On Demand V: Preparing for the Transition

Earlier this month, Purchasing.com published yet another article about on-demand entitled On-demand promises to hook savings stating that on-demand software and technology is more than just software on someone else’s servers—it’s a delivery method that supporters say improves ROI. However, what caught my attention about this article was that it gave some suggestions on how to prepare for a switch to an on-demand solution, something we haven’t really discussed yet in this series.

The suggestions offered by the article are:

  • Know what you need! Develop a solid statement of expectation or long-term roadmap for the specific problems you’re trying to fix and/or the specific results you need to attain. (Note: Discuss this list with your prospective solution provider(s)!)
  • Talk to other users of on-demand technology. Get their perspective on what on-demand is doing for them. (Note: Any on-demand solution provider I’ve talked to is usually more than happy to provide you with a list of contacts in their customer base that you can call.)

In addition, I would suggest you also:

  • Identify what systems your data currently resides in and what systems you are going to need to export data from and import data to. Make sure the solution you select either interfaces with these systems or supports standard input and output formats that will allow you to import and export the appropriate data as needed.
  • Start with a pilot. The beauty of on-demand is that solution providers can literally set up pilot accounts at a flick-of-a-switch that you can use to try-before-you-buy. In addition, most providers will engage in a pilot project with you to prove their solution at very little cost to you. (The standard seems to be free access to the system for the length of the pilot if you cover reasonable consulting costs and expenses. Some eSourcing providers with analytic solutions will even do preliminary one or two day proof-of-concepts on existing data for free to demonstrate the power of their tool.)

Another good point made in the article is that moving to an on-demand solution is not an overnight process as it’s a change management process. The most successful projects transition small groups of power users at a time. These power users become the internal proponents, experts, and trainers and help bring the rest of the organization over to the new organization.

The article mentions how Cox Enterprises was up and running on Procuri‘s on-demand solution in under 3 months and saved 2M in a 10M spend category on their very first on-demand sourcing event. It’s important to note that this is a typical result – initial projects using the latest sourcing technologies built into on-demand platforms typically save users 10 to 30% since they not only enable transparency in your market, but remove inefficiencies from the process. If you check out Iasta‘s typical results, they are 17 to 26% in aerospace/defense and automotive, 19 to 27% in consumer packaged goods, 18 to 25% in electronics, and 14 to 27% in food processing and food service, for example. (And some of their results at some of their new Fortune 500 clients have been just as impressive.) Iasta maintains a complete list of categories it has assisted clients in here. Procuri also has a page dedicated to Success Stories.

Another impressive point of note is that ServiceMaster now claims to have a 99% compliance rate as a result of switching to an on-demand solution. I guess the only thing left to ask is if you have not tried on-demand, why? With solutions that encapsulate the end-to-end executable sourcing cycle in a single, consistent, easy-to-use desktop application, and the cost of a pilot project less than what a big five consulting company would likely charge you to analyze your processes and installed applications and tell you that you should probably supplement their weaknesses with an on-demand solution, it seems like an obvious choice to me. So, like fellow bloggers David Bush of eSourcingForum and Tim Minahan of Supply Excellence, I’m going to keep extolling its virtues. The on-demand story will continue.

You can find the previous parts in the series, which started on eSourcing Forum, here: