When is the right time to move your sourcing or procurement process to the cloud? How much will it cost? And will it be worth it?
We get many clients asking us about the benefits of cloud procurement solutions and, particularly, whether they should move from an ERP system to the cloud. There certainly are benefits to the move. These include real‑time communication between buyers and suppliers, supplier portals, integrated team communication, and convenient buying solutions for end users.
The main question that needs an answer is, is it the right time to move?
If you answer YES to one or more of the questions below, it is the right time!
- Is it difficult to locate your signed supplier contracts – especially the long‑term contracts?
- Do your tenders take weeks to conclude?
- Are your internal auditors giving you warnings about governance in the tendering process?
- Do suppliers complain about the fairness of the tender award?
- Is it difficult to work out if suppliers deliver quality work on their products or services?
Depending on the cloud solution, all of these can be improved. But how easy is it?
To make an informed decision, one should be aware of the challenges and costs involved.
Many clients assume migrating to the cloud is just a ‘click’ away. This assumption is like the analogy of the iceberg. The cost of cloud solutions is driven by factors hidden from view when navigating the ‘ocean’ of cloud technology. The following costs should be taken into account with your business case:
- implementation costs
- integration costs
- licence fees
- adoption costs.
Determining the cost of an implementation is often underestimated.
Integration is probably the most fraught with difficulty and depends on the extent of the integration between the ERP(s) and the cloud solution. Smooth sailing is only ensured by the expertise of your cloud‑implementation partner.
Do not forget about license‑fee costs for both you and your suppliers. Suppliers can boycott the system if they end up having to pay licence or training fees to submit their bids.
Most importantly, the adoption costs should be kept in mind. Adoption costs should cover all stakeholders in your supply chain – your end users, suppliers, as well as the procurement, sourcing, contracts, and accounts payable departments, stores, logistics and legal teams. Without change management for the entire supply chain, supplemented by thorough training, the cloud solution may be ignored and shelved by the organisation.