Angela Wilson, Senior Solutions Architect at CSS, wrote an Oracle blog about three considerations for small-to-medium businesses (SMBs) to keep in mind when looking into Cloud procurement systems.
There are very different business requirements for how SMBs source goods and services. Using modern cloud procurement solutions is the best way today to meet these requirements.
The goals for SMBs are often:
- Providing a homogenous feel for all end users who manage procurement
- Focusing on supplier management
- Driving product quality while lowering costs
Procurement is now a strategic part of indirect and direct business operations, so high growth companies are looking to deploy modern, comprehensive systems sooner rather than later. The good news is that now all companies, no matter the size, can take full advantage of all the functionality of cloud procurement, but that often drives the need for seamless integration.
Considerations for SMBs and Cloud Procurement Systems
Based on her experience with real customers, Wilson said that you should always consider these three questions when deploying a cloud procurement solution that may need to be integrated with any type of legacy ERP system.
No. 1: Cloud Procurement Components
The first question SMBs should consider is, “Do I have the right cloud procurement components?”
It’s important to understand all of the procurement requirements critical to your organization and how procurement solutions can be integrated to support a company’s needs.
In many organizations, tracking supplier qualifications (such as supplier diversity) is critical, but it is too often done outside of the system. This makes it difficult to incorporate supplier qualifications into sourcing events and subsequent contract awards. Evaluating and pre-qualifying vendors to maintain compliance, avoid risk, or maintain a list of certified vendors is often a critical pre-requisite for full visibility into sourcing and being able to flag, track, and identify essential vendors. Another important capability is identifying high-risk vendors that should be excluded.
Also, ask if contract terms negotiation should be part of the sourcing cycle or pushed downstream to the contract execution stage. Many companies want to take on the laborious task of negotiating terms during sourcing to speed up the contract execution stage once an award is issued. Incorporating contract management capabilities lets companies build out legal terms and conditions, and include them in the sourcing event. Vendor collaboration then starts earlier in the procurement process.
No. 2: Integration Strategy
The second question to ask is “Do I have the right integration strategy?”
How and what you integrate often revolves around whether you are a direct or indirect purchasing organization, what the legacy ERP systems are, and, of course, the integration options. In a hybrid procurement model, payables are often processed in the legacy system, because this is where the financial system of record resides. Typical integration options include:
- Direct integration from sourcing to a legacy system to create an agreement or purchase order if using stand-alone sourcing.
- Creation of an agreement through an out-of-the-box integration from cloud sourcing to cloud procurement contracts. Then integrate the agreement from cloud procurement contracts to your legacy system.
- Creation of a purchase order through an out of the box integration from cloud sourcing to cloud purchasing. Then integrate the purchase order from cloud purchasing to your legacy system.
No. 3: Training Plan
The third and final question to consider is “Do I have a well-thought-out training plan that includes suppliers?”
In a hybrid cloud sourcing and procurement environment, depending on where invoices and payments are processed, you may have two systems that vendors interact with.
Whether your company uses a portal for negotiations and quote responses or the entire onboarding to invoice and payment submission, there will be a transition period for suppliers to get up to speed. It’s easy to underestimate the amount of assistance and training a supplier will need. However, ensure they have a great experience is a crucial part of a successful rollout. Absolutely incorporate them into your training plan.
Similarly, your end-users will now be working with a hybrid solution including cloud and legacy applications. End-user understanding of the business flow of data in a hybrid sourcing and procurement solution will be more effective when departments collaborate to ensure business flows do not break down.
When implementing a hybrid procurement solution always complete these three steps. When you can provide detailed answers to these three questions, you will certainly experience successful user adoption, a successful project, and the ROI you were expecting.
To learn more about cloud procurement systems, check out the additional resources attached below.
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