more than #2bn, according to the latest annual survey from remuneration adviser Monks Partnership.

Fees for non-exec chairmen range from #32,000 at the lower end to #200,000 at the top. The chairman’s role is part-time in four-out-of-five industrial companies.

The average age of NEDs is 58 and only 9% of non-executive directors are female. All but 1% of chairmen are male. Regardless of company size, NEDs typically work 12-15 days a year, though non-exec chairmen put in between 20 days (in companies with turnover below #50m) and 90 days (where turnover is more than #2bn). Boards tend to meet between 10 and 12 times a year, while audit committees gather together three or four times a year in large companies or financial institutions.

Almost half of those surveyed had not raised NED fees over the previous year, but the median increase at those which had was 13.6%. Most FTSE-100 companies determine fees by looking at a “comparator group” based on company size, while half look at their own industry sector. None said that they set their fee policy below “mid-market” practice.

Non-executive Director Practice and Fees, #400, Monks Partnership, 01799 542222.

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