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Transferring Sourcing & Payment to the Cloud

If the future of supply chain lies in a globalized, networked world, then most likely, the future belongs to sourcing vendors.

The advent of the web has fundamentally transformed the supply chain like no other category of business. Sourcing vendors realized that the only way to tap into the sourcing and spending patterns that are evolving globally is to leverage cloud-based technology.

Through these investments, sourcing vendors have become more connected and increasingly mobile. Consequently, these organizations have closely integrated with partners in an effort to eliminate product mismatch, provide up-to-date availability information, and generally avoid other problems arising from the lack of a common data/platform.

Today, the cloud is further transforming the nature of sourcing itself. This online platform enables the adaption of new crowdsourcing strategies in which prospective suppliers (not only those providing goods but also those providing intellectual labor and professional services) compete in a global marketplace on a bid-by-bid basis.

Of course, this kind of online sourcing is in its early stages of development. Today, proponents are trying desperately to iron out all the delicacies of automated reputation rating and price setting mechanisms. As these teething issues are resolved, the automation of sourcing and spend management process will rise to a new level of innovation.

The potential benefit of the cloud moves beyond sourcing, though. In the payment world, checks continue to have a significant volume in the overall corporate payments in the US. These check-based payments present problems, not just for the buyers, but also for the sellers. For sellers, of course, check-based payments are time consuming and expensive. For sellers, the inability to track payments and know when payments will arrive is a trial. When payment arrives, reconciling payments against shipments can be confusing.

Today, the market is rife with potential cloud-based payment solutions. Ariba, Concur, Coupa, and Rearden Commerce all provide solutions to cater to the problems pertaining to sourcing and payments. Each solution provider specializes in specific areas like spend management, providing a platform for buyers and suppliers to interact and exchange information, as well as payments.

Even now, and certainly going forward, sourcing and payment vendors are likely to innovate. For example, at least one vendor offers an alternative payment service network. With this type of service, buyers make all payments through the network. The supplier is given a choice of opting in to the network to receive electronic payment or remaining with a check-based payments.

Given the breadth of options, many organizations are moving to leverage the cloud technology to their benefit. Some of these platforms already have more than a million registered suppliers and claim to have a transactional volume of about half a trillion US dollars.

Let us know where you are. Have you moved to the cloud? Or are you waiting for more information? Share in comments about how and when you made the move.

21 comments on “Transferring Sourcing & Payment to the Cloud

  1. SunitaT
    June 19, 2013

    Today, the market is rife with potential cloud-based payment solutions. Ariba, Concur, Coupa, and Rearden Commerce all provide solutions to cater to the problems pertaining to sourcing and payments.

    @Sohaib, thanks for the post. I didn't knew already so many companies are offering cloud-based payment solutions. I am curious to know how secure is it for the companies to adopt cloud-based payment solutions ?

  2. Tom Murphy
    June 19, 2013

    I'm really surprised to hear there are any networks with “more than 1 million” sources already registered.   Can you identify any of those for us, please?   That's an awfully large number…

  3. SP
    June 19, 2013

    Cloud is a boon for supply chain management. If privacy and security are held well then its a Win-win for everyone. Education industry is another key beneficiary of cloud.

  4. smasood
    June 20, 2013

    tirlapur, thanks for your comment. 

    Security of cloud based systems and payments is one topic that is being discussed everywhere. Vendors these days are trying their best to come up with secure products. So far most of them have succeeded in delivering secure payment platforms. As a result you would see many businesses getting onto these platforms. 

  5. smasood
    June 20, 2013

    Hi Tom! Thank you for your question. 

    Yes, the number is awfully large but there are companies that have gone there. One example, is of Ariba (an SAP company) which has more than 1 million connected companies in the Ariba Network. The huge business following can be attributed to the fact that the company was bought by SAP a few years ago and therefore banked on the existing SAP user-base to increase its customer base. 

  6. smasood
    June 20, 2013

    Hi SP! 

    Cloud based solutions offer a wide variety of incentives for the business community. Many industries can benefit from the move onto the cloud not just education and the electronic supply chain. 

  7. harryjamesbr
    June 20, 2013

    Cloud is a benefaction for accumulation alternation management. If aloofness and aegis are captivated able-bodied again its a Win-win for everyone. Education industry is addition key almsman of cloud.

  8. Houngbo_Hospice
    June 20, 2013

    Most supply chain leaders are not convinced that “convinced that the cloud could keep up with the process complexity and pace of change across supply chain partners, segments, and products.”

    Security concerns are another stumbling block, as supply chain operations include the exchange of sensitive product information across multiple partners, systems, and geographies.”

    Unless all these concerns are mitigated, the supply cahin will still be slower to jump on the cloud bandwagon.  (See http://insights.wired.com/profiles/blogs/supply-chain-the-last-bastion-of-cloud-computing#axzz2WnJMee00)

  9. Houngbo_Hospice
    June 20, 2013

    @harryjamesbr

    Cloud solution is win-win for everybody?

    I will say it depends on the industry and the kinds of transactions involved.

  10. smasood
    June 21, 2013

    Hi Hospice_Houngbo! 

    Yes, the number of supply chain leaders believing in the cloud based system is not that great as compared to the ones not using it. However, with newer products being introduced the confidence is gradually building up. Especially, with the endorsements of big companies like SAP. 

  11. ahdand
    June 21, 2013

    I think you can trust cloud right now. Payments done via online are always risky but many do it now. So why not try the Cloud for it. I think it will be much more effective   

  12. itguyphil
    June 21, 2013

    What's funny is that most credit card processors are based online now. So even when you're swiping at a terminal, the capture & authorization processes are done online anyway.

  13. smasood
    June 22, 2013

    nimantha.d, I am one of those who are willing to trust the cloud and move onto it. The problem is that the others out there are still skeptical about the move and are taking time to decide if they want to move onto the cloud or not. 

  14. t.alex
    June 24, 2013

    In fact moving to the cloud has certain level of security risk. But who will bother to hack or destroy your data if your company is still small. 

     

  15. smasood
    June 25, 2013

    It does pose a certain level of threat but it is not as easy as it seems. The cloud has become securer over the years and as more & more data goes into it the solution matures. Plus, it is very difficult to predict exactly which data sets will be in which memory spaces at a given point in time. 

  16. t.alex
    June 28, 2013

    sohaibmasood,

    Definitely it is improving over the years. To some extent it will attract more attacks by hackers as it gains more popularity over time. But definitely there is always proper backup and contingency plans  from cloud vendors. Migrating to cloud is the way to go. 

  17. ahdand
    June 29, 2013

    @pocharles: Indeed but you do not realize it since you are swiping it physically. SO people should not worry that much of online payment if they are been properly educated on the process.        

  18. itguyphil
    June 29, 2013

    But that's the thing. Consumers are not educated on the payment process nor do they want to be. They just want to be able to make a transaction without headaches.

  19. ahdand
    June 30, 2013

    @Pcharles: Yes they think it's a high risk that they have to take but they do not realize that while paying from the card you are actually giving your details to the network itself.       

  20. itguyphil
    June 30, 2013

    Well yes. Paying for everything with cash nowadays is unrealistic. It's a necesary evil.

  21. Anand
    August 2, 2013

    Cloud hosting is a highly dynamic and rapid evolving space. Enterprises should avoid getting into long-term, uncompromising contracts to benefit from declining rates. A detailed security evaluation and a deep dive in the performance and availability SLAs before you sign on the dotted line will aid prevent some sleepless nights for the commercial stakeholders and IT leadership.

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