When it comes to e-procurement, would an in-house enterprise software model or a cloud-based solution be best for your company?
A recently published white paper by Procurement Leaders, in association with Corcentric, “Rethinking the P2P Relationship” dealing with the need to rethink the relationship between procurement and accounts payable when it comes to transactions and the entire source-to-settlement continuum.
Last week, I wrote a blog on one of the major barriers to achieving a company’s e-procurement goals, “Don’t Let Silos Stop Your e-Procurement Success.” Once silo breakdown is achieved, a company can then go on to realize the many benefits that e-procurement provides. But not just any solution will give you the advantages you may be looking for.
The Procurement Leaders paper points out that there are various types of solutions available and the one you choose can definitely make a difference. The white paper notes that the research group Gartner found that some stakeholders or leaders expressed disappointment in not realizing the projected benefits they anticipated in their e-procurement projects. The report cited, Predictions 2016: Procurement and sourcing suites are expanding in scope but buyers often struggle with adoption, points out that “by 2017, 50% of deployments of source-to-settlement (S2S) systems…will have failed to meet expectations.” Source-to-settlement is true e-procurement which goes broader in process scope than does P2P.
Why choose a cloud-based solution over an enterprise software model?
One of the reasons for dissatisfaction may be the company’s choice to deploy an on-premises or enterprise software model instead of working with a cloud-based solution provider. A cloud-based e-procurement platform provides full, real-time visibility into all of your spend, both direct spend (supplies necessary for the production of your core product) which has considerable oversight and indirect spend (those items necessary to keep the day-to-day business of the company alive) which often lacks any oversight at all. This is especially valuable for those companies that have multiple locations from which purchases are made and a somewhat decentralized approval process. Using the cloud, both buyer and supplier can access the necessary data from anywhere using multiple devices to track transactions and ensure that all terms, pricing, and conditions are met.
Access isn’t the only benefit you’ll realize with a third-party, cloud-based e-procurement solution.
Although access is one of the major benefits you’ll be able to take advantage of by deploying an end-to-end e-procurement solution, it’s far from the only one. Here are other things to consider:
- Consider the cost of hardware, software, technical oversight, and updates. These items can not only be costly but require internal IT time to manage which may not be readily available. Working with a solution provider eliminates the cost and time for all of these issues.
- Many of your suppliers are likely working with disparate ERP and purchasing software. A cloud-based platform that’s agnostic when it comes to ERP systems means every supplier can easily work within the platform without needing costly IT intervention on their end
- Software updates are disseminated simultaneously to all users. This is not possible with a non-cloud based system which would require that each individual supplier be notified and provided with updates, possibly over an extended period of time. This could cause real friction with some suppliers being up-do-date and others lagging behind, leading to confusion for all parties.
- As more and more data is gathered, managing and storing data that can measure in terabytes and higher can be difficult to handle on-site but is no problem in the cloud, which has unlimited capacity.
- Every business today has to worry about disaster recovery. If your business experiences a natural disaster or power outage that hits your on-site data storage, the information may not be able to be recovered and the negative impact on your business could be enormous. But if all your data is backed up on the cloud that risk will no longer exist.
Setting up an e-procurement system on your own is always an option, but quite clearly not the best option to gain the control over your spend necessary for company growth. However, what is also essential is that you select the right e-procurement solution provider for your business. That means a company with the expertise, platform, and understanding of your individual needs.
To discover all the ways e-procurement can transform every aspect of your transaction processes, download the Procurement Leaders paper.