What Is Shaping Procurement’s Technology Choices? (Part 1)

Jon Milton, Director at Comensura, says procurement professionals have never before been such masters of their own technology destiny …

Enterprise technology trends come in waves. To briefly summarise the latter half of the 20th century: we moved from an environment where businesses bought expensive IT hardware then paid developers to build their own software to run on it; to function-specific ‘packaged’ software applications; to the takeover of all-encompassing ERP software that ‘did everything’. But was this ‘game over’ for technology? Definitely not, in fact the 21st century saw even more change.

Those behemoth ERP systems came under pressure from the cloud, offering a wholly new way of buying IT. Initially cloud adoption was only for certain things, but now of course businesses have entire cloud ecosystems that allow them easily to mix and match the systems they use, interrogate big data and integrate everything they need so it can be accessed whenever, wherever and however the user wants. In essence, business IT has become like a sweet shop – we can pick and mix whatever tools and systems we want, without the worry that we will lose our data if we switch or will be hampered by a lack of integration.

But how does this apply to procurement? Essentially procurement’s own relationship with IT has followed a similar path. Once procurement was devoid of technology. Then there were the early packaged eProcurement and eSourcing systems, which were then to some degree usurped by the ERP players putting procurement modules into their large-scale platforms. The market has shaken out since then and we now see procurement tech taking many forms.

Cloud has become mainstream, procurement within ERP still exists, but the market is also full of best-of-breed software systems that deliver a range of capabilities – from eAuctions and eSourcing to Contract Management and Purchase-to-Pay, to spend analytics and supplier relationship management. Now more than ever, procurement has an array of technology and technology based services at its disposal to fit the specific needs of its organisation. It has the power to build its own technology ecosystem mapped to its specific objectives.

Looking ahead I think this will lead to three trends: value, not software, as a service, integration of the perfect mix of systems and systems built around the end user. These will further put procurement in the driving seat of its technology decisions.

  1. Value, not Software, as a Service

Procurement technology experts have predicted an end to Software-as-a-Service as we know it, where, from a procurement perspective, technology buying decisions will no longer be based on the features and benefits that a piece of software has, but on the value it delivers to the organisation. For example, rather than buying a procurement software tool on the basis that, once implemented, it will automate processes and ultimately save money, we will buy based on the promise of value  that can be delivered - whether this is risk reduction, cost savings or something else. For instance, in the future we’re more likely to buy based on the outcomes that we identify as right for our organisations, combining services and software from third parties to deliver these outcomes, rather than having to work around  what systems are available.

In our area of procuring and managing temporary staff from external suppliers for example, we have seen greater demand for technology to be part of the value we deliver to clients, in the form of accessing intelligence about the workforce, delivering compliance more easily or giving contractors the ability to manage their own timesheets. In the future procurement will rely more on specialist, technology-enabled third parties for an increasing number of specialist services, and embedded technologies will be part of this.

Trends 2 and 3 can be read in part 2.

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