THE BUSINESS REVIEW FOR PROCUREMENT LEADERS
Hype springs eternal in the technology world, but for once a sea change seems to be under way in how e-procurement applications are bought. On-demand software from the likes of PerfectCommerce, Ketera and Procuri is proving attractive not only to smaller firms, which have traditionally balked at high software licence fees and implementation costs, but also to bigger ones. US paint manufacturer PPG Industries, for instance, is swapping its in-house Ariba applications for externally hosted incarnations.
A survey by Aberdeen Group found that on-demand software performed better in terms of return on investment, implementation timescale and effort, and ease of upgrade. To Tim Minahan, a former analyst who now heads up marketing at Procuri, on-demand has three clear advantages: first, it’s a usage-based model (much like other utilities that a business consumes); second, because it sits outside the corporate firewall it needn’t consume internal IT resources or require CIO approval; and third, it moves expenditure from the capital budget to the expense budget.
However, for on-demand vendors the model’s downside is that customers may find it easier to switch their loyalties after just two or three years.
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