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SaaS: The Rise of Software as a Service (and its Role in Procurement)

The past decade has seen the extraordinary rise of SaaS or Software-as-a-Service. What is SaaS, and why has it become so popular?

Traditionally, software solutions are installed and run onsite. Applications run on PCs, and if they are tied to a central server, that server is also a PC that’s located on the premises. Data is stored and accessed on the PC that runs the application, as well as the server (if there is one). This traditional model requires a robust IT department that is responsible for the installation and support of both software and hardware, security, and data backup. The software is typically purchased outright, with new versions bought and installed as they are released.

Software as a Service leverages the internet for web-based apps instead of traditional software. It’s a more modern approach, but this isn’t just a case of adopting the cloud because it seems like the cool new way of doing things. 

A June 2020 report by McKinsey & Company noted that at this point, all industries have at least a 20% adoption rate of SaaS as traditional on-premises software is pushed out. Professional services have reached 38% SaaS adoption, while manufacturing is at 25%. That report shows the rate of SaaS adoption has multiplied through the decade, but the pandemic has accelerated the trend:

“The ‘next normal’ established during the COVID-19 pandemic will accelerate the footprint of SaaS, given the growth of remote working, the rapid deployment of digital solutions, and the lower up-front costs.”

Why are companies so eager to adopt Software-as-a-Service? There are many advantages—that’s what makes SaaS so compelling. Here are some of the most frequently cited reasons why SaaS is growing so rapidly in popularity:

  • The subscription pricing model eliminates costly purchase and upgrade costs and allows flexibility based on the number of users
  • Instead of monolithic software that tries to do everything (often letting users down for specialized functions), SaaS is an ecosystem of apps that is each highly specialized and able to complement each other for a “best-in-breed” solution 
  • Rapid deployment
  • Managed data centers mean lower IT staffing costs for customers, freed up space and lower operating costs without local servers, and 24/7 uptime
  • Security is managed centrally, and data is stored centrally and backed up by a data center
  • Hosted servers in data centers have become exponentially more powerful, enabling the use of AI and machine learning that would not be practical for an on-premises installation 
  • Faster broadband and cellular internet service enables responsive remote sessions and makes large data transfers practical
  • Web-based SaaS apps can be accessed remotely and run on virtually any connected device, including PCs, tablets, and smartphones

Best-of-breed solutions solve one business purpose better than any other solution. They focus on supporting a single business outcome instead of many, so they outperform other solutions that try to do everything. Best-of-breed SaaS solutions—like Arkestro—enable strategic sourcing transformation and have an excellent user experience. 

Software-as-a-Service is making big inroads into every industry. It’s also having a profound impact on how functional departments operate. In particular, there are huge wins for sourcing professionals. The procurement office in many companies has been making things work using a hodgepodge of software—much of that not designed specifically for sourcing—and manual processes. It’s inefficient, time-consuming, error-prone, and expensive. Trying to operate using strategic sourcing is a challenge with the many compromises involved. They say a true compromise means no one is happy, which has been largely true when sourcing is compromising on manual processes (it doesn’t have to be this way). 

The move to SaaS brings tremendous benefits. The companies making that transition are seeing lowered costs, happier staff, better relationships with suppliers and also gaining a competitive edge.

Here are some of the big wins for any company’s sourcing team—regardless of the industry they work in.

Artificial Intelligence

Strategic sourcing requires tracking and evaluating many variables. Delivery dates, transportation requirements, quality levels, currency fluctuations, global and local demand, weather-related events, government regulations, environmental factors—the list goes on. Being able to track all of these variables in real-time, evaluate them, make decisions based on the information, and make projections for trends is all but impossible.

Or it was until artificial intelligence arrived on the scene. With SaaS, AI has moved from university and government research labs to the cloud. Applying the power of artificial intelligence to procurement is a game-changer.

Automation

Many procurement professionals spend a large chunk of their time on repetitive tasks. It’s boring, a waste of their skills, and the nature of the work makes it all too easy for errors to slip in. Having massive parallel processing capacity on tap means SaaS solutions can leverage machine learning to automate these tasks. They are completed in a fraction of the time, without error.

Combine artificial intelligence and machine learning, and it’s even possible to automate the negotiation process—not just a time-saver, but a significant competitive advantage.

Single Source of Truth

In a traditional procurement office where suppliers communicate using various methods ranging from email to phone calls, different departments within the company use their own solutions, and legacy systems make integration difficult. Tracking information is difficult. Sometimes it’s impossible.

