Thursday, August 28, 2008
ELP Articles (Edition 2)
Posted: Monday, August 01, 2005, 11:08PMAuthor: Mark Perera - Procurement Leaders
Published in: Edition 2 (June 2005)
SPONSORED LINKS
- Universities explore procurement lessons learned from private-sector companies to achieve high performance (University Procurement Viewpoint)
- Tapping into talent: Discovering the secrets of procurement success
- Procurement for high performance: Global sourcing in the industrial products industry
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KNOWLEDGE MANAGEMENT TAGS
"Technology", "Strategic Sourcing"
Technology: Why on-demand is in demand
With faster implementation times, lower risk and fewer resources than traditional software, on-demand delivery solutions are here to stay, argues Mark Perera.
The ongoing pressure for organisations to reduce costs, compete globally and improve performance has raised the profile of supply management in enterprises. In order to realise aggressive performance and cost-reduction targets, research shows procurement heads are increasingly turning to on-demand delivery solutions to rapidly and cost-effectively fill key gaps in their procurement-solution capabilities. As Marc Benioff, CEO of salesforce.com, has said, 'On-demand will dominate the computing industry for many years to come.'
So what are on-demand solutions? Also known as 'software as service', they are externally hosted and managed content, applications and services delivered through the internet and offering flexible pricing models. Compare it to a utility: when households use electricity, they don't have a power plant in their back garden, but tap into the electricity provided by the power plant. With on-demand, you tap into a software 'power station', taking advantage of the software and its capacity.
Unlike its predecessor, the application services provider (ASP), on-demand leverages a multi-tenant architecture that enables more rapid deployment of multi-client instances within the environment, and creates a highly scalable economic model for end users and solution providers.
What is the attraction of on-demand supply management solutions? Aberdeen Group's recent research report On-Demand Supply Management highlights faster implementation times, lower risk and fewer resources as key reasons why organisations are increasingly turning to these solutions.
What key areas can on-demand solutions fill? E-sourcing solutions are leading the way, with more than half of the Fortune 500 opting for on-demand over installed options. E-procurement take-up lies slightly behind, followed by supplier performance management, contract management and spend analysis. Industries with the largest proportion of indirect spend have led the way in adopting on-demand solutions to quickly capitalise in the saving opportunities.
The recent implementation by leading UK retailer Tesco of Marrakech's on-demand spend management solution to manage its goods and services not for resale re-iterates the wider adoption of on-demand supply management solutions in Europe. And with an additional 27 per cent of organisations in Europe planning new deployments in the next two years, it looks like on-demand supply management solutions will be increasingly common for many of us.
REASONS FOR ENTERPRISES TO TURN TO ON-DEMAND
- Operational implementations within weeks
- Full payback and ROI in months
- Initial solutions fees that are 50% lower than traditional software installations
- On-going operating costs are half those of installed software
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