Executive Briefings

The On-Demand World: Bringing Supply Management Into the Future

Analysts' Insights: As companies plan and strategize for long-term effectiveness in supply management, they must focus on one aspect to truly derive value out of their procurement and sourcing efforts: evolution. Organizations globally must look to the future and adapt their reliance on technology as solutions evolve for the better. Christopher J. Dwyer, senior research analyst, Aberdeen   As organizations continue to adjust their technology footprint into the next decade, the question around SaaS is not if but how SaaS will be leveraged within the procurement enterprise. Constantine G. Limberakis, senior research analyst, Aberdeen

Part I: Looking for ROI in Spend Management Solutions

Over the past decade, there has been a shift for procurement and supply chain professionals to balance their efforts on managing spend as a means to improve bottom-line growth and ensure that corporate expenditures don't erode financial value. Much of this concern revolves around the investment being made in technology. Aberdeen research demonstrates that the top barrier preventing an organization from investing more in spend management solutions is difficulty in measuring ROI, according to 44 percent of respondents in the Dynamic Procurement: CPO as Collaborator, Innovator and Strategist report.

Moreover, the importance of having an integrated and harmonized approach to IT for procurement is critical to decreasing costs while optimizing purchasing decisions for the entire organization. Given the increased use of Software-as-a-Service or cloud-based solutions, CPOs and their departments today are finding less costly options that require long-term investment in software and services. In fact, Aberdeen's research also found that 26 percent of enterprises are using SaaS for spend management solely based on the flexibility of the licensing model and no need for upfront equipment or development of resources.

Part II: Expanding the Notion of SaaS

As a result of the perceived inability for SaaS solutions to accommodate highly custom requirements or due to a lack of desire to invest in multiple solution platforms, SaaS today has not outright replaced older deployment models such as behind-the-firewall/ licensed models or hosted models. For instance, Aberdeen research found that nearly a third of respondents to the CPO survey were using SaaS for either upstream processes (analysis, sourcing, contract management) or downstream (procurement and invoicing).  Yet organizations that have already adopted SaaS in one area are more likely to implement it for other areas in spend management. Organizations using e-procurement for SaaS are three times more likely to also be using it for upstream processes.

Areas that focus on complex spend and expense management are seeing an increase in, and benefits from, the use of SaaS. For example, in the Expense Management for a New Decade research study, which gauged the performance, pressures, challenges and strategies of nearly 200 companies globally, there was a strong correlation between best-in-class organizations and reliance on SaaS. In fact, companies currently utilizing cloud-based solutions for managing corporate travel-related expenditures reported a 41-percent higher frequency of holding real-time visibility into corporate spending than non-cloud users, as well as being nearly 45 percent more likely to have the capabilities in place to accurately analyze spend data to uncover savings opportunities.

                                The Outlook

Overall the expectation is that SaaS-based technology in spend management will continue to provide technology flexibility to procurement, sourcing, financial and supply chain executives. SaaS is already playing a key role for gathering and utilizing intelligence gleaned from corporate spend data to formulate a companywide strategy and for managing costs and other key aspects (such as compliance and quality / effectiveness).  And in the future, despite being in its infancy, look for SaaS to impact social media in the cloud by redefining how to gather data for market strategy and the means for communicating to internal stakeholders, colleagues and suppliers.


Keywords: Cloud, SaaS & On-Demand Systems, Sourcing & Procurement Solutions, Supplier Relationship Management, SC Finance & Revenue Mgmt., Technology, Aberdeen Group, Dynamic Procurement: CPO as Collaborator, Innovator and Strategist, spend management, chief procurement officer, Expense Management for a New Decade

Part I: Looking for ROI in Spend Management Solutions

Over the past decade, there has been a shift for procurement and supply chain professionals to balance their efforts on managing spend as a means to improve bottom-line growth and ensure that corporate expenditures don't erode financial value. Much of this concern revolves around the investment being made in technology. Aberdeen research demonstrates that the top barrier preventing an organization from investing more in spend management solutions is difficulty in measuring ROI, according to 44 percent of respondents in the Dynamic Procurement: CPO as Collaborator, Innovator and Strategist report.

Moreover, the importance of having an integrated and harmonized approach to IT for procurement is critical to decreasing costs while optimizing purchasing decisions for the entire organization. Given the increased use of Software-as-a-Service or cloud-based solutions, CPOs and their departments today are finding less costly options that require long-term investment in software and services. In fact, Aberdeen's research also found that 26 percent of enterprises are using SaaS for spend management solely based on the flexibility of the licensing model and no need for upfront equipment or development of resources.

Part II: Expanding the Notion of SaaS

As a result of the perceived inability for SaaS solutions to accommodate highly custom requirements or due to a lack of desire to invest in multiple solution platforms, SaaS today has not outright replaced older deployment models such as behind-the-firewall/ licensed models or hosted models. For instance, Aberdeen research found that nearly a third of respondents to the CPO survey were using SaaS for either upstream processes (analysis, sourcing, contract management) or downstream (procurement and invoicing).  Yet organizations that have already adopted SaaS in one area are more likely to implement it for other areas in spend management. Organizations using e-procurement for SaaS are three times more likely to also be using it for upstream processes.

Areas that focus on complex spend and expense management are seeing an increase in, and benefits from, the use of SaaS. For example, in the Expense Management for a New Decade research study, which gauged the performance, pressures, challenges and strategies of nearly 200 companies globally, there was a strong correlation between best-in-class organizations and reliance on SaaS. In fact, companies currently utilizing cloud-based solutions for managing corporate travel-related expenditures reported a 41-percent higher frequency of holding real-time visibility into corporate spending than non-cloud users, as well as being nearly 45 percent more likely to have the capabilities in place to accurately analyze spend data to uncover savings opportunities.

                                The Outlook

Overall the expectation is that SaaS-based technology in spend management will continue to provide technology flexibility to procurement, sourcing, financial and supply chain executives. SaaS is already playing a key role for gathering and utilizing intelligence gleaned from corporate spend data to formulate a companywide strategy and for managing costs and other key aspects (such as compliance and quality / effectiveness).  And in the future, despite being in its infancy, look for SaaS to impact social media in the cloud by redefining how to gather data for market strategy and the means for communicating to internal stakeholders, colleagues and suppliers.


Keywords: Cloud, SaaS & On-Demand Systems, Sourcing & Procurement Solutions, Supplier Relationship Management, SC Finance & Revenue Mgmt., Technology, Aberdeen Group, Dynamic Procurement: CPO as Collaborator, Innovator and Strategist, spend management, chief procurement officer, Expense Management for a New Decade