With a web-based SaaS solution, data is centralized. Access to the system with different levels of functionality can be easily granted to any party that’s part of the transaction, no matter where they’re located. Communications can be kept within the system. SaaS makes it possible to have a single source of truth for transparency and increased efficiency.

How to Experience the SaaS Advantage for Your Sourcing Needs

This one’s easy: contact Arkestro. 

Arkestro exemplifies everything that’s great about SaaS, applying the concept specifically to the needs of procurement professionals. From AI-powered intelligent first offers to comprehensive supplier management tools, a demo of Arkestro will show you how to leverage the power of SaaS in a best-of-breed solution for your sourcing team.

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Rob DeSantis

Founder

As a former co-founder of Ariba running sales, Rob has deep expertise in the procurement space, having helped propel Ariba from zero to $250 million in revenue in four years and IPO of the year in 1999 before its acquisition by SAP a decade later. In addition to co-founding Ariba, Rob was also an early angel investor and board member of LinkedIn, the world’s largest professional online network.

More recently, Rob served as an investor and advisor to a small portfolio of companies including Bloom Energy, AEye, Inc., HiQ Labs, Agiloft, USEND and more. He is also a co-founder of Dibbs Technology and TrueParity. Rob holds a BSME from the University of Rhode Island.

Marty Meyer

Chief Financial Officer

A trusted partner and advisor on the executive team, Marty has a unique background having been the CFO of nine venture backed technology companies. Marty has raised over $300M in venture funding and has closed six strategic M&A transactions with a combined value of over $1B. Marty has deep domain expertise in ecommerce, consumer internet, networking, data security, data privacy, media technology and enterprise software industries. Marty is especially experienced in the finance and operations activities of SaaS companies and is driven by data and metrics to help create outstanding customer experiences and drive efficient growth.

Neil Lustig

President and Chief Operating Officer

Neil is a seasoned executive with over 30 years of experience leading and building teams in Tech. Neil brings insights from a variety of market spaces and company sizes. Most recently Neil was the CEO of GAN Integrity, an innovative SaaS Compliance technology company serving enterprise customers in North America and Europe. Before that Neil was the CEO of Sailthru, a leader in ML driven personalized multi-channel marketing communications for media and e-commerce markets. Prior to that Neil was the CEO of Vendavo, the leader in B2B price optimization and management for large enterprises. Before Vendavo, Neil led the commercial team at Ariba, the market pioneer that defined and created the eProcurement space. Neil served as the GM of Ariba Europe and subsequently the GM of Ariba North America. Neil started his career at IBM where he spent sixteen years, initially as a software developer, and then twelve years in a variety of Sales and Marketing roles

 

Neil has a BS in Computer Science and Applied Mathematics from SUNY Albany. He is a native New Yorker, Brooklyn born, and still resides with his wife and three children in New York City.

Bonnie Adams

Director of People Operations

Bonnie is a People Operations and HR veteran, with over a decade of experience establishing successful people and culture functions for early to mid-stage tech startups going through high growth phases. She has a passion for supporting and creating inclusive and collaborative work environments and is well-versed in driving positive changes in her organizations as a trusted leader. Prior to joining Arkestro Bonnie worked as the People & Culture Coordinator for Ionic Security, helping them scale from 5 to over 200 employees in addition to a $120M funding round. Most recently she was the Head of People & Culture for blockchain innovator Storj Labs and was the Director of Human Resources at PrizePicks, the largest independently owned Daily Fantasy Sports platform in North America.

Arym Diamond

Chief Revenue Officer

Arym Diamond joined Arkestro in January 2022 bringing over 20 years of experience in the enterprise software and consultancy industry.  He is responsible for the worldwide go-to-market revenue strategy. Prior to Arkestro, Arym was Chief Revenue Officer at CalAmp focused on Telematics and Logistics. He also served as the area vice president of North American Sales within the Salesforce.com Enterprise Business unit for Einstein Analytics & AI, where analytics and machine learning were re-imagined for the front office.  Prior to that, he spent over 10 years at Oracle in various sales positions. Arym holds an MBA from the University of Southern California Marshall School of Business, and an undergraduate degree from California State University.

2022 Gartner® Hype Cycle™
for Procurement and Sourcing
includes Arkestro.

2022 Gartner® Hype Cycle™ for Procurement and Sourcing includes Arkestro.

Gartner® Hype Cycle™ are registered trademarks of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.

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