New Research: Sourcing/Contract Management/Supplier Management in the Cloud — Beyond BI Benefits

We're excited to announce our latest Spend Matters Perspective: Sourcing, Contract Management, and Supplier Management Cloud -- Business Users Benefit From Savings Enablement (Dining with Procurement, Not with IT). Authored by Spend Matters' Thomas Kase, the paper takes a close look at functional and business integration of cloud solutions in the sourcing, contract management and supplier management areas. Specific SAP business integration use and customer cases are included. Our findings suggest that cloud capabilities typically result in quick implementations with limited or no IT involvement and that the approach has empowered the procurement community in a range of ways, including ease-of-use and general front-line business user accessibility, permitting experienced sourcing experts plus more traditional "buyers" to walk up to a tool set and be productive with little or no training.

These new-found cloud capabilities have helped standardize and automate a range of sourcing, contracting and vendor management functions while simultaneously enabling new capabilities like project management, savings tracking and collaboration within procurement organizations as well as with suppliers. The cloud concept has allowed businesses to embed best practices from the industry far more quickly than possible with traditional enterprise software deployment cycles owing to the rapid development iterations by vendors. Additionally, executives have gained new visibility into overall function performance with the ability to drill into specific projects and categories. This allows them to gauge progress and areas requiring intervention or additional sourcing firepower.

One of our key findings in the paper is focused on technical and business integration of cloud solutions. In this area, a frequently cited corporate challenge around cloud toolsets versus installed software -- in procurement and in other areas -- is connecting internal systems and data to enable savings generation. While some may posit that integration isn't important to areas like strategic sourcing, there are actually significant business benefits to linking systems together; several of which we outline in this paper. More important, it's now possible to separate the overall decision to leverage on-demand models and architectures from the integration question. New cloud-based architectures can drive a level of data, workflow and process integration that many initial Software-as-a-Service (SaaS) and on-demand skeptics didn't know would be possible.

The advantages of linking processes can be significant. Even what we might describe as basic integration capabilities within an area like e-sourcing can drive quantifiable benefits and savings. From the ability to bridge the gap between identifying savings opportunities in spend analysis tools to driving actual sourcing events on the front end of the strategic sourcing process to coupling sourcing outcomes with contract creation on the back end -- foundational integration is what some describe as the "upstream" procurement process (i.e., source-to-contract) and can significantly accelerate the time to implement savings programs.

As one example in the sourcing areas, these include the need for integration within the context of an RFX, inclusive of direct and indirect materials integration between back-end ERP/ECC systems plus eProcurement systems such as SAP SRM. Early adopter organizations already allow users to "punch out" of direct and indirect buying processes to embark on strategic sourcing events in cases where a more robust and/or competitive bidding process can yield better results than the proverbial three-bids-in-a-box. Some organizations are also starting to aggressively close the PO loop, linking sourcing and contracting into backend systems for transactional buying through the integration of outline agreements.

If you're curious to learn the latest about the benefits of cloud-based solutions in the sourcing, contract management and supplier management areas as well as the business benefits of tighter SAP integration in best-practice cases, we would encourage you to download our latest Perspectives research brief today: Sourcing, Contract Management, and Supplier Management Cloud – Business Users Benefit From Savings Enablement (Dining with Procurement, Not with IT).

Jason Busch

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