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January 17, 2017

Procurement Technology Word Math

Procurement Technology Word Math

In my previous post, I defined seven of the most common procurement technology terms: cloud, platform, digital, solution, point solution, suite, and legacy system/solution/suite. They are commonly misused or misinterpreted, a fact that (while completely understandable) makes it difficult to have clear conversations about the differences and benefits of available procurement technology.

Part of why this confusion persists is because these terms are often not used in isolation, but combined. And if you have trouble agreeing on a consistent definition of one word , try using two or more of them together in a phrase.

In an effort to clear things up, let’s do some “word math” with the terms defined in the first post.

cloud + solution = Centrally managed SaaS solution that allows users to access and apply its functionality without separate concerns (and costs) associated with infrastructure, maintenance, and upgrades. When the solutions are modular, there is almost no reimplementation needed to add new solutions after the initial deployment; whereas cobbled-together solution suites can be costly to integrate, difficult to work with, and potentially problematic.

cloud + platform = A technology core that houses a company’s master data and workflows, and connects one or more solutions through shared hardware and centrally managed software in the cloud.

solution + platform = One or more pieces of technology that share the same master data, workflows, and user interface.

digital + solution = Technology that meets a specific business need by directly creating and containing information rather than simply serving as a repository.

That may be how each of those phrases are defined, but what does it all MEAN? If we bring together the above ideas and the previous definitions, we can describe the technology advantages available to procurement organizations today.

Cloud-based platforms (let’s assume that there are one or more solutions being used in conjunction with the platform) are accessible from anywhere at any time on a range of devices. Using a platform based in the cloud provides levels of scalability, security, mobile access, and business continuity that would either be difficult to provide or too expensive for one company to afford on its own. Implementation and integration with backend systems — ERP, financial, etc. — can be relatively simple, too.

This is the real beauty of the cloud: While any IT department might try their best to provide good security and uptime, it is unlikely that they will be able to meet or exceed the quality and performance provided by Amazon, Microsoft, or Google — the major cloud-hosting companies.

In addition, there is no need to worry about fluctuations in usage levels or transaction processing. Cloud hosting is designed to provide flexibility on demand – and when it is done right, users should be completely unaware that they have exceeded average usage levels.

Even the notion of “usage” comes with additional benefits today. Historically, the solutions procurement used were variants of the repository model. While eSourcing, contract management, and supplier information or relationship management solutions contained different information, they were not consistently built with the ability to fully interconnect and access that information. With digitization, more data is contained directly in the solution itself as opposed to attached files. This direct contact makes it easier and more efficient to move and share unified, consistent information between solutions and users – or better yet, to maintain it centrally as part of the platform’s master database.

There are also unique benefits associated with procurement’s platform/solution model that accommodate growth and facilitate the achievement of medium- and long-term objectives. It is easy to outline short-term goals and realize them with available technology. Procurement, however, has often struggled to discern and articulate longer-term objectives. The more flexibility technology can provide the better it can ensure that today’s solution will not create a roadblock to the goals of tomorrow, unknown though they may be.

Being able to meet future objectives is not just about integrating the latest technology. It also requires that the entire cohesive solution continues to move forward and no component becomes an impediment to the rest. In the previous glossary post, one of the terms defined was “legacy system”. The most commonly bemoaned example of a legacy system is ERP systems. Their sheer size and reach may enable complex processes, data, and transactions, but they’re so immovable that many companies would rather continue to suffer than face the pain and disruption associated with supplanting them.

If procurement’s technology, whether we are referring to a solution, suite, or platform, is to escape the fate of becoming a modern ERP equivalent, we must be prepared to make constant incremental changes that can be rolled out with minimal impact to the business. This is perhaps the most overlooked benefit (and requirement) associated with procurement technology.

Cloud + platform + solution suite = an agile, evolving, accommodating asset that empowers everyone inside and outside of the organization who uses it.

In our next and last post in the series, Procurement Process Shape Shifting, we explore the inaccuracy of the standard procurement process linear diagram, and look to replace it with a more continuous, flowing hub-and-spoke model.

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