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Peggy Bresnick-Kendler
Peggy Bresnick-Kendler
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The Tough Go Shopping...Online

Web-based purchasing is not just for consumers. Insurers are saving money and gaining efficiencies through e-procurement systems.

Q: How can insurers benefit from implementing an e-procurement solution? What are the benefits, in terms of cost savings, efficiencies and e-business implementation?

A: Cande Olsen, senior vice president, New York Life (New York): E-procurement is today's way of doing business. When a company buys goods and services—whether it is office supplies, fax machines, PCs or air travel—we want and need that same convenience as consumers who "point and click" to add purchases to their electronic shopping baskets. Using an e-procurement solution to buy goods and services can also save money. It is easier to limit the products and vendors that can be used so you can focus on preferred vendors with which you have negotiated discounts.

A: Timothy B. Plunkett, industry marketing director-financial services, Lawson Software (St. Paul):To remain competitive, insurers must not only reduce expenses, but must also work smarter and faster. E-procurement solutions can reduce administration costs by up to 70 percent and cost of product by 80 percent (according to a January Lawson Software survey of financial service organizations), reduce cycle time from requisition to payment, provide role- and rule-based processing solutions and contribute to fully utilizing the company's Internet investment.

A: Graham McDonald, vice president of finance, Great-West Life & Annuity Insurance Co. (Denver, CO): Benefits involve both reduced cost and better service to purchasers. With online procurement, you automate the process and eliminate the administrative, paper-based tasks. But the bigger benefits are in customer and vendor management. By aggregating your expenses, thereby knowing how you spend your money, you get more leverage with your largest product suppliers.

A: Richard Glassman, executive vice president and chief technology officer, SupplyAccess, Inc. (Los Angeles): Implementing a hosted e-procurement solution can deliver process efficiency gains of 85 percent over manual requisition systems. When combined with strategic sourcing and fulfillment (real-time access to price and availability) from multiple suppliers, a hosted e-procurement solution can reduce the average cost of goods by three to 12 percent.

A: Christine Buckley, general manager, e-procurement, Walker Interactive Systems (San Francisco): Organizations that implement e-procurement within the framework of strategic sourcing with full purchase-to-pay functionality and back-office integration can benefit from this automation. Companies utilizing an e-procurement system will develop an understanding of issues and opportunities offered by new business models and emerging technologies, thus positioning the entire organization to benefit from future developments.

Q: What are the challenges and risks of setting up an e-procurement solution?

A: Olsen: The biggest risk in implementing any type of e-procurement solution is in the change management area. Users must be trained before implementation, but follow-up training sessions are needed because users don't focus on what the implementation will mean until it happens.

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