PROCUREMENT OPTIMIZATION BLOG

From our perspective at Shelby, it seems that our industry has finally gained traction with “moving to the Procurement Cloud.”

We define “moving to the Procurement Cloud” as the implementation of some or all of the core functions of Procurement [1] from legacy systems (including email and Excel!) to the newest offerings from Procurement’s leading Cloud providers. [2]

It appears we are well on our way to what Geoffrey Moore, author of Crossing the Chasm, called the Early Majority of a market. In this stage of the adoption cycle, key leaders face the reality that “business demands for increased productivity push them toward the front of the adoption life cycle…” [3]

Gartner research shows that fewer than “5 – 20%” of companies have moved to the Procurement Cloud. [4] So what are the implications for your business? Two completely different paths, depending on whether or not you have begun your Cloud initiative.

If you are “on the Cloud”

Congratulations on your Early Majority status. You are among the few companies with the vision and risk-taking culture to begin this journey.

However, you may also find yourself challenged with the scale of the implementation. After years of streamlining staff, many corporate Procurement and IT functions are woefully short of resources to drive a Cloud initiative. Paying license fees alone does not secure the business return that was promised in the business case.

The Shelby Group’s blog section is a rich trove of written perspectives on everything from Master Data Management to Engaging Stakeholders. These short summaries can assist you in thinking about your particular challenges in driving usage and benefit through your organization. It will only be through making your Cloud platform a part of your firm’s “way of doing business” that you will realize your return on investment.

If you are “Pre-Cloud”

Congratulations on having the opportunity to bring incredible value to your firm. Given the compelling business rationale for driving the ubiquity of an optimized, visible and accountable Procurement infrastructure, you potentially have a company “game changer” project in your future.

There are many resources available for assessing the business opportunity for modernizing your firm’s Procurement infrastructure. In fact, many of the Cloud providers would be more than happy to provide an analysis of your specific business situation for free. Shelby has assisted many firms in this journey. One of our clients, the Blackstone Group, allowed us to report on their journey 3 years after they kicked off their project. The numbers are consistent with what other clients are experiencing.

So, what about that “Present for Procurement?”

Here it is. Make it your personal New Year’s resolution to either drive further adoption of your existing Procurement Cloud infrastructure, or make 2017 the year you develop the business case to move to the Cloud. Either way, it will be the best present your Procurement function can give your company!

John Dreyer
President & CEO
The Shelby Group
jdreyer@theshelbygroup.com

Shelby Framework

[1] As Shelby defines it, the six functions of Procurement are Spend Analytics, Strategic Sourcing, Contracts Management, Procurement Processes, Invoice and Payment, and Supplier Management

[2] The Forrester Wave: eProcurement, Q2 2014, Gartner’s 2015 Magic Quadrant for Strategic Sourcing Application Suites

[3] Crossing the Chasm, Geoffrey A. Moore, p. 43

[4] Hype Cycle for Procurement and Sourcing Solutions, 2016, Gartner