Six benefits of cloud procurement tools

Purchasing new software tools to help your organization work faster and cut costs should be easy.

However, the cumbersome and unnecessary barriers established by many legacy procurement systems draw out this process, making SaaS purchasing a bone of contention between department leaders and procurement teams.

Department heads want to move quickly. They know what they want, and they need it now.

The procurement department has different goals, however. They want to ensure new purchases are cost-effective and competitive and need to assess potential risks associated with a new software platform.

Cloud procurement software is the solution that bridges the gap between these two teams, helping both departments achieve their goals while creating additional operational efficiencies and cost-saving measures.

Learn how cloud procurement software solutions replace legacy systems and discover six benefits for collaboration, risk mitigation, and operational efficiency.

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What is cloud procurement?

Cloud procurement is a specialized category of software that helps procurement teams manage their purchasing processes, from sourcing and vetting to relationship management and contract renewals.

Cloud procurement platforms typically offer features like:

• Workflow automation
• Price benchmarking
• Integrations with relevant software like ERP or AP tools
• Risk assessment matrices
• Contract management and storage
• Spend visibility and reporting

These procurement tools are cloud-hosted. That means the company you purchase them from is responsible for hosting your data, managing platform security, and maintaining infrastructure quality.

All you need to do is purchase the software—typically on a subscription basis—and use it to put your procurement processes into play.

How does cloud procurement differ from traditional procurement software?

The key difference between traditional procurement tools and cloud technology is the location of software hosting.

Under the traditional model, companies purchase and install procurement tools locally (the perpetual license model). This could be on a single computer if only one person uses the tool or within the company’s centralized hosting infrastructure if several employees need access to the software.

As you might imagine, this requires the company to have a dedicated IT team with its hardware infrastructure and the ability to monitor and maintain infrastructure health while combating security risks.

In the cloud model, the company that sells the procurement platform is responsible for hosting. You, as the buyer, access the software platform over the Internet.

It allows you to access incredibly powerful procurement software even if your company is small and doesn’t have an internal IT team. You no longer need to worry about internal hosting or infrastructure maintenance.

A second difference between the procurement tools is the pricing models. Traditional procurement software is sold on a perpetual license, meaning you purchase the tool once and own it outright.

The cost is often prohibitive for smaller companies, and if a newer version of the software is released, you must pay to upgrade to it.

Cloud procurement software is more commonly sold on a subscription basis.

You pay a monthly or annual subscription fee to access the platform and continue to benefit from all subsequent developments to the tool without paying more than your contract states.

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Six benefits of using cloud procurement software to drive purchasing

1. Enhanced efficiency through automation and mobile apps

Cloud procurement software is all about driving efficiencies in your procurement process.

Because the software is cloud-based, procurement team members access it from anywhere. Whether at work on their computer, at home on a laptop, or at a vendor meeting with only their phone, they can access their cloud procurement platform. All solutions are accessible via web browser, and most have mobile and desktop apps.

More than that, cloud procurement tools often include automation functionality that allows purchasing teams to speed up internal procurement processes.

For example, you might build an automated approval workflow in your procurement platform. When a team member raises a purchase request, it gets sent directly to your procurement leader—or other decision-making authority—for approval.

You could also set up automated reminders to keep the process moving and prevent procurement delays.

2. Less intensive security requirements:

Because the vendor hosts these software tools, it reduces the internal requirement for IT resources and security monitoring.

Of course, when sourcing any kind of software, the security risk is a concern.

You’ll still want to be up to speed with your cloud procurement vendor’s data handling protocols—for instance, which cloud service providers they partner with—to ensure they comply with your expectations.

However, you need to be much less engaged with security monitoring than you would be if you were hosting the software in-house, reducing your overall expenditure on procurement software.

3. A more cost-effective approach

In most cases, opting for a cloud-hosted platform is a more cost-effective option.

You can often pay monthly or quarterly, which is an excellent option for companies that don’t have a ton of capital to invest upfront in a single software tool.

Secondly, you don’t have to invest in data storage or security infrastructure.

Finally, most cloud procurement platforms also help you save money on other purchases.

Take Vendr, our cloud-based SaaS buying platform. With Vendr, procurement teams can access price benchmarking information when assessing a new software purchase.

Rather than defaulting to the sticker price, you use your understanding of what other buyers pay for the same product to improve your contract negotiation conversations and drive costs down.

4. Elimination of data silos through integrations

The best cloud solutions offer native integrations with the tools you already use.

This makes it easy to connect existing platforms without relying heavily on developer expertise or APIs and opens up the door to greater data visibility and eliminating silos.

For instance, you might integrate your cloud procurement solution with your:

• CRM platform
• ERP tool
• Accounting software
• Supply chain management solution
• Risk management platform

By connecting all these tools, you ensure data is up-to-date and accurate across the board and improve your reporting and analytics abilities, allowing you to make more informed decisions that drive essential business outcomes.

5. Improved team collaboration

Cloud procurement software makes it easier for teams to work collaboratively and for C-Suite stakeholders to ensure compliance with purchasing regulations without micromanaging.

An effective cloud-based procurement tool allows teams to:

• Log in and work simultaneously without interrupting each other’s workflows or causing data issues
• Assign tasks and responsibilities
• Communicate in context within the platform itself
• Build approval workflows that automatically allocate tasks to the right employees

6. Greater relationship health and spending visibility

Most cloud procurement tools also include reporting and analytics suites which provide teams with improved visibility into vendor relationship health and the ability to analyze spending by category, vendor, or department.

Procurement teams make more informed decisions that drive strategic improvements by improving visibility into these critical areas.

For example, spending reports in your cloud procurement platform might alert you that your organization is paying for two tools with similar functionality. This is known as overlapping spending, a common consequence of decentralized purchasing.

By identifying this overlap, you can cut costs by consolidating software licenses and paying for just one platform.

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