The Determine


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March 1, 2016

Explaining Cloud Computing for Procurement in 2016

In a recent Determine webinar I had the chance to talk about procurement trends and the cloud with Mihir Nanavati, SVP of Product at Tradeshift, and Julien Nadaud, Determine’s Chief Product Officer. Considering the two areas, which are changing rapidly and having an enormous impact on each other, it was enlightening to hear what these two experts had to say.

Top of the mind, especially for procurement, is to understand the factors around the growth in cloud computing. We discussed topics ranging from the benefits of shifting to cloud from on-premise, technology investment, compliance, data and – number one on the cloud hit parade in any research – security.

Given the benefits of reduced capex and maintenance, improved flexibility and increased reliability, many procurement organizations have fully embraced the use of cloud applications. (As Mihir pointed out, it’s interesting to note that the cloud made our webinar possible.) It’s almost impossible to delineate at this point where the cloud starts and on-premise leaves off – so many services are hybridized. That is to say, most if not all of us are already in the cloud; if you’re using your smartphone, a tablet or web browser, you’re using the cloud through Apple’s iCloud, streaming video, posting to Facebook, etc.

What we’re seeing today is that the cloud has completely revolutionized technology as we know it. If you need proof of cloud’s preeminence, consider this:

According to Gartner, more than 90% of 2015’s deals were for cloud-delivered solutions and suites, the preferred delivery mode because of superior upgradability, better access to innovation and easier support for supplier self-service.*

The cloud isn’t just transforming existing companies, it’s spawning new ones. Entire industries, in fact. Some of the largest public companies traded in stock markets today owe their growth or their very existence to the cloud: Apple, with a $532 billion valuation, Google at $533B, Microsoft at about $400B, Facebook at $296B, Amazon at $236B and IBM at $117B. Or consider a company like Salesforce that came from the cloud and has completely revolutionized the way we look at software today. Even Amazon, whose Amazon Web Services** (their cloud infrastructure service) is worth more than all of its e-commerce business.

As for hard benefits, the webinar panel cited data storage, low IT maintenance cost, lower infrastructure investment, disaster assistance and the whole notion of lower cost of ownership. For procurement organizations and professionals, and providers like us, cloud technologies have provided a blueprint that we’re using to develop platforms with almost unlimited scalability and complete reliability.

Conditioned by the Internet, we expect access to information anytime, anywhere with any device. That and the rise of mobile have forced companies (or convinced them) to adopt a cloud-first strategy. For procurement customers, the cloud translates into greatly enhanced productivity—the whole idea of always being up and always being on.

Okay, now let’s talk about the gorilla in the room: unauthorized access, data breaches, hackers. Not surprisingly, security tops the list of SaaS use in application markets.*** A Gartner statistic shows that companies allocate just 3.8 percent of cloud spending to security, compared to 11 percent from their total IT budgets. According to Rajiv Gupta, CEO of cloud security software provider Skyhigh Networks, “There’s a gap between where cloud security budgets currently are and where they should be based on overall security spending. In 2016 budgets for cloud security will outpace overall IT security spending as companies play catch-up.”

There are still companies that believe on-premise is more secure than the cloud, though the ranks are dwindling. Along with continual upgrades, better innovation and enhanced support, a new white paper from Amazon Web Services shows why cloud computing may actually offer superior security and risk management to existing on-premise environments. It makes sense – with so much business moving to the cloud, providers see it as being in their best interests to ensure 100% security.

It’s an interesting time to be in procurement, for sure. As the field continually moves the benchmarks in terms of business process and efficiency, speed, collaboration and more, the cloud will play a bigger role. Whether you use public, private or hybrid cloud services, there’s no doubt that it gives procurement the ability to capture much more data, better analyze and utilize it, and be more responsive and cost-effective.

* Be sure to check out the recorded on-demand webinar, and don’t hesitate to share this link with your colleagues.

*Gartner. “Modernizing Finance and Procurement Applications Primer for 2016.” 21 January 2016
**Full disclosure: the Determine platform utilizes Amazon Web Services.
***Gartner. “Market Trends: Future Look at SaaS in the Application Markets.” 25 November 2015