Barriers to SME e-Procurement Solutions in Canada: A Survey

Working Paper Authors Publish Date
7 Cam Cuthbert
Dan Hamzic
Norm Archer
Aug. 2003

Many SMEs (Small and Medium Enterprises) handle procurement through an inefficient combination of manual processes, including paper records, phone calls, e-mails, and faxes. This can lead to problems such as limited financial reporting, lack of readily accessible management information, lower levels of vendor compliance, and unauthorized spending. There are e-procurement solutions that can address these issues, but most of these tend to be expensive, complex, require technical expertise to install and maintain, and are usually oriented towards larger firms. The purpose of this study was to examine the barriers perceived by Canadian SMEs to e-procurement. A total of 53 companies responded to the questionnaire in a survey distributed primarily by e-mail during June and July 2003. Findings from the survey indicate that e-procurement in Canadian SMEs has a slow acceptance rate compared to other Internet-based solutions. Major findings were that many companies were not familiar with e-procurement solutions, and almost half indicated they would not be considering such solutions within the next three years. In justifying implementation of e-procurement, cost control and ROI were ranked as the highest motivators, followed by competitiveness and supplier requests, with strategic decision ranked the lowest. Among the lowest barriers to implementing e-procurement were security and financial support. The most favoured option of implementing e-procurement was working with suppliers that promoted it, and the least favoured was an outsourced solution. Application functionality was rated the highest importance and the lowest was price. Not surprisingly medium-sized firms were more favourably disposed than small firms to e-procurement. Finally, our findings indicated that SME managers in general have a limited understanding of e-procurement solutions and vendor offerings.

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