Traditional software is dead. We have been pronouncing this for quite some time, but other respected outlets are beginning to jump on board in making this proclamation. The popular business blog Spend Matters recently confirmed the death of traditional software, at least when it comes to Purchase to Pay (P2P) automation, in the opening line of their insightful blog post titled “3 Reasons Why Companies Are Investing Exclusively in Cloud P2P.” This piece refers to traditional software (also known as “on-premises software” and sometimes referred to as “shelfware”) as “CD versions,” but the meaning is the same – software that you purchase in physical format, generally as a CD, and install yourself.
As the title indicates, Spend Matters presented three reasons why companies are investing in the cloud almost exclusively today when it comes to P2P solutions. Below are the truncated highlights of why this is the new trend:
- Process Optimization - The rush to customize previous CD versions around a perceived optimal procurement process that was unique to a specific organization has now come full circle to most organizations wanting to conform to the “80%” norm when it comes to search, transactional buying, approval workflow, supplier onboarding/connectivity and the like. The trend is for companies to want to learn from P2P providers — and by extension their current customers — and become a procurement version of the best practices buying “Borg” rather than being nonconformist.
- Data Security - IT has largely given up the battle over data security and stewardship, has become an ally to procurement in certain cases and simply gotten out of the way in others. IT has come to realize that the cloud may change its role and value to the overall organization, but there is no turning back from the migration to externally managed solutions.
- The External World - Companies are realizing that processes, transaction and information exist as much (or more) outside the organization than within. Cloud e-procurement is as much about connecting the external world with an organization than connecting internal procurement with suppliers. What happens inside the four walls is simply a part of the transactional buying battle. The main “war” on spend actually takes place externally and requires coordination between organizations. This is one of the reasons why cloud models are becoming ubiquitous.
We are in agreement with these points, and in past blogs we have gone into greater depth on these and the other benefits of cloud-based P2P solutions, such as lower total cost of ownership, cheaper implementation costs, faster deployment times, and constant enhancements, that Spend Matters lists in their concluding paragraph.