The Cloud and the IT revolution – good news for procurement. Or is it? (Part 2)

Last week we explained how the “cloud revolution” in computing was freeing users to make their own decisions, which was reducing the power base of the IT function. the simplicity of buying, installing and implementing cloud based products was allowing budget holders to do their own thing without reference to the previously mighty IT function.

Nice Clouds - not actually anything to do with IT

Now, while this might appear good news to procurement people, given our often difficult relationship with the CIO and his / her team, we suggested it might not be quite such a positive development as it at first sight appears.

Here’s why.

Firstly, by decentralizing the spend, it will be more challenging for procurement to keep a grip on what is being spent, with which suppliers, under what commercial terms. Just getting that sort of information may be difficult, and even if we can do that, then it may be too late to influence the spend. Multiple budget holders, all engaging with perhaps a range of cloud based software providers-  just keeping tabs on this will prove a challenge, let alone demonstrating that procurement can add value across these multiple transactions and relationships.

Secondly, while we might like the freedom to choose and run our own procurement and supply chain software outside of IT’s control, we might find that not everyone shares our view or our strategy. So for instance, we might choose a sourcing software suite (Emptoris, Iasta, BravoSoltuion, Zycus etc…), looking for the consistency of approach it gives us across the board.

But we may then find that Human Resources have gone off and invested in their own Vendor Management System for temporary / contingent labour perhaps. Or another division or directorate has decided to run their own cloud-based Supplier Information Management (SIM) system. Now that might be fine, but what if it doesn’t integrate easily with what we perceive as the wider procurement technology strategy? What if we end up with 15 SIM systems across the company, defeating the whole purpose from a procurement point of view?

Now I don’t have all the answers to this at the moment. But one thing you can do is articulate your procurement technology strategy as clearly and widely as possible and get as much buy-in to it as you can. But be aware of this double edged sword of cloud computing – more freedom for procurement, yes, but also more freedom for other parts of the organization to ignore procurement, or take action that doesn’t exactly help our cause!

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