Cloud: The New Nirvana for Procurement?

A lire sur: http://businessvalueexchange.com/2014/02/21/cloud-new-nirvana-procurement/

February 21st, 2014

By Laurent Gautier

Cloud is being challenged continuously on its value from business to IT, delivered internally, externally, or both ways, in case of hybrid cloud. But the real value winner when it comes to cloud is definitely procurement.

Why procurement? Simply because cloud is a catalyst for all that procurement likes, including heavily competitive environments, lots of pressure on market prices, diversification of suppliers, and innovation in pricing models.

Cloud also allows companies to combine into one deal categories of procurement that are usually highly disconnected, including software, hardware, services, hosting, networks and security. In fact, cloud aggregates the best deal for all categories while giving suppliers the opportunity to improve, or to be at risk on all current and future framework deals.

The Other Side of the Coin

But will procurement always benefit from cloud, you ask? Not always, as the move to cloud also presents a challenge for any procurement organization to change its classical supplier-client model to a more business partner-driven model. Some procurement organizations are there, but not all of them – especially those on the IT procurement side.

Cloud also drives the challenge to be a better business partner to IT than IT itself – to look beyond technically driven demand (as most companies are asking the market) to real business outcome-driven demand. This raises the bar quite a bit, as skills are needed to understand market definitions and principles, impacts, and dependencies. For example, how have past frameworks changed? Do they remain unchanged? For software license agreements, how do you size volume commitments from discrete supply to complex new unit costs? And the list goes on.

A New Style of Procurement

Above all, the move to cloud is a great opportunity to revisit the value of all existing agreements. It’s a real business case “true-up” from the past towards the strategic direction of the future for an entire company. The new style of IT fuels this new style of procurement, as the flexibility of the cloud introduces real game-changers in how to manage incompatible demands that currently create nightmares for procurement organizations.

Knowing what the needs are for a holding company, for example, doesn’t mean knowing what to do for the newly acquired business unit that just chose to operate outside of Europe (if headquarters is based in Europe). But the cloud addresses all of that: It is a consumption-based model, international, flexible and open to multi-suppliers – whether outsourced, in-sourced or both.

So where can your procurement organization begin? Here are a few recommendations based on real business cases:

• Take advantage of cloud to educate a new generation of procurement and drive best practices. If you do this, you could apply this model to more categories of supply.
• Practice good partnership behavior between corporate IT and business. This is the opportunity to act as judge for current and future negotiations.
• Focus on the big picture. It can pave the way forward when you’re presented with specific challenges related to exit costs from current suppliers at the corporate and business-units levels.

Remember – small rivers make oceans.

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