B2B suppliers relying on 'rogue buyers' - analyst

Forrester urges B2B IT providers to earn approved-supplier status in a bid to secure long-term future

B2B e-commerce firms are relying too heavily on so-called "rogue buyers", according to Forrester, which claims suppliers need to make better attempts to earn the approval of the IT department.

The analyst said that chief procurement officers (CPOs) are increasingly worried about their staff buying services direct from e-commerce sellers. These employees have earned the status of "rogue buyer" by Forrester, which warned B2B firms about them.

"At the moment, [suppliers] may be able to market and sell successfully direct to end-user customers, but not for long," said Forrester principal analyst Duncan James.

"The growing imperative for CPOs to guarantee compliance with various external laws and internal policies is driving a much tougher stance on so-called rogue buying.

"One of their most common questions is ‘how can I prevent employees buying stuff directly from sell-side websites?' This used to be purely due to concerns about cost.

"They assumed that their e-procurement application would direct employees to approved suppliers who would, they believed, be the cheapest. Now, however, the bigger issue is supplier risk. Issues such as corporate social responsibility, corrupt practices, data security, and so on, are forcing CPOs to be much tougher in preventing purchases from unapproved suppliers."

James added that players such as SAP and Oracle have made efforts to improve their e-procurement offerings, demonstrated in part by their respective acquisitions of Ariba and Endeca.

Staff who continue to procure IT kit under the radar may "find themselves in trouble", James said.

"'But I bought it cheaper/better/faster' is no excuse, because these compliance obligations allow no exceptions," he said.

"What this means for online B2B sellers is that [suppliers] will have to convince customers' CPOs to agree to let you be a ‘punch-out' supplier, or face increasing barriers to e-commerce sales. Customer traffic from search engines... is likely to be rogue traffic, and relying on selling only to rogue buyers is not a good long-term strategy."