How can procurement add more value to your organization? First, you will need more visibility and efficiency into your process.
Off-the-shelf vs custom purchasing tools
In today’s day and age, consumers demand customized experiences—a trend that’s made inroads in the enterprise environment, too. Instead of buying out-of-the-box systems, some organizations that have the resources are opting to build fully custom applications—even when it comes to purchasing tools. That way, instead of procurement teams having to adapt their workflows to a piece of the software, they are able to use platforms that were specifically designed to accommodate existing processes and procedures.
But is the decision to build custom tools the best way forward? Would companies be wiser to use off-the-shelf systems instead? Or is there an even better option?
The custom approach
In a perfect world, every company would be able to build a custom set of purchasing tools that would work wonders for their procurement teams. Unfortunately, it’s not that easy.
While custom solutions can be useful and they are generally easy to configure, there are two major reasons why a significant majority of companies should avoid them:
It’s obscenely expensive
How expensive? It’s hard to say. Building a customized house, for example, can cost as much money as you’re willing to spend. If you’re okay with settling for a house that has only one room, it’ll probably be a lot cheaper than if you’ve got your sights set on building a state-of-the-art mansion on an enormous piece of property. According to one estimate, a custom piece of software can cost anywhere between $40,000 and $250,000. Largely, that number depends on the size of the application, its complexity, how well it’s designed from a UI/UX perspective, and whether it needs to integrate with other platforms, among other things. This doesn’t even include the costs of managing, debugging, and upgrading the software regularly.
They lack important features
While there are certainly some cases where companies would be better off forking over enormous sums of cash to support custom software development, in a vast majority of instances, it doesn’t make a whole lot of sense. While fully custom applications may conform to your workflows and have some features that wouldn’t come with an off-the-shelf solution, they will almost certainly lack a lot of important features you might not have known you needed. When you stop to think about it, the last thing you want to do is invest a significant amount of liquid cash to build a completely customized set of purchasing tools, for example, only to find out that the software doesn’t meet your expectations.
The good news is that companies that either don’t have the requisite resources necessary to build their own solutions or don’t want to risk missing out on backbone features can opt to deploy off-the-shelf purchasing tools instead.
The out-of-the-box approach
Unlike custom solutions, purchasing tools that come straight out of the box tend to be quite affordable. But there are a few reasons why these stock platforms might fall short:
They’re good, but maybe not great
While the best out-of-the-box solutions on the market provide a lot of powerful functionality, they may lack the specific features your company is looking for.
You need to accommodate them
When you deploy a new off-the-shelf platform, you may have no choice but to alter your existing workflows in order to accommodate the software. That, of course, can be quite difficult. Every employee is forced to learn something new—and you have to devote adequate training resources to make sure everyone is on the same page. In such a situation, productivity is bound to take a hit. It depends how long it takes for employees to get fully up to speed with the new workflow to see just how big a hit that will be.
Do neither custom nor out-of-the-box tools sound like they’re what your company is looking for?
The hybrid approach
The whole point of procurement is to lower costs while reducing risks and improving relationships with suppliers. Since customized solutions are expensive and lack major functionality and out-of-the-box purchasing tools have their shortcomings as well, companies would be wisest to look for a provider of purchasing tools that offers a strong off-the-shelf system—but also has the resources and skilled engineers necessary to tweak that system to meet your specific needs.
Strong off-the-shelf functionality
Market-leading purchasing tools enable procurement teams to ditch their spreadsheets and instead rely on a software-based solution that tracks purchases, purchase orders, and reimbursements automatically. As a result of this streamlined approach, not only do companies benefit from accelerated ROI, the procurement team also has a lot more time on its hands—which can then be used to focus on other pressing business matters.The ability to change when it’s warranted
After using the platform and figuring out where it’s lacking from their organization’s perspective, companies can then work with a flexible provider to adjust their out-of-the-box solution as needed. This allows enterprises to benefit from the specificity of customized solutions without having to incur anywhere near as many expenses.
So, if you had to pick one, is an off-the-shelf solution better than a customized solution? Most likely.
But the best answer lies somewhere closer to the middle. By partnering with a flexible provider that offers a hybrid approach to purchasing tools—by providing significant functionality out of the box while having the ability to make adjustments as needed—companies can get the best of both worlds at a fraction of the cost.