What is Driving the Rapid Adoption of Cloud Solutions?

Procurement Magazine Speaks to Greg Hanson, GVP and Head of Sales (EMEA North) at Informatica, to Discuss Rising Cloud Adoption in the Procurement Function

With the rise in complexities and disruption in procurement and supply chain, competing forces including supply shortages, inflation, price increases and health crises are driving the industry to adopt a more innovative mindset and strategic technologies. While cost and risk reduction remain high on the list of priorities for many professionals, digitalisation and sustainable development have also been stepped up to mitigate today’s challenges and complexities. 

“The emergence of these new risks has changed the perception of digital transformation by procurement departments,” say Isabelle Carradine and Dr. Norbert Fischer from PwC. “While digitalisation continues to progress among companies in all sectors, it is now becoming a necessity to overcome the challenges of cost control, supply chain traceability, and supplier relation securitisation.” 

So, where does cloud technology adoption fit in?

Increasingly common in the procurement industry, cloud-based supplier data management is used to collect, organise and maintain critical supplier information, which helps ensure smooth procurement operations. 

Greg Hanson, GVP and Head of Sales (EMEA North) at Informatica, explains: “Good supplier management involves keeping track of supplier profiles, contact information, performance metrics, compliance documents (including information related to ESG issues) and other important data.

“Cloud solutions enable businesses to conduct these critical operations at scale in an always-on, always-available model that flexes with need and removes the need for costly self-managed infrastructure.”

The amount of data that procurement teams handle continues to grow exponentially, particularly with the growing importance of ESG reporting. As a result, on-premises solutions risk becoming a limiting factor when it comes to scaling supplier data management as the volume grows. 

“By contrast, cloud solutions can be spun up—or down—to match need as it fluctuates,” notes Hanson. 

“They can be accessed by any team when and where they are needed, rather than being tied to a particular location. They also make it easier to break down silos between different areas of business data, integrating multiple streams into a single platform.”

Factoring in the rise of generative AI, the two technologies are expected to significantly reduce selling, general and administrative (SG&A) costs and staffing. However, Hanson warns procurement teams must “ensure their data foundations are right before they jump in”.

He continues: “That’s where having a cloud-based platform approach to data management comes in. Procurement teams need to ensure the foundations and controls for AI tools are robust before they use them. And they need to have full transparency of the data used to train any AI models they use.”

Where to begin with cloud adoption and the obstacles to avoid

Most businesses simply don’t have the time or inclination to manage the kind of IT estate that’s required for supplier data management on a large scale. 

But, as Hanson explains: “Cloud services provide a scalable and flexible solution that frees up businesses to focus on improving their operations, benefitting from high-capacity, intelligent data management to streamline decision-making, and leaving the estate management to the professionals.”

While the benefits are clear, it’s important to factor in the challenges of technology adoption. 

“With data spread across public and private clouds, organisations face challenges around the accessibility and integration of that data, as well as visibility, security and data governance issues,” Hanson goes on. “When it comes to integration, they need to be able to move their underlying data across clouds, regardless of where it resides.

“For larger organisations, these challenges can become more complex, with data scattered across different teams, clouds, applications and formats. Delivering subsets of this data to the right team at the right place is even trickier. As a result, it’s important for organisations to include comprehensive data management in their architectures.”

Hanson also stresses that organisations must remember this kind of implementation is not an overnight switch, but a transition.

“Careful thought and the adoption of an effective data management platform can help to keep operations functioning whilst this transition is in process,” he says. “A platform approach can help synchronise data from cloud to on-premise to ensure business processes continue to function. That is a complex exercise.”

Finally, Hanson recommends that organisations ensure what is moved to the cloud platform supports the value you expect to create from cloud adoption. 

“We all know that data quality is an issue, and the old rules of garbage in, garbage out still apply,” he concludes. “Data quality must be addressed to ensure new cloud applications deliver a high-quality experience and the results expected from the investment.”

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