The As-a-Service ‘Economy’ and its Growing Role in Procurement

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Procurement can expect to see the rise of an as-a-service economy this year — it’s not just a “model” anymore, at least according to the recent HfS report: MRO As-a-Service, The Shift to the As-a-Service Economy Changes the Value Proposition of MRO BPO.

We recently wrote on this aaS acronym after talking to Accenture, who also told Spend Matters the agile, dynamic aaS model that features plug-and-play services could help procurement organizations operate smarter. Mike McDaniel, senior managing director of Accenture’s Procurement-as-a-Service offering, said the aaS model would become an increasingly important tool for procurement in 2016 and beyond.

It’s a similar message discussed in the new HfS paper, produced in partnership with SDI Inc.

“This transition to as-a-service means removing unnecessary complexity, poor processes and manual intervention to make way for a nimbler way of running a business,” the report said. “It is also about prioritizing where to focus investments to achieve maximum benefit and greater outcomes for business operations.”

The report does, however, focus on the aaS “economy,” not “model,” and specifically its role in maintenance, repair and operations (MRO) within procurement. HfS uses the term “economy” as it “emphasizes the breadth and staying power” of aaS, the report said. The aaS economy can deliver measurable results within MRO, such as labor productivity, machine uptime and production throughput, according to HfS. An ideal aaS platform collects all MRO data and presents it in an easily digestible way so procurement can use the information to improve processes.

“To be most effective, an as-a-service platform will collect all of the relevant data, link to all the available material catalogues, empower requests via mobile channels, support advanced inventory management, warranty tracking and enable connectivity with the organization's full range of other enterprise software,” the HfS report stated.

To make the switch to this more efficient aaS model or economy, companies will have to say goodbye to legacy technologies that may be less agile. This may be an issue for larger corporations specifically that have made major long-term investments in legacy systems. HfS research shows the majority of companies have not made the switch to aaS platforms. The majority (54%) of companies with more than $10 billion in revenue surveyed by HfS said they imagine their processes will be delivered aaS within 5 years. Twenty-seven percent said they would adopt aaS within two years and 15% said within 10 years. Just 2% said they already have adopted aaS processes, and another 2% of these companies said they never would make the move to aaS.

As Accenture argued, HfS is advising companies to adopt aaS platforms sooner rather than later, and take advantage of emerging technology and improve procurement processes.

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