There are very different business requirements for how small-to-medium businesses (SMBs) source goods and services. Using modern cloud procurement solutions is the best way today to meet these requirements.
The goals: provide a homogenous feel for all end users who manage procurement, focus on supplier management, and drive 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 vs. 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 (more on that later).
Based on my experience with real customers, 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:
Understand all 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: identify 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.
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 financials system of record resides. Typical integration options include:
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.