PROACTIS Blog

Cloud eProcurement: Cut through the Technology Hype & Market Confusion

Charlotte Sutton
Charlotte Sutton,
PROACTIS
One topic that is fast rising to the top of the eProcurement list is "cloud computing":
From an IT perspective, cloud computing has opened important new options for the way in which organizations deploy enterprise systems. Virtualization of applications and the supporting systems infrastructure, the emergence of cloud computing service providers, and new approaches to software licensing make it possible for organizations to look at selected enterprise systems as a "service" rather than a capital expenditure. Without the need for extensive IT resources, such services can be deployed more quickly, often at a cost that is lower than the cost of operating the system in-house.

For Finance and Procurement, cloud computing is enabling a new level of communication and collaboration that, in turn, is enabling eProcurement innovations in sourcingsupplier engagementcontract management, and the entire purchase-to-pay process. Thoughtfully designed cloud-based software applications also provide new flexibilities that enable organizations to incrementally improve business practices in a way that moves them steadily through the journey to Class A spend control e.g:
  • Easy secure global access. Web-based access and mobile communications that make it possible for employees, Procurement teams, and suppliers to use solutions whenever it is convenient for them; and regardless of where they live, work, or travel. Organization-wide, inter-divisional visibility that enables a spend control program that spans the entire enterprise.
  • Enhanced supplier communication and collaboration. A range of Web-based capabilities that enable safe, secure and automated two-way communications with your suppliers from initial introductions through on-boarding, bids and proposals, catalogue management, and throughout your relationship.
  • Reduced cost of trading. Extensive electronic transaction processing capabilities that reduce the paper handling, human interaction, and errors involved with traditional approaches to commerce functions such as placing orders, processing invoices, and making payments. Options to fit all of your different trading relationships and supplier IT capability levels.
The net result is that cloud computing is enabling organizations to streamline spend control and eProcurement processes, reduce both purchase and IT costs, and, in general do more for less.

However, a word of caution: when considering the many options available it is important to cut through any technology hype and market confusion and get a straightforward description of what vendors are doing and the advantages their approach provides to you and your organization.

Below are just some of the questions to consider:
  • Delivery: What is the vendor's track record? Is it a 'one-size fits all' solution and configuration? Can you choose the delivery approach to suit the strengths of the solution class (or a combination for different components)? Can you move from either an installed-behind the firewall to an external private cloud model or vice versa? How much flexibility do you really have?
  • Pricing: Is licensing transparent and predictable? Will fees ramp up on both the buyer and supplier side? Will you be penalized by "teaser pricing" based on limited seats and features? Will the price increase when the business uses the software for what it was originally intended for? How much does it cost really e.g. compare upfront and ongoing costs?
  • Functionality & architecture: What is the depth and range of the solution footprint? How well will the application adapt over time? Is the vendor playing catch-up on development e.g. launching enhancements every few months? Do changes affect everyone? Do they offer the scalability, reliability and security larger organizations require of mission critical systems?
  • Data: What kind of data will be in the cloud? With who is data shared? Who technically owns the data? Can the vendor 'snoop' on the data for their own use? How quickly can the data be accessed or retrieved for reporting? Where will the data reside? What happens if you terminate the contract e.g. do they offer access to and export your data?
  • Integration: Is there out-of-the-box integrations that can support complex enterprise requirements? Is there disparity between the vendors "claimed" and "actual" integration? Is there a standard for data formats and flexibility for handling customization rapidly?
  • Performance: Is the vendor meeting its availability targets? In the event of a failure or breach how is the vendor expected to respond/ make things right? How are risks identified and mitigated before the event?
  • Support services: How does consultancy and support fair in comparison with other vendors e.g. does the service go beyond just an FAQ page on a website or a list of third-party providers that some SaaS-only vendors offer? Does a lack of consulting skills mean cheaper not better - do you want technology for technology sake or a step-change in process improvement?
PROACTIS is excited about the opportunities offered by cloud computing and recommend that every organization consider cloud-based options as they move forward with new spend control and eProcurement projects. But we also recognize that this is not a "one size fits all" situation. That's why we have invested in the range of options and capabilities necessary.

Download the solution brief: "Unlock the Cloud for Spend Control and eProcurement Innovation" to learn more.