The idea of procurement focusing on driving value for an organization, rather than solely pushing for cost savings, is an important topic amongst progressive procurement teams. As a procurement veteran myself, I can’t think of a single conference that I’ve attended or a user group that I was a part of that didn’t talk about the idea of moving “beyond savings” and “getting to value.
This concept isn’t new at all, but it represents a larger procurement shift in that it appears that cost savings have become table stakes. Bringing down dollar spend is almost viewed as the tactical component of procurement. Meanwhile, defining and driving value of company investments has become the new strategic focus.
Collaboration & Value: More Important than Cost Savings
The interesting correlation, as I talk to our customers every day, is that they are solely focused on value as well, and less focused on cost savings. They are managing large SaaS deployments of company-wide “backbone” solutions (think Salesforce, Workday, GSuite, etc.). Their goal is to get as much value out of these solutions as possible, not drive savings and reduce licenses. Procurement is now being challenged to think like the functions they support, rather than thinking like a savings-hungry procurement and finance team. Collaboration is now more important than governance.
SaaS Measurement & Optimization Drive Application Value
I think about this trend every day, especially around measuring and reporting back on SaaS application value. By providing quick visibility into SaaS software utilization across a wide swath of your apps, and visibility into deep utilization across the most important and strategic apps, procurement teams can proactively drive application value within a company. Further, they can start thinking and acting like information technology (IT) pros.
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Here are three ways procurement can use the cloud shift to drive new value in the enterprise, and see results quickly:
- Stratify your user base by user type: How many times have you negotiated an “all-in” deal for a set number of licenses, where all of the licenses are the same cost, no matter if the users are active or not? With active user detail included in a cloud intelligence system of record, you can understand who your power users truly are, who is only accessing the application seasonally, how many licenses have yet to be deployed, and who has infrequently or never used their application license. With that intelligence, you are armed to negotiate a new strategic deal, which aligns license types to the users in your organization, and you now understand your user base more than ever before.
- Provide proactive training & enablement: You made the decision as a company to invest in software that would have return on investment (ROI) far larger than your what you put in, right? Now that you’ve stratified your user base, you can target your power users and elevate their visibility in your organization, nurture your seasonal users, and provide training and enablement to your infrequent users. These approaches let you get strategic and maximize ROI.
- Understand how ingrained an application is in your company: With real-time views into active user counts by license type and department, you now have a pulse on how ingrained your most strategic deployments are in your company. You can see which user types are driving value, and report back on how these applications are driving critical business processes.
The shift to the cloud has created a massive shift in how companies buy and manage their software deployments. Now more than ever before, due to cross-functional alignment goals, procurement is the single best-positioned function within a company to capitalize on this shift and drive net-new value.