An article in the October issue of CFO Magazine entitled "Why CFOs Should Police SaaS Deals" discusses the challenges of acquiring and managing Software-as-a-Service (SaaS) technology. While all the points in the article are valid, one consideration was glossed over, especially as it relates to procurement, and which no doubt applies to other operational aspects as well, whose functions are assigned to SaaS implementation through the information technology (IT) department.

The article addresses the core concern of a CFO in acquiring such software. "The larger lesson for the CFO is to approach SaaS as one would any business investment. As Mark Linden, CFO of Intacct, a cloud-based provider of accounting and financial-management tools, says, ‘You’re buying software to automate some business process, so you’ve got to understand the changes to the process and the benefits you’re looking for…. You have to focus on the business benefit. Are you achieving it or not?’ "

This is well stated, and eminently true when using SaaS electronic sourcing tools. While there are many excellent e-sourcing tools available, ranging in cost from free through a rather significant investment, nothing replaces the effectiveness of the human in the loop. Many SaaS solutions are highly appropriate for routine, normalizable, standardizable functions, but operations which have many variables and qualitative elements resist being stuffed into that standardized box. Strategic sourcing is one of those operations.

Source One, a consultancy that offers strategic sourcing services, has created a free set of e-sourcing tools called, which has about 80% of the electronic functionality that can be expected to be relevant to most sourcing initiatives, including RFx management, reverse auctions, and a contract repository system. Source One, individual companies and even other consulting firms use on a regular basis for a huge variety of sourcing projects. Source One publishes the tools for free in order to maintain and augment procurement standards, and to provide, for any companies who have the will and the bandwidth to take on their own procurement challenges, a robust tool to accomplish those goals. In exchange, Source One maintains its market-leading status and increases its brand awareness.

Counterintuitively, Source One is not competing with itself, or giving away any "tricks of the trade" by supplying the market with free electronic sourcing tools. The toolset must be accompanied by best strategic sourcing practices to be optimally effective. As Steven Belli, CEO of Source One, likes to say, "Just owning a hammer does not make a person a carpenter." Moreover, as the old saying goes, if all you have is a hammer, every problem starts to look like a nail.

Many procurement professionals come to over-rely on their SaaS e-sourcing solutions to do the sourcing work for them, and become complacent or generate excuses on why they aren’t more actively involved in the process, in the misguided belief that the tool by itself is a comprehensve solution to the sourcing task.

However, an essential component of strategic sourcing is the strategic element. As the CFO Magazine article aptly states, it is crucial that you’ve got to understand the changes to the process and the benefits you’re looking for, and focus on the business benefit. If you haven’t developed that understanding before you begin a project, a high-tech SaaS hammer isn’t going to be much use to you. That strategic knowledge and capability is the added value that Source One brings to every project in which the company engages, and why it is willing to offer access to a quality high-tech e-sourcing hammer free of charge. Companies who have been through a sourcing cycle or two with Source One have learned how to properly use the tool to enhance their own strategic efforts, and are ready to try to go it alone. Other companies who understand the combination of a robust e-sourcing tool with a well-designed strategic approach will experience success as well.

CFOs and supply chain professionals who understand the business dynamics outlined in the CFO Magazine article are going to be much better positioned to make effective decisions regarding SaaS as an effective integrated component of a well-planned business strategy. The article closes by recommending a steering committee approach to evaluating and implementing SaaS solutions, and not placing all the acquisitional and operational burden on the IT department. This is wise advice, because any tool, no matter how high-tech or low cost, is just that: a tool, which still requires the skillful use by a competent manager with a well-conceived plan in mind.
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Alex Howerton

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