Blog | 03.26.18

A Quarter into 2018: Time to Invest (or Reinvest) in Cloud-Based eProcurement

By Brian Utley, CEO at Periscope Holdings

A quarter into 2018, we’ve still got NASCIO’s top ten priorities on our minds.  To no surprise, cloud services were listed as the number two priority behind security. As NASCIO Executive Director Doug Robinson noted to GovTech recently: “There is an overarching continued consistency in the areas of budget and cost control, security and risk management.” Cloud services – and particularly, cloud-based procurement services – are one of the most effective ways to gain the visibility and tools needed to:

  • Eliminate wasteful spend and, therefore, maximize budgets;
  • Implement stricter, and more sustainable, cost controls;
  • Identify and enact new purchasing efficiencies to improve overall fiscal management;
  • Closely scrutinize each procurement action and enhance accountability for all actions to minimize the risk of non-compliance, non-performance oversights and fraud

Procurement is the central enabler of all government projects and, as such, plays a critical role in each agency’s ability to meet operational performance standards set forth by both the C-suite and taxpayers. For example, if procurement systems are not tightly integrated with finance, the ERP and other business systems, then data sharing and, thus, efficient project management becomes a challenge. This is especially true as state agencies increasingly leverage agile methods for IT modernization projects and will resultingly demand a shift towards well-defined agile procurement processes.

In fact, cloud-based eProcurement systems that can consolidate all procurement-related workflows into a single platform and enable the unification of (procurement) services across the enterprise will become even more valuable to states in the coming months as the risks of ERP-only environments continue to outnumber the benefits.  

In a recent Center for Digital Government survey of 138 state and local executives, more than half of the respondents said they wished their ERP-based procurement capabilities were easier to implement and offered better analytics. They also saw the need for customizable vendor management tools and built-in support for requisitions, bidding and purchase orders. They were also disappointed in the ERP’s inability to support better encumbrance, pre-encumbrance and expense controls. On the flip side: Modern eProcurement systems, at least those delivered as a cloud service that integrates with existing ERP systems, address those ERP gaps and ultimately improve the ROI government agencies realize for existing ERP investments – a bonus for those trying to control costs.

If your state is making cloud services a priority this year, and you’re not already utilizing a cloud-based eProcurement system that is connected, or can easily be connected, with your other business systems (i.e. finance, ERP, etc.), then it’s time to prioritize a procurement technology upgrade.

Before you sit down to prepare the solicitation, consider the minimum requirements for a successful implementation, such as an end-to-end platform that:

  • Handles everything from requisitions, purchase orders and online product catalogs to vendor management and payment processing tools.
  • Doesn’t require you to implement finance modules within ERP suites before the procurement capabilities can be used. (Tip: Best-of-breed cloud-based procurement systems can be layered on top of existing operations, delivering value as soon as the integration is completed.)
  • Ties directly into your organization’s existing core financial business processes, making it very user-friendly for collaborative procurement-finance tasks and data sharing. Offers in-depth cataloging tools, such as online catalogs, that let buyers quickly see approved vendors, compare pricing and submit online orders to speed procurements. (Tip: Be sure that transaction data is automatically sent to backend reporting systems so that managers can perform valuable trend analyses in real-time and confidently report on procurement actions.

Then, consider the additional capabilities required to meet immediate business needs and support future goals (i.e. centralization of procurement, increased number of agile procurements, workflow scaling, or business process re-engineering). For example, cloud-based eProcurement solutions should relieve government IT departments from having to buy, implement, test and manage on-premises hardware and software. That is their primary benefit from a cost-control perspective. At the same time, best-of-breed eProcurement systems will offer predictable cloud service fees for the life of contracts without unexpected costs for upgrades, security patching or infrastructure issues. In other words, if you are worried about cost creep, or the solution provider cannot confidently communicate the cost of implementation, management, or scaling of their procurement technology system, then you should consider other options. Though there are plenty of cloud-based procurement technology options there, most are not built solely to support the public sector’s unique procurement needs and “business” structure.

To see which cloud-based eProcurement systems your colleagues prefer, check out these video testimonials from the Commonwealth of Massachusetts and the Texas General Land Office.