Procurement is on a trajectory to being run as a service, according to the Capgemini CPO. Emmanuel Erba told delegates at the Ivalua Now: The Art of Procurement event that technological advances and market forces were making it almost inevitable that the procurement function would become pay-as-you-go, in part at least.
According to Erba, the evolution of procurement is aligned with the evolution of the cloud, with many of procurement’s capabilities likely to mirror those of cloud-based services. In essence Procurement as a Service (PaaS) will shift indirect procurement to a third party, freeing up time for procurement teams to get to the core of the business and become an integral part of the value chain. Is that just wishful thinking? Apparently not.
According to Thomas Evans, who runs Pro Outsourcing, a Procurement services organisation, the market is shifting as attitudes towards procurement change. “The move to a PaaS style-model is going to happen and it is happening quickly,” he says. “The ability to turn resource on and off in this way is really easy.
“Ultimately it’s a far more efficient approach. With tech being such a huge enabler of efficiency, it makes sense for procurement departments to reduce overheads and use resource to create value.”
Evans’ assertion adds further weight to Emmanuel Erba’s belief that market forces are pushing business functions to ‘everything-as-a-service.’ Erba believes that because Apple, Amazon, Microsoft and Facebook can launch services almost at will, the market is having to react. Evans says that this is partly because procurement is at risk, but also because it has to evolve into more than a transactional function.
To that end, PaaS is a no-brainer for most organisations. Those that Evans works with are seeing huge tangible benefits, with one organisation freeing up 10 execs to work on value creation and another saving in excess of 400 man hours a month. The use of SaaS and automation are pivotal because they take care of basic functions and reduce costs almost overnight.
Yet, despite the obvious tangible benefits, Evans says that PaaS remains a relatively underused tool for procurement departments for now, though he expects that to change.
“Change is seen as a threat to existing teams and their structures, which in most cases isn’t accurate,” Evans says. “Traditionally, procurement has been admin heavy, so the sooner you can get in and start improving efficiency and strategically looking ahead the better.
“I see considerable adoption of PaaS over the next five years. As a department, procurement’s job is to look for savings and efficiencies. If you’re clever, you’ll look at it in this way and make it much more effective.
“Strategically, it makes sense – and for those companies that believe in the power of procurement, this is an opportunity to deliver lasting and sustainable value.”
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