As we discussed in our latest report, Cloud-based solutions are revolutionizing the way that enterprises conduct business. These web-based versions of common business tools, like analytics or document management tools, retain most or all of the functionality of their desktop versions and provide significant access, customization, and utility to end users. More organizations are ditching on-premises solutions and adopting cloud-based tools, also known as Software-as-a-Service (SaaS), “hosted,” or “on-demand” solutions. They are becoming invaluable assets in today’s agile and mobile workforce.
In the last half-decade, the adoption and use of cloud-based business solutions has been on the rise with procurement and supply management teams. In fact, Ardent Partners research has found that their adoption has grown by 37.5% over the past few years, with 54.6% of Chief Procurement Officers and their teams reporting cloud adoption in 2016 compared to 40% in 2014. Chief Procurement Officers love “going to the cloud” because it allows them to focus on what is most important to them: automating and repeating processes, scaling resources, and driving greater value through greater volume.
The Value of “Going to the Cloud”
One of the principal challenges to wider technology adoption (particularly in the mid-market) has been the lack of technological infrastructure within many enterprises. After all, in order to deploy desktop or server-based solutions, a typical enterprise needs not only the software and workstation, but also the server(s), IT technicians, security features, and the know how to implement and maintain the solution throughout its lifecycle. It creates (or sustains) an enormous amount of overhead for small- and mid-sized organizations. For Chief Procurement Officers, securing funding for an on-premises solution can be too big of an “ask” if the infrastructure is not in place and there is no room in future budgets for the associated costs. But hosted solutions allow Chief Procurement Officers and their lieutenants to take advantage of the benefits of modern solutions, like eProcurement and eSourcing, without necessitating costly infrastructure, maintenance, and security.
Because hosted solutions are internet-based (rather than on a company’s internal servers or on desktop stations), they allow business leaders to offload expensive infrastructure requirements to third-party providers for nominal monthly service fees. In doing so, they can provide small and mid-sized organizations with access to very innovative and robust technology solutions without the expensive overhead of supporting IT infrastructure and staff. These features improve user experience and drive greater usage, which allow organizations to scale operations, increase throughput, and drive greater value as a result.
By design, cloud-based solutions also attempt to “solve” the configuration problem that can prevent organizations from deploying the latest and greatest version of a solution by two or more years. With large on-premise solutions, like an ERP system, IT frequently has to allocate significant time and resources to customize it to the user’s specification. These customizations can be lost when the solutions are upgraded, requiring IT to either reinvest the time and resources to restore customizations or to delay upgrades. The result is that many organizations are “stuck” with an overbuilt but outdated solutions when there are newer, better solutions in the market.
Cloud-based solutions can help change all of this by providing purpose-built solutions that allow for user configuration, regularly and automatically upgrade, and preserve the configurations in the process. Since these solutions are turnkey, organizations and end users do not have to spend significant time and resources updating them.
Cloud-based procurement and sourcing solutions are transforming the way that Chief Procurement Officers, their departments, and their staff save the enterprise money and perform their jobs. On-premises solutions are gradually being phased out in favor of hosted solutions that represent a lower total cost of ownership when hardware, storage, security, staff, and customization / configuration are factored in. Chief Procurement Officers do not have to sacrifice capability for scalability and cost effectiveness; they can have both in hosted, cloud-based solutions.