Gartner Peer Insights & Zluri survey: SaaS and Procurement

As the role of procurement professionals gains momentum at board-level after many years of neglect and misunderstanding as to its significance, the tools and processes that fall under its remit are also being pulled into the spotlight and given due consideration.

One of the central tools or more precisely, ecosystems that are central to procurement functions is Software as a Service (SaaS), the management of which, needs to be carried out with care so that the entire project isn't futile and productivity is achieved post-implementation.

The Research

New research reveals that most organisations are spending up to 10% of their revenue on SaaS applications, but that documented policies and processes for management are inconsistent at best.

The research was carried out by Gartner Peer Insights (GPI) and Zluri, who sampled 100 IT leaders in order to better understand their priorities, challenges and current states with regard to their SaaS application ecosystems.

GPI and Zluri found that most organisations (58%) spend between 6% to 10% of their revenues on SaaS applications, with 11% of spending more than 10% of their entire revenues on SaaS applications.

This is a great chunk of organisational spend, and mismanagement of the system after adoption would seem to be connected to the push to digitise without understanding processes.

The top three capabilities considered essential in a SaaS Management Platform were revealed to be employee onboarding, procurement and discoverability - all of which were selected by at least 62% of respondents.

Interestingly, when asked "what capabilities do you consider essential in a SaaS Management Platform (SMP) that will help in SaaS governance?" - 62% of respondents said "Procurement".

Convergences

So once again, here we have an expansion of the procurement function, giving credence to its centrality in the business of achieving excellence.

There is also an indubitable trend towards the incremental - yet inevitable - convergence of CPO's and CIOs' roles'; as procurement becomes an almost entirely digital process and data and information continue to play a pivotal role in its functions and processes.

To this end, the research further revealed that the top two choices respondents cited when asked who they consult before purchasing a new SaaS application, were IT departments (68%) and the CIO (63%).

From SaaS to PaaS

SaaS is the more generalised category which is presently falling further under procurements ambit. Specifically, there is the relative neologism of Procurement as-a-Service (PaaS), which is essentially a specific type of SaaS crafted around the procurement function.

A recent Procurement Magazine article looked at PaaS - this specific species of SaaS - which is exploding in terms of market share and is set to break records over the next few coming years. 

The article drew from a recent ReportLinker paper, which forecasts the global Procurement as-a-Service Market to reach US$9.6bn by 2027 - growing at a CAGR of 9.1% over the analysis period 2020-2027.

According to the report, Strategic Sourcing - one of the segments analysed in the report, and a massive part of SaaS for procurement - is projected to record a 10% CAGR and reach US$3.6bn by the end of the analysis period.

The same report found: "In the global Transactions Management segment, USA, Canada, Japan, China and Europe will drive the 11.1% CAGR estimated for this segment.

As the global PaaS footprint grows, the same methodical approaches which are needed in SaaS Management will need to be dexterously applied to PaaS Management.

Procurement's role in organisational effectiveness 

Max Management Maxim: The planting of seeds is not an end, but a beginning - their ensuing care, is what really counts. The implementation of systems is not an end, but a beginning - their ensuing management is what really counts.

Effective SaaS demands consistent and effective documented policies and processes for their management. 

With procurement being one of the top three capabilities considered essential in a SaaS Management Platform, as well as essential in a SaaS Management Platform (SMP) in helping in SaaS governance, its critical that SaaS is given the same level of consideration to optimise processes both in and outside of the procurement function, and that likewise, procurement is given due consideration to optimise processes both in and outside of SaaS.