The role of procurement has changed drastically in the last decade, mostly due to the introduction of SaaS and other cloud-based delivery models that have completely changed the way organizations select and deploy technology. In the past, procurement teams sent out lengthy RFPs and reviewed all of the responses, often requiring weeks or months of evaluation before they presented their findings and recommendations to the executive team or other internal stakeholders.
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As the SaaS delivery model for software was introduced almost two decades ago, the procurement team has shifted its focus and priorities. It’s had no choice but to adopt the SaaS way of doing things, which also means adopting a more expedient process for internal evaluation of new technologies.
A recent article in publication, Spend Matters, explained, “If you do work in Procurement, chances are that you care less about server virtualisation and multi-tenant architecture, and more about delivering business benefits to your organisation i.e. you’re after business outcomes and hitting your targets, not making sure you can get a system live quickly and effectively.”
The article goes on to say, “Until a few years ago, business technology seemed to lag behind the consumer experience – the elusive ‘Amazon’ experience. One of the main reasons was software vendors’ long development cycles, followed by long testing and then long upgrade. This all equals an online business experience that is several years behind the consumer one.”
Now, procurement teams are changing their focus to the benefits of SaaS and other cloud-based applications. With SaaS, procurement teams and IT teams together can accomplish a fast and seamless integration, and no long-term commitment if the software isn’t adopted. These reasons are among countless others that organizations are transitioning from traditional on-premise software to cloud-based solutions. Let’s take a closer look at some of the biggest benefits that a SaaS model delivers inherently.
Lower Per Solution Cost
One reason procurement teams and IT leaders are selecting SaaS procurement solutions is for the model’s relative low cost, especially in comparison with on-premise counterparts. While organizations are spending more than ever on cloud-based applications, these costs are spread among many different solutions across departments – sometimes hundreds for enterprise companies.
The SaaS model is typically based on a user or usage model, where the company pays per expected user or for the amount of technology consumed. And if the organization uses a cloud cost management solution to track utilization of licenses and they discover that the product isn’t being utilized as intended, they can easily remove or reprovision licenses to reduce costs.
A recent article by Hillary Ohlmann explains the low cost of SaaS like this: “With SaaS solutions, there are no pricey hardware purchases nor are there expensive local installations. Lower upfront costs mean a quicker ROI. Costs savings don’t end after implementation, either. You won’t have to pay for additional upgrades or maintenance since all of that is taken care of once on the vendor’s end.”
For procurement teams, the cost benefits of SaaS and cloud-based solutions are crucial to consider as they are weighing the pros and cons of each new software purchase.