Procurement is one of the few departments that can be measured on efficiency and how much money it saves, but rarely on the margin produced. And when it comes to procuring software, it is an even tougher measurement since this is usually used for internal infrastructure rather than to design a product which is then sold for margin.
According to Bain & Company, a leading consulting firm:
Procured costs represent between 25 percent and 60 percent of a company’s total costs.
Purchasing organizations often “collapse under their own weight” because of the difficulty approaching strategic initiatives while at the same time trying to contain costs.
86% of people questioned said their purchasing organization experienced 3 or more “barriers to success.”
Options for Cost Reduction/Optimization
In the face of this, what is an IT purchasing organization to do in order to succeed and avoid the many pitfalls that face every organization?
While many companies attempt to reduce IT procurement expenses by cutting heads, this is usually a temporary fix that only exacerbates problems later. Efficiency can help, but working better and faster is usually temporary because in the end, people are people and humans aren’t designed to work harder and faster at sustained periods of time.
What about other forms of cost optimization like automation and process improvement?
It’s no secret companies can realize some huge savings in this department. For example, Gartner says:
Improving IT procurement processes can reduce costs by 5% - 20%.
Implementing Software as a Service (SaaS) can reduce costs 10% - 30%.
Using Infrastructure Cloud Services can reduce costs up to 30%.
IT asset management improvements can reduce costs by 8% - 10% per managed asset per year.
So if we are to take Gartner’s word for it, the best gains will be had by implementing processes, software, and automation that make the procurement process more efficient, converts software to a cloud service rather than a physical asset, and manages those assets the company does retain more efficiently.
Some solutions do part of this without addressing others. For example, there are many different purchasing automation applications out there that automate the purchasing step itself without addressing the linkages of quotes, orders, or the other side – a.k.a., Software Asset Management (SAM).
Consolidating the best of both worlds
Enter PyraCloud from SoftwareONE. PyraCloud is comprised of four modules designed to streamline and optimize an organization’s software portfolio. These include:
A global, centralized Catalog Management system.
Order Process Management that links quotes to orders and offers approval workflows.
Customizable Invoice Process Management approval workflows.
A reporting and compliance module that gives both visibility into licenses/entitlements and also provides cloud consumption visibility.
PyraCloud is one of the only tools that both streamlines the purchasing and management of software assets while also providing consumption visibility for cloud computing usage. PyraCloud was designed to focus on software only and incorporates numerous features that address many IT challenges. Two of the more noteworthy include:
Demonstrating compliance during an audit, which puts organizations at high risk of penalties or fines if found to be non-compliant.
Maintaining visibility on the total cloud usage across various business segments, which can often be far above or below the defined budget.
PyraCloud’s Reporting and Compliance module handles both of these areas. PyraCloud facilitates audits with a complete hybrid view of assets and entitlements while providing cloud consumption data to either reduce or escalate a department’s use of cloud resources in order to align with their defined budget.
PyraCloud hits all four of the Gartner areas for improvement listed above. If you would like to learn how a global risk management organization uses PyraCloud to justify its Azure investment, then click the banner below and download our FREE case study.