Things to Consider in a Cloud Sourcing Hybrid Environment
By Angela Wilson, Sr. Solutions Architect, ArganoCSS International, Inc.
Depending on the industry, there can be very different business requirements that affect how companies source goods and services. The introduction of advanced procurement solutions is often required to meet these business requirements; which often drive the need for seamless integration. When an organization deploys a best in class procurement solution in their enterprise environment it becomes of paramount importance to provide a homogenous feel for the end users who are managing procurement initiatives focused on supplier management and product quality while at the same time driving lower costs. So what makes life easier when you want to take advantage of the full functionality of Oracle Cloud Sourcing while you continue to leverage the business value provided from your current on premise ERP system? This hybrid solution model can drive significant value to your business and what you do directly before and after the sourcing event can affect how seamless the transition is from system to system. By working through the following questions; running a hybrid solution model will offer business value that provides almost immediate return on the investment required to deploy it.
Do I have the right supporting modules in Cloud?
Part of deploying a successful hybrid Sourcing model includes utilizing not only the functionality of the Sourcing module but also taking advantage of the integrated functionality that is built into the supporting modules to specifically assist with sourcing events. Determining if there’s additional functionality that may be truly beneficial to your organization lies in understanding the procurement requirements critical to your organization and how Oracle Cloud Procurement solutions are integrated to support those requirements. Similarly, structuring your business data with a focused master data strategy will directly impact how successful your Oracle Cloud Sourcing and Procurement solution will be in meeting your objectives. In many organizations tracking supplier qualifications such as supplier diversity is a critical process but it is often done outside of a system. The result is that it is difficult to incorporate supplier qualifications into sourcing events and subsequently who you award contracts. Evaluating and pre-qualifying vendors to maintain compliance, avoid risk, or maintain a list of certified vendors is often a critical pre-requisite for full visibility into whom you are sourcing from. Cloud Suppliers and Supplier Qualification Management can help to flag, track, and identify critical vendors that should be specifically included in sourcing events or identify high-risk vendors that should be specifically excluded.
When organizations have qualitative requirements that must be gathered from vendors these requirements can be easily be built out directly in the Sourcing module or these requirements can be aggregated and pre-built into lists within Cloud Supplier Qualification Management. Using Cloud Supplier Qualification Management as a supporting module gives organizations the option to pre-build lists of requirements that can be reused and incorporated into a sourcing event in addition to using it for the supplier pre-qualification or evaluation process prior to the sourcing cycle. This functionality gives companies significant flexibility in how they want to collect critical information affecting a contract or PO award.
It is also important that companies ask themselves if contract terms negotiation is better suited as part of the sourcing cycle or pushed downstream to the contract execution stage. Many companies want to take on the laboring task of negotiating terms early on (during sourcing) in an effort to speed up the contract execution stage later once an award is made. Incorporating Cloud Contract Management, another supporting module, allows companies to build out their legal terms and conditions and include them in the sourcing event so vendor collaboration starts earlier in the procurement process. This is especially helpful to organizations whose procurement team does the majority of the negotiating and sourcing. This ensures a smooth transition to the contracts team who is then using their time to spot check for issues and anomalies instead of trying to create contracts from scratch and begin yet another round of negotiations, this time around contract terms, with the vendor who is dependent on your organization to get a quickly executed contract finalized.
Do I have the right integration strategy?
So what does this mean exactly when it comes to implementing an Oracle Cloud Sourcing solution? How and what you integrate often revolves around whether you are a direct or indirect purchasing organization, what the on premise systems is, and of course the integration options. In a hybrid Procurement model like the one I am describing, often payables are processed in the on premise system because this is where the financials system of record resides. Therefore getting the awarded contract lines and pricing to the on premise system for transactional purchasing business flow is one of the most important integrations. For clarity those options are one of the following:
- A direct integration from Sourcing to an on premise system to create an agreement or purchase order if using Stand-alone Sourcing.
- Creation of an Agreement through an out of the box integration from Cloud Sourcing to Cloud Procurement Contracts. Then integrate the Agreement from Cloud Procurement Contracts to your on premise system.
- Creation of a Purchase Order through an out of the box integration from Cloud Sourcing to Cloud Purchasing.
- Then integrate the Purchase Order from Cloud Purchasing to your on premise system.
The topic of integration approach and the benefits of each will be discussed in future blogs so please come back and read more in the upcoming weeks or contact ArganoCSS for a discussion on the topic.
Do I have a well thought out training plan which includes my suppliers?
In a hybrid Oracle Cloud Sourcing and Procurement environment depending on where invoices and payments are processed you will possibly have two systems that could be vendor facing if using supplier portal for vendors to submit invoices online as well. Cloud Sourcing utilizes the Cloud Supplier portal for quote responses so planning for both internal end user and also external end user (the supplier) is very important to adoption and sustainability. Cloud Supplier Self Service, Sourcing, And Contract Management in a single portal gives suppliers a single place to manage critical collaboration with your organization. Whether using the portal for just a negotiations and quote responses or for the entire onboarding to invoice and payment submission, this is a transition for suppliers as well. It’s easy to underestimate the amount of assistance and training a supplier will need, however, they are an important part of a successful rollout. Incorporating them into your training plan, considering a partial rollout, or doing a trail through some of the more strategic vendor/partnership are ways to ensure you have a proper implementation plan. Similarly, your end users will now be working with a hybrid solution including Cloud and on premise applications. It is important to design for the most seamless user experience possible including providing thorough training on the business flow of information starting in Cloud and ending in On Premise. End-user understanding of the business flow of data in the Hybrid Sourcing and Procurement solution will be more effective in working across departments in collaboration to ensure business flows do not break down due to procedural failures.
In summary, implementing a Hybrid Sourcing and Procurement solution it is important to consider the following prior to the start and during your implementation:
- Map your business requirements to the entire Oracle Cloud Sourcing and Procurement solution offering. This will allow you to provide a solution that optimizes the sourcing business cycle for supplier onboarding to contract award.
- Think through your integration strategy and business data flows to define the most seamless approach to deploying a hybrid Oracle Cloud Sourcing solution. This will allow you to not only develop a simple integration model but also allow for the highest levels of sustainability of your integration footprint.
- Plan for training both internal users and suppliers. Training focused on supplier needs will ensure your solution is adopted and you rapidly achieve the benefits of your project business case. Designing training including addressing the integration business flow will improve your internal end-user experience and help reinforce adherence to procedures required for the hybrid solution model.
Please read my next blog where I discuss the integrations in more detail along with pros and cons associated with integration approaches.