On-Premises vs Cloud-Based Procurement: Everything You Need to Know

Over the past few years, industries have witnessed a huge evolution in digital transformation. The latest and highly adopted change is moving towards cloud-based services and applications over on-premises software. According to the latest forecast from Gartner, people from all over the world are spending on end-user public cloud services and the investment is going to increase by 20.4% to total $678.8 billion in 2024.   

One of the big reasons why businesses are moving towards cloud-based solutions is lowered costs and simplified operations.  This helps businesses to scale easily.  And as businesses grow, it brings with it the need to acquire more raw materials, produce more and distribute more. All of which puts focus on having an effective and efficient procurement process.  

Index 

• What is Procurement?
• What is On-premises Procurement?
• What is Cloud-Based Procurement?
• How does On-premises Procurement differ from Cloud Procurement?
• What are the advantages of On Premise-Based procurement?
• What are the Advantages of Cloud-Based procurement?
• Partner Portal: A Cloud-Based Procurement Software and its Key Features

What is Procurement?

Procurement is the backbone of a supply chain that includes finding potential vendors and acquiring products or services at the best available price. Finding the requirements of an organization is the first stage of the process. It follows identifying potential vendors, sourcing products or services, and ends with paying the vendors. 

Once the team finds the vendors, they negotiate and bid with the vendors, onboard them, manage contracts, and fulfill the company’s requirements.  The purpose of the procurement process is to explore various options and identify the most suitable deal on the basis of the company’s defined criteria, such as cost, quantity of products, location of the provider, etc.  

What is On-premises Procurement?

On-premises procurement involves deploying and managing procurement software within the physical infrastructure of an organization. This traditional approach gives businesses complete control over the data, its security, and the complete procurement process. Businesses typically install software and run it on the company’s internal servers or computers. The company has complete responsibility for the installation, configuration, maintenance, and security of the procurement software and systems. 

What is Cloud-Based Procurement? 

Cloud-based procurement is a technology solution based on cloud computing services. It resolves the limitation of complex hardware requirements and integration, since cloud computing enables accessing various IT resources via the internet with as-you-use pricing, rather than physically storing them in various devices or servers. 

Unlike On-premises procurement, the software and data are hosted and maintained by third-party service providers such as AWS, Microsoft Azure etc, eliminating the need for on-site infrastructure and reducing the burden on internal IT teams. Though with the popularity of cloud-based procurement, many companies are shifting to the cloud, which offers newfound flexibility to improve agility and scalability.  

How does On-premises Procurement differ from Cloud Procurement? 

An on-premises procurement system is a setup that depends on a company’s IT infrastructure. In the on-premises procurement process, the company has full access and control of infrastructure. It includes their servers and hardware to manage data and results in managing the procure-to-pay cycle effectively.  The company needs an in-house procurement team and an internal or external IT team to manage tasks such as updating data, backups, security, and fixing any technical problems. 

However, cloud-based procurement is software that runs on cloud servers and is accessible through the Internet. Hence, the company doesn’t need to worry about capital expenditure on hardware infrastructure, networking, upgrades, or even maintenance.  It also enables the company to access resources (storage, database, network, etc) as per the demand. The company doesn’t need to store and manage the data on their computers. Instead, all the data gets managed in the cloud. It helps companies reduce their IT staff and provides a cost-effective way to store and manage the process.  

What are the Advantages of On Premises-Based Procurement?

Absolute Control and Enables Customization: Businesses have absolute control over the procurement system as all systems are physically installed in their regulated environment.  This also allows a large amount of customization to meet some very specific business requirements.   

Secured: As data gets stored within the premises, businesses could implement their very own cyber security measures as considered safe by their own IT team. Some businesses depend on specific cyber security measures as prescribed by their specific industry regulations.  

Integration with Existing Systems: On-premises solutions can seamlessly integrate with other on-site systems, such as ERP (Enterprise Resource Planning) software.  

What are the advantages of Cloud-Based procurement

Cloud-based procurement offers several advantages that can positively impact a company. Here are some of the key advantages.   

 Cost-effective process: With cloud-based procurement, a company can save their expenses on traditional hardware and software purchases. This cost-effective approach takes out the need for large capital expenditures and allows for better budget management.  

 Enhanced efficiency and productivity: Cloud-based procurement offers improved business operational efficiency. Users get accessibility of cloud services from anywhere with an internet connection, enabling remote work, collaboration, and improved productivity.  

 Accessibility to advanced technologies: Cloud-based procurement enables organizations to access cutting-edge technologies without spending time and money separately on it. Usually, cloud providers offer some services such as machine learning, artificial intelligence, big data analytics, Internet of Things (IoT), and serverless computing that can enhance the decision-making process of organizations.  

Enables E-Invoicing: The software on the cloud also extends accessibility to vendors.  Vendors can now submit invoices online rather than physical submissions.  Also, easy access helps active collaboration, a three-way matching process of all Purchase Orders, Receipts and Invoicing becomes so much easier and quick. It automates the verification of invoices before sending them for approval and ensures the correct figures for the payment to vendors.     

Partner Portal: A Cloud-Based Procurement Software and its Key Features

Partner Portal, a cloud-based vendor management system, streamlines and automates procurement-to-pay processes, cuts down costs, and enhances efficiency. Key features of the platform are vendor onboarding, real-time inventory updates, purchase order automation, purchase requisition, and invoice management providing a comprehensive solution. Implementing a cloud procurement strategy with Partner Portal involves careful steps like defining spending and acquiring goods or services plans, choosing the right cloud service, and prioritizing security. The company can get benefits like cost savings, advanced technology access, easy usage, e-invoicing, and seamless integration. Embracing Partner Portal transforms processes and drives better outcomes for organizations. 

FAQs: 

What is cloud procurement? 

Cloud procurement is also known as a cloud-based procurement solution that provides a comprehensive set of tools based on the cloud to complete the procurement lifecycle, from sourcing to payment.  

What are the benefits of cloud-based procurement solutions? 

Cloud-based procurement solutions allow a company to reduce costs, increase supply chain efficiencies, save, store, and access the data via the Internet, streamline purchases and payments, and increase business value.  

What makes cloud procurement important in the modern era? 

Due to scalability, flexibility, cost-efficiency, and ability to enable seamless collaboration of cloud procurement and the ability to access data from anywhere at any time it is important in the modern era.