Despite the rapid technological advancements of the past few years, many organizations are still operating on outdated procurement systems that are inefficient, costly, and unable to provide the agility and access needed to support remote and hybrid operating models.
Companies that rely on manual procurement processes are equally restricted as they lack the visibility and speed that’s critical to modern businesses. These factors are compelling more and more business leaders to consider cloud procurement systems.
So, what exactly is cloud procurement? Increased global competition and the technological demands on finance departments have led businesses to modernize their operations. Instead of downloading data and programs to computer hard drives, the "cloud" enables companies to store, access, and analyze this data online, completely transforming business functions such as procurement. With centralized data, processes, and accessibility by all users via a secure internet connection, regardless of the location, companies can now gain complete visibility and control over purchasing processes and spending behavior. Cloud-based systems enhance the processes for requisitioning, approving, and, analyzing spend, enabling more accuracy, transparency and control in procurement workflows.
By integrating the core elements of modern procurement with the latest cloud solutions, forward-thinking companies can streamline their procurement activities by engaging all users in a collaborative environment. Robust cloud procurement systems can be seamlessly integrated into an organization, replacing inefficient practices, enabling accessibility, and driving productivity and accountability among stakeholders.
5 Benefits of a cloud procurement system
There are multiple benefits to cloud procurement systems, and this blog article explores five compelling reasons to consider migrating your procurement processes to the cloud.
1. Cost-effective and scalable
One of the most significant benefits of cloud procurement systems is how cost-effective they can be for an organization. Regardless of where team members operate from, access and usability can extend to the edge of an organization. Affordable subscription models enable system usage to scale as an organization grows.
Legacy ERP solutions have traditionally been expensive and complex, leading to only having limited user licenses and a small subset of employees having access and the expertise to operate the system. Standard or add-on procurement functionality is often limited and fails in achieving user adoption. Cloud-based systems, meanwhile, are typically much cheaper and easier to deploy and do not require on-site implementations. The feature-rich and purpose-built solutions provide the functionality to achieve procurement efficiency and flexibility.
Unlike outdated legacy systems, there is no longer a need to pay hefty up-front fees or constrain resources to install, manage, and maintain a system. While cloud procurement systems might seem similar to traditional approaches, significant differences allow for further cost-effectiveness, such as reducing the need for extensive hardware and server maintenance.
Since all data is stored in the cloud, it cannot be lost through the damage or loss of a laptop or mobile device, saving time, energy, and money companies would otherwise spend on maintenance or recovery.
Additional benefit: Cloud security
While there are multiple advantages to a collaborative and easily accessible procurement system, a security-first approach is critical to maximizing the full benefits of cloud-based solutions. Deploying certified cloud solutions that are actively monitored for vulnerabilities and undergo active threat assessment and management can effectively safeguard against data threats and meet regulatory compliance standards, such as System and Organization Control (SOC) compliance.
Deploying cloud-based solutions with these robust security and availability standards enable companies to scale safely and cost-effectively as demand increases, while maintaining reliable uptime. Workforces can stay productive when supported by a secure cloud procurement solution that addresses issues in real-time, further minimizing the expense of system outages.
2. Fast and easy to use
The future of procurement is here, and modern organizations are using cloud-based systems to optimize processes, reduce paperwork, and gain real-time access to information. Modern procurement systems enable users to respond quickly to changing business conditions and disruption, thanks to powerful automation, data insights, and always-on accessibility via the web, mobile app, or any smart device.
Processes are simplified by intuitive user interfaces, automated workflows, and notifications that initiate action. The ease with which procurement processes can be completed reduces purchasing cycles and frees up more time for staff to focus on key business objectives, rather than admin.
Having a single source of data that's updated in real-time can streamline buying, inform and improve decision making, and reduce the time wasted from dealing with fragmented data sources.
3. Process efficiency
Manual purchasing processes pose significant challenges for most companies and cause delays and bottlenecks that are no longer necessary to deal with. For instance, it is nearly impossible to manually complete a purchase requisition using a business letterhead and get it approved by an out-of-office manager within 24 hours.
With cloud procurement systems, the entire purchasing process is streamlined, from requisition to approval, internal control, to AP workflows, increasing the accuracy and accountability of all purchasing decisions while reducing acquisition cycle times.
Companies can leverage automation features and cloud mobility to drive informed decision-making, spend control, and risk management wherever users are. Spend visibility is another crucial benefit of this, as expanded below, where organizations gain a clear view of the purchase requisitioning lifecycle across multiple business units.
4. Visibility
Cloud procurement systems driven by automation create a more holistic picture of how money moves through an organization, allowing finance or purchasing teams to better measure, benchmark, and improve their processes.
This enhanced spend visibility gives companies a clear view of the entire procurement lifecycle across multiple business units to determine which practices or departments are wasteful and overspending, and where opportunities exist to generate more savings.
With increased visibility comes greater reporting power, enabling even more opportunities for data-driven decision-making and spend control. Spend visibility puts procurement back into the employees’ hands, empowering greater speed, and productivity across critical business functions, while business leaders maintain financial control.
5. Integration
By integrating your procurement and financial system, you can gain end-to-end efficiency that saves time, decreases human error and manual data capturing, while extending internal controls across the procure-to-pay process. Cloud procurement systems provide proactive policy and budget controls, ensuring that all spend is approved, within budget, and compliant before any payments are released by the financial system.
There are various integration methods that connect cloud solutions to legacy software or enable cloud-to-cloud integrations, such as Application Programming Interface (API), which is a standard communication interface between two or more software applications or systems to exchange data. Companies relying on cloud-driven procurement should be able to integrate their software with third-party vendors and use the API to transmit this data directly into their accounting / ERP system.
This feature further lowers the procurement cost, integrates disparate data sources, and greatly simplifies the management and accuracy of purchasing workflows by removing manual data entry and the margin for error.
Taking your business to the next level with a cloud procurement system
The global shift to remote work is necessitating digital transformation and encouraging companies to optimize how they do business and ensure continuity. This evolution can also open new business opportunities and provide companies with a strategic advantage to compete in international markets. Legacy technology strategies are being replaced by cloud-first approaches that support and enhance the productivity of dispersed teams, making it easier for companies to do more with less effort and cost. With effective management, your procurement function can drive efficiencies and significant savings for your company. Are you equipped to reach these goals with your current procurement process?
How we can help
Fraxion’s cloud procurement system provides an easy, flexible experience that ensures transparency and proactive spend management across procurement processes. With integration capabilities for cloud and legacy financial systems, and advanced business intelligence and reporting capabilities, we’re helping finance teams worldwide to establish frameworks for company-wide accountability, efficiency, compliance, and spend control.
Interested in learning more? Get a custom product demo for a thorough review of the cloud procurement system, tailored to your business needs.