If you were looking to procure, say, the services of an unscrupulous private detective to hack into the mobile phone messages of politicians, celebrities, grieving relatives of war dead, child crime victims and casualties of terrorist atrocities. it’s highly unlikely you would use a procurement system.
Phone hacking may well have taken place on an “industrial scale” at the News Of The World, but I doubt there was ever a formal request for quotation or request for tender issued for the work. But then, if the newspaper had had an automated procurement and purchasing system in place, the whole process of discovering just how many people had their phones hacked and who had authorised the work would be so much easier for everyone involved.
It may well be that the people in charge of News Of The World were deterred from implementing such a system because of the difficulties associated with procurement applications. On-premise systems can be difficult to implement, expensive to maintain and cumbersome to use, so it’s perfectly understandable if the bigwigs at the newspaper opted to persevere with the traditional paper-based approach that had served them so well for so many years.
But might they have changed their minds if they had heard about the benefits of adopting a cloud-based procurement system, or even a hybrid of on-premise and cloud?
Cynthia Zhang is marketing coordinator at Coupa Software, a specialist in providing cloud spend management applications. The company’s e-procurement product is a software as a service (SaaS) procure-to-pay application developed on Ruby on Rails and hosted on Amazon Web Services.
She believes the cloud can play a “huge part in transforming the entire procurement industry”, while arguing that it is relatively easy to adopt. “If you can do it on paper, if you can do it in your current on-premise procurement application, if you can do it with your own homegrown solution, you can do it in the cloud. If your procurement processes make business sense, adopting those same processes in the cloud (or in a hybrid environment) just comes down to change management.”
A cloud-based system can be implemented quickly across thousands of locations in a matter of months. The need for extensive training is minimised by “the consumer-friendly nature of cloud” which helps drive user adoption, “especially critical for procurement to get 100 percent of spend under management”.
Zhang provides supporting evidence from Rent-A-Center which adopted Coupa after two failed implementations of on-premise spend management products. It took only four months to implement Coupa cloud spend management at more than 3000 Rent-A-Center locations for over 18,000 users. Chief procurement officer Mike Wilding revealed it was anxious to put a training programme together to support the Coupa roll-out but got comments back saying “it’s so intuitive, your training is a waste of time”.
In many instances, cloud-based procurement systems are likely to be part of a hybrid approach, usually in conjunction with a company’s existing on-premise ERP and accounts payable products. Zhang describes this as extending the value of investments in ERP and other third party applications by taking advantage of the latest in procurement innovation to drive user adoption, improve spend visibility and increase spend control “while maintaining their current AP processes and ERP workflows”.
Simon Dadswell, director of marketing at PROACTIS, is keen to put the hype around cloud in perspective. “It’s less about the cloud than the delivery mechanism and how you enable the process. We try not to lead with it.” There are companies in the market “making a lot of noise” around cloud and they are capturing people’s interest, he says.
But while PROACTIS is excited about the opportunities offered by cloud computing, Dadswell also stresses that it is not a one-size-fits-all solution. Nevertheless, cloud is “at the heart” of the company’s strategy and is “here to stay” because it helps to drive process change, process enablement and return on investment.
A significant benefit from a cloud-based approach is the ability to improve supplier engagement and collaboration. PROACTIS quotes research which suggests supplier communication costs can be anywhere from 40-70 percent of the total cost of the procure to pay process. As many as 75 percent of all calls into accounts payable are to deal with supplier enquiries over invoice status.
Dadswell describes supplier integration and engagement as a “critical” area. He cites the work it has done on regional trading hubs, for example in areas such as Yorkshire. One involves 24 local authorities that can look at contracts, bring on suppliers and manage relationships using a cloud-based environment. The options for collaboration are stronger. For instance, if one authority has a strength in buying IT equipment, another could collaborate with it to get the benefit of that expertise.
Zhanfg also believes the cloud offers “a level of flexibility and collaboration unavailable with an on-premise solution”. Open supplier networks (as opposed to private networks that are only open to limited suppliers for a hefty fee) provide a platform for businesses and suppliers to increase efficiencies by allowing suppliers to keep customer catalogs up-to-date and confirm orders. Businesses can also flip puchase orders into invoices which allows them to quickly confirm receipt, provide direct supplier feedback and manage contracts.
Improving the collaboration and engagement of suppliers can give companies “better visibility” argues Dadswell. He suggests that for many organisations, “the first time finance hears about spend is when it hits accounts payable”.
Having better information and a finger on the pulse of procurement can help to address situations such as the customer that found its transaction cost for each invoice was £56 but 70% of invoices received were for less than that amount.
Zhang believes that cloud-based technology “will soon be everywhere in procurement”. She quotes Coupa CEO Rob Bernshteyn’s analogy to Wayne Gretsky’s talent as an ice hockey player because he could “see where the puck was going. If you’re implementing on-premise software in procurement, you’re going where the puck was”.
All well and good, but for those of us on this side of Atlantic without much knowledge or interest in ice hockey, a better example might be found much closer to home.
You can’t help but feel that if the News Of The World and, more importantly, its parent company News International had better visibility of suppliers to the title and who had procured their services, a number of senior executives would not have told a House of Commons committee in 2009 that hacking was restricted to a single reporter.
And possibly, if their systems provided better visibility of what those services were for, they might have ended the practice much sooner, the newspaper might still be in existence and Rupert Murdoch would be measuring up the curtains in the BSkyB boardroom.
