I very much enjoyed listening to Tim Minahan's presentation at Procuri's Supply Management 2.0 Forum when it stopped in Chicago earlier in the week. I love the fact that Tim's discussion did not come off as an advertisement for his new employer, but I do need to razz him a bit about the style in which he gave it. While delivering it, Tim sounded more like an industry analyst than a sector evangelizer. Tim will need to decide in the coming months which persona he plans to present externally in his role at Procuri. The roles are different, and perhaps Tim will design a new type of approach in between the two. But Procuri -- and the whole Spend Management market -- still needs an On-Demand evangelist, which is different from the marketing executive / industry analyst hybrid approach that Tim played earlier in the week. And Tim could easily fill this new role – if he wants. But it will require him to deliver presentations in less of an academic way. As one of my colleagues who was at the event put it: "you need to win the hearts -- not just the minds -- of the audience."
Enough of the preaching -- here are some of the highlights from Tim's talk (I will focus on the advantage of On-Demand deployments that Tim discussed). During his discussion, Tim defined On-Demand as "the delivery of software applications, content, and services as flexible web-based services that augment internal infrastructures to accelerate and sustain business value and performance." Most important, Tim discussed the economic advantages that On-Demand deployments provide. Year 1 TCO for On-Demand solutions is roughly 5X-10X less than installed software. The implementation cycle for On-Demand is usually days or weeks, not months (traditional installed sourcing and contract management applications can often take a year or more to fully roll-out). Implementation costs for On-Demand are roughly 10-25% of the subscription costs, while implementation costs for licensed applications are roughly an additional 1X-4X the cost of the license fee (and tack on another 18-25% for infrastructure and hardware costs).
One Global 200 procurement executive that Tim cited in his presentation claimed that "The costs for our installed applications are 3.5x higher than for OnDemand solutions. And we're getting broader adoption of OnDemand. What’s not to like?" Tim also discussed that one of the major advantages of On-Demand deployments are frequent upgrade cycles -- roughly 3-4 times per year, depending on the vendor. And unlike traditional installed software, these upgrades are free and painless as well.