1: What is hosted procurement and what is being hosted? The basic definition of hosted procurement is the business-to-business purchase and sale of supplies and services using the Internet, but managed day to day by a procurement partner. The partner “hosts” the procurement solution with either your hardware or theirs while assuming IT responsibilities for a constant 24/7 operation. Although the term “hosted procurement” falls under a big umbrella of different definitions, it is most commonly associated with a procurement partner who daily manages and maintains your procurement solution for you.

2: So what REALLY is a hosted procurement solution? Your procurement partner provides services for you to ensure every aspect of the procurement solution meets your enterprise planning strategy. Services can be limited to only management of the solution to a full extended service solution including help desk services, training webinars, catalog maintenance, etc. Hosted procurement partners assume responsibility for day-to-day management of certain procurement processes, but the key is to determine what your organization needs, and then creating a solution with your procurement partner.

3: Why do most companies consider hosted procurement solutions? Most companies we speak to find that the reasons for considering hosted procurement and the reasons they ultimately decide to purchase a hosted solution are often very different. Many companies investigate hosted procurement as a means to lower procurement related labor costs such as IT resources. Once they better understand the capabilities that a procurement partner brings to the table and how they can use these capabilities to compliment their organization, their decisions are often driven by three main objectives: 1) to improve overall procurement, 2) to gain more freedom and flexibility to focus on mission-critical procurement business functions and 3) to reduce startup costs associated with the solution and the IT resources required to maintain the solution.

4: How do I know if a hosted procurement solution is the right solution for our organization? That’s a difficult question that can only be answered after carefully scrutinizing the internal processes and policies that drive your procurement strategy within your organization. As monumental as that seems, it best comes back to what drives your procurement strategy and opening the true monetary advantages gained with a hosted solution. Most companies we speak to emphasize the compelling value of services and overall cost savings with the solution.

5: What's the next step? You’ll probably want to start by gathering information first about your current procurement activities and processes and then move to the more strategic considerations. A better understanding your current state, that is, procurement organization, capacity and capabilities can be a valuable analysis tool to support any improvement decision. Some examples of information you may need, include: spend numbers by category by location, transaction types and volume, procurement roles, major activities and percent of time on each. Other questions to consider are what processes can be farmed out to the hosted procurement provider as part of their services package. For example, a number of the companies we spoke with take advantage of help desk services to free procurement resources to direct their energies into mission-critical procurement strategies instead of researching orders and returning client telephone messages or administering the procurement solution themselves. So what’s the next step? Contact us to see how our hosted procurement solution strategies and services will provide you with a means to see your vision of procurement strategy success.