Procurement Bill of Rights – Freedom of Application Choice in a SaaS-Centric World

Get the available applications you want in the manner that you want them.

It’s obvious that Software-as-a-Service (SaaS) is here to stay as the preferred vehicle for cost-effectively and rapidly delivering applications over the web in the “cloud.” But, the SaaS model also brings its own set of issues, and we wrote about some of the rights that buyers should expect and advocate for in terms of cloud applications and also cloud procurement applications that are part of large provider offerings (e.g., part of B2B commerce networks). See the links at the end of this post for the previous installments in this series.

Additionally though, many buyers have some unique requirements that pose some challenges to the traditional cloud-based model:

  1. They have on-premise applications (e.g., custom systems) that are difficult to bring into the cloud, especially since the integration tools may also be locally hosted.
  2. Industry regulations or specialized security requirements may require that the applications be local, or that the data is persisted in a local data store (or that the servers be located in a home country to help protect IP sovereignty).
  3. Buyers may not want to upgrade monthly or quarterly when SaaS point releases get pushed out en masse (due to integration testing, changes in desktop procedures, etc.).
  4. Many organizations like to capitalize this spend rather than expense it (although on-premise software too only has so much that can be capitalized).
  5. Many on-premise applications have the ability to be customized and personalized through data dictionaries, screen tailoring (to only display needed fields), and other means.

 

Providers, for their part though, have their own set of challenges as they not only transition commercially to a subscription model and seek new revenue streams (which may threaten certain rights such as data ownership where the provider might seek to “jointly” own the data in order to monetize it as a market intelligence service offering), but also have to re-tool their foundational technology stacks and use them to build their new service offerings and/or try to integrate their various acquired assets together. Those assets include both the applications and the dizzying new set of infrastructure components that enable capabilities for mobile, social, content, analytics, etc.

For the big two ERP providers, this would include:

  • Oracle Cloud ERP (previously Oracle Fusion) for SaaS and Oracle Cloud Platform for PaaS
  • Ariba for SaaS (we’ll leave SAP Business ByDesign out of this since it’s basically a “dead product walking”) and SAP HANA Cloud Platform

Now, these SaaS products don’t really use the PaaS platforms from the same firms (although Oracle is obviously much further along since Ariba was acquired and has its own technology stack), but we’ll dive into this “eat your own dog food” issue in future research.

So, let’s get back to the Bill of Rights and discuss the issue of choice in application deployment using these two providers as examples (since they are the largest players). Basically, practitioner firms should be able to choose the technical deployment methods and financing methods that they’d like to use for the applications that best fit their needs. This generally means two things:

  • If a procurement organization likes the SaaS product, it should be able to get at least some “private/hybrid cloud” support for data security, data privacy, data on-premise storage, “mass personalization,” upgrade on-demand, etc.   Hopefully, the providers’ cloud platform will help to provide this (a mixed bag at Oracle and nonexistent at SAP). But for now, Oracle Cloud is too new, and Ariba has made the transition to cloud and is not going back.
  • Conversely, if a buyer likes the functionality of an on-premise application, even if it is an enterprise-class “one-to-many” application (or suite), it should still be able to get it offered in the cloud natively or through a partner. For Oracle, its Advanced Procurement product (part of E-Business Suite) is the flagship product and Oracle is smart to continue making it the alpha dog in the pack while it quietly (albeit slowly – but not as slowly as its supply chain product) brings functionality over to Oracle Cloud Procurement. But, if the buyer wants to get EBS in the cloud, Oracle can turn to a partner like Enrich for a pure cloud or even hybrid cloud deployment.  For SAP, in contrast, it’s very messy.

Stay tuned for the second part of this article.

Voices (2)

  1. Pierre Mitchell:

    Hi Ronald, thanks for commenting. This is MUCH more than wrapping a nice cloud-based catalog or basic marketplace like yours to the backoffice system (but I should have added your firm to the list of Vinimaya, SimplifyingIT/Hubwoo, BuyerQuest, et al – so sorry for that). I won’t re-state all the points why. Jason/Peter like your stuff on the spend analyses you can do (like we’ve written about), so I look forward to speaking with you sometime down the road. I also applaud your desire to ‘platformize’ your solution. Stay tuned for our coming coverage on this. Cheers.

  2. Ronald Duncan:

    We (cloudbuy) already provide cloud based procurement for both Oracle and SAP and are a genuine cloud platform where customers can develop their own apps on our platform.

    The on premise integration issues were solved a long time ago for those that want hybrid clouds and a proven way to link in legacy on premise apps to the cloud.

    Best regards
    @ronaldduncan
    Cloudbuy.com

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