Business & Technology Nexus

Dave Stephens on technology and business trends

Budget-Based Procurement

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We’ve all seen Trading Spaces and so many other budget-based home improvement shows popular on Cable TV these days. But while these reality TV shows’ approach to budget-based procurement is fun and simple, corporate procurement’s ability to offer budget-based management in its enterprise systems is anything but.

Systems directed at public sector, at least in the US, make extensive use of encumbrance accounting. But encumbrance accounting is so 1970’s – it’s overly complex for what should be a simple function.

Too many organizations seem like they have to choose between complex accounting-based budgeting or nothing at all. There seems to be a giant gap where simpler mechanisms to control spending should be.

And in the enterprise, pseudo-project budgeting systems seem to crop up all over the place. You’ll find them in MRM (Marketing Resource Management), in Consulting, in Higher Ed w/Grants Management, in R&D, and in Employee Programs to name a few.

The goals of these systems, although they are found scattered throughout ERP & CRM, are all the same: to track spending against a “reasonable” target.

But pure-play best-of-breed procurement vendors have approached project management from a sourcing & task-list perspective. This is useful too, but distinct.

It’s time for budget-based Procurement, and easier ways to allow line managers and Procurement alike to evaluate success. If nothing else, it will make for better stories for Procurement managers to tell – and who knows, a reality TV show may not be far behind..

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Written by Dave Stephens

05/9/06 4:07 PM at 4:07 pm

Posted in Opinion

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