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SMART Procurement Means Never Having to Integrate Your Modules

stitchedtogetherProcurement technology and procurement software don’t define our business processes but they are important factors in setting the boundaries of what we can accomplish: both in terms of technical capabilities and in how we are perceived by internal stakeholders and suppliers.

The procurement solution landscape has largely progressed in a linear fashion, with a few notable exceptions. The most pronounced evolutionary course correction was in response to the Cloud delivery model.

On the plus side, the Cloud brought solutions out from behind firewalls, significantly reduced fixed and ongoing costs, and all but eliminated barriers to switching. The Cloud has been a challenge for established players. The popularity and inevitability of the Cloud required that they embrace it in order to compete, but they also had to overcome the disadvantage of their legacy status; their solutions were moving to the Cloud rather than being developed in it.

In response to this and other market shifts, GEP made a path-altering decision to rethink and redesign their solution from scratch - learn more about the new SMART by GEP here.

GEP’s founders looked at the procurement solution landscape and realized that if they wanted to continue to be competitive, they had to design a new offering – one that captured their vision and knowledge but which took full advantage of new hosting models and cost structures. GEP’s decision to opt for a new generation solution represented a huge risk in terms of time and investment, but it was deemed a strategic necessity.

GEP wanted an end-to-end, native platform with a natural process flow that could provide support for a full range of devices - and which could take full advantage of being hosted in the Cloud.

According to GEP’s Vice President of technology, DJ Nagalkar, the wider developments in technology represented a huge opportunity for procurement businesses but were being largely ignored by the procurement software industry. “The power that cloud and mobile technologies have to transform business efficiency and to really drive savings is something that we saw right away. Putting control and management capability directly into the hands of procurement professionals immediately enhances their ability to deliver results to the business”

After two years of intensive design work, SMART by GEP was released at the end of 2013. It represented a regenesis for the company’s technology: a full architectural relaunch that combined the strength of their procurement experience with the agility of the latest technology.

While sourcing and procurement processes have not fundamentally changed over the last decade, our approach to executing them has.

When eSourcing solutions were originally introduced, they were revolutionary because they represented an improvement over the Excel and Word alternatives we were dependent upon until that point. Any advantage from being better than a spreadsheet or a word processor has long since evaporated. Now procurement solutions actually have to compete with much larger expectation-setting technologies such as Google and Amazon.

Although neither firm is (yet) making direct moves towards the procurement space, they represent how we expect intuitive technology to look, feel, and function. It would be ridiculous in 2015 to make the case that an eSourcing solution is a good investment because it works better than Word. On the other hand, it could sink an implementation if the project team can’t get past how much harder it is to use the solution than something like Amazon.

If you talk to the team at GEP about their redesigned solution, don’t ask them about modules – there aren’t any. Unlike the modular solutions of old, which had boundaries in design or breaks where different technologies had been pieced together, SMART by GEP is one tool with many functions. Those functions can be turned on or off depending upon the needs of the customer, but they are all there and work the same way whether they are used in isolation or as part of an end-to-end platform. While most of the differences represented by GEP’s complete redesign are ‘under the covers,’ they are visible to users in the ease of flow from one function to another.

“First and foremost we understand procurement as a business,” explains Nagalkar. “Our customers don’t have separate silos in which different parts of their procurement operation conduct their day to day activities. So why should software dictate they have to work that way?”

One of the other benefits of non-modular procurement automation is that processes can be supported serially or in parallel. If you like to complete your sourcing project and then flip the project to a contract, you can do that. Alternatively, if you want to negotiate a contract in parallel to the sourcing project so that terms are negotiated alongside prices, that works too. A lack of modules really means that there is no need for integration – and without integration you are free from the distinct points connecting disjointed functionality.

When procurement is not fighting with legacy solution baggage, we can spend our time seizing opportunities, such as dynamic discounting: taking advantage of cash on hand (or readily available through financing) to pay suppliers sooner in exchange for spot discounts. We can also better monitor our contractual exposure in terms of what spend we have committed to third parties vs. revenue coming in.

Any risk decision is based on the potential reward and the certainty of receiving it. The other factor is the exposure from not making a change in response to shifting conditions. As procurement learns to view risk in the supply chain as a certainty to be harnessed for gain rather than to be feared or avoided, we should expect the same from our suppliers – including solution providers. An organization that will fight to survive, even if it means a complete self-redesign, is willing to take opportunistic risks. If that aligns with your philosophy for building a sustained competitive advantage, that makes you SMART too.

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