Procurement Industries

Why Do Governments Use Cloud-Based Procurement Systems?

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5 minute read

Written by

Logan Price

It is a fact that the movement of money within a country dictates how well its economy performs.

Consequently, governments often use a considerable effort to maintain a keen eye on the management of their procurement process. However, while in the past the aim was to purchase a lot with the least amount of money possible, societies now require that public funds be used to address a variety of socio-economic issues, such as housing, education, and medical care.

Social