Overcoming Resistance to Software-as-a-Service
In our last blog we discussed briefly the reasons that organizations resist moving to e-procurement systems despite the well-documented benefits they could expect from such a move. In today’s blog, let’s look at ways to mitigate the resistance to this beneficial change through Software-as-a-Service (SaaS).
We’ll begin by reviewing the benefits of e-procurement. Studies by groups such as Gartner Inc., Accenture, UPS, and others consistently show that post implementation cost benefits of e-procurement include:
– Up to a ten percent reduction in indirect spend.
– Reduction in maverick spending
– Overall cost savings of up to fifteen percent in the first 12 months.
Other benefits include:
– Greater internal procedural compliance
– Reduction in errors and duplication
– Cleaner, more effective lines of authorization
– Decreased cycle time
– Increased productivity
– Improved security of data and documentation.
– Greater compliance and transparency with regulations
– Improved vendor relationships.
Remind me why organizations resist what looks like a great idea?
The four reasons for resistance that rise to the top of any discussion about moving to e-procurement are:
– Cost of switching
– Reliable availability and security of the system
– Loss of long-standing partnerships with suppliers
– Change management
Let’s start with cost.
e-Procurement systems can vary widely in cost depending on which system an organization chooses. There are two basic systems available. There are software systems that organizations can purchase outright and set up themselves. The other choice is called cloud procurement or Software-as-a-Service (SAAS) which works somewhat like a subscription service.
The choice of purchasing the software need to be estimated at cost of the program, future upgrades, IT support, hardware and software support, personnel training, ongoing security, and redundancy of the data.
As the program is installed and brought in service, lines of authorization, data analyses, reports, and forms must be developed and maintained. Organizations also need to consider how the program will interface with their suppliers’ programs and whether the program will support the established relationships with suppliers and vendors.
Over time, the software must be up-dated and the equipment upgraded to maintain the overall system. IT personnel and time must be dedicated to the system costing valuable resources that could be allocated to strategic goals and implementation of tactical objectives.
Software programs with all the costs they entail can cost upwards of $400,000 or more depending on the size of the organization.
The other choice, an SAAS like International e-Procurement (IEP) allows an organization to join forces with an experienced and established e-procurement provider. There is no program to buy, license, or upgrade. No additional equipment needs to be purchased or set up. The SAAS provider handles upgrades and maintenance for the program seamlessly so that all users are upgraded simultaneously.
Training is provided by the SAAS vendor to both the organization and to the necessary suppliers. The organization does not have to allocate IT personnel and costs to that task. And training is simple; anyone who has checked their email or on-line banking will adapt to this process easily and quickly.
By providing support and access to suppliers, an SAAS vendor allows organizations to retain previously established supplier relationships as well as expand to new relationships as needed. Organizations can also assign ratings or classify suppliers if necessary.
A strong Software-as-a-Service provider like IEP will have demonstrable security in place to protect your organization, your data, and to maintain your records through redundant systems.
SAAS or cloud procurement systems work like annual subscriptions. The average cost of IEP is around $1,000/year.
Wow, that’s a big difference. And I can see that when talking about cost we also talked about supplier relationships and a little bit about security. It all comes together, doesn’t it?
Are Software-as-a Service systems a one-size-fits all then?
Not at all. SAAS is more of a one-stop-shop when it comes to set up, training, security, and on boarding your suppliers but each customer has different needs. The right SAAS provider will ensure that an organization has all the support, branding, and customization they need.
But what about availability of the system?
What if I wanted to check an order but I’m not at my office?
There’s a big difference there, as well. SAAS services are set up to work from the cloud with cross platform availability. They allow access on your android phone or tablet as well as in your office.
A software program must be enabled across multiple platforms and must also ensure security across multiple platforms. Creating more costs in time and IT involvement.
We’re running out of time so let’s recap where we are right now.
Today we discussed ways to overcome three reasons to resist moving to e-procurement.
We discovered that if we compare costs of time, personnel, and money there is a clear difference between the two systems of e-procurement.
One system, stand-alone software, requires a large investment of time and money as well as a tremendous commitment of personnel to set-up, install, and maintain.
The other system, Software-as-a-Service, frees up an organization’s resources to focus on strategic objectives, branding, and market tactics.
Other reasons for resistance that we discussed were security, availability, and supplier relationships. To sum it all up so far:
In our next blog we’ll discuss how to make change management work for your organization as you look at making the move to e-procurement with an experienced SAAS provider like IeP.
If you’d like more information about what International eProcurement can do for your organization, contact us at 1-866-526-9266 or through our website at https://www.internationaleprocurement.com.