In the wake of ongoing disruptions to supply chains that show no sign of abating, there is naturally now a lot more focus on procurement processes within organizations. The need to make sure there are second, third and even fourth sources for critical components and ingredients has become critical. The challenge is that many of the procurement processes in place rely on applications that make it challenging to onboard new suppliers.
More challenging still, many of the people involved in procurement are still working from home to help limit the spread of the COVID-19 pandemic. Remotely accessing legacy applications over a wide area network running on a server in a data center creates all kinds of IT issues for any internal IT team.
ServiceNow, today at its Knowledge 2022 event, made a case for replacing those applications with a software-as-a-service (SaaS) application that is more accessible. The Procurement Service Management (PSM) application, which is based on software that ServiceNow gained last year with its acquisition of GekkoBrain, is designed to foster higher levels of collaboration among geographically distributed procurement teams that can now all access the same cloud application, says Kirsten Loegering, vice president of product management for enterprise resource planning (ERP) solutions at ServiceNow.
That application platform also gives procurement teams access to processing mining tools, a robotic process automation framework, integrations and a set of low-code tools to enable those teams to build applications that extend the core PSM application as part of a digital transformation initiative, she notes.
In addition, ServiceNow has embedded artificial intelligence (AI) capabilities and other forms of advanced analytics to surface opportunities to make procurement processes more efficient.
Most large organizations today manage procurement as an extension of ERP applications that have been used as systems of record for decades. ServiceNow is aiming to replace some of those applications, but not the entire ERP suite, notes Loegering. “We’re not providing a system of record,” she says. Instead, ServiceNow is challenging organizations to rethink which applications that make up an ERP suite today are in fact a so-called system of engagement application that is better served being delivered via the cloud.
Of course, organizations could move their ERP applications into the cloud, but that requires a lot of time and effort. There are, however, a wide range of SaaS applications that enable organizations to more easily shift some processes to the cloud without having to move an entire ERP suite of software. The tradeoff, of course, is that organizations may wind up with a large portfolio of SaaS applications that they then need to manage. Most IT teams given their druthers would prefer not to go down that path, but many business executives are showing a marked preference for modern SaaS applications that they perceive enable them to achieve their digital transformation goals faster.
It’s not clear how much appetite there is for moving procurement applications to the cloud, but given the pressure many procurement teams are under to fix supply chain issues, there’s clearly a lot less tolerance for any process that is deemed too inflexible. In most of those cases, that inflexibility stems directly from the way the procurement process was coded into a legacy application. The issue now is to what degree can an organization facing severe supply chain issues really continue to tolerate an application that was designed for what now appears to be a bygone era of procurement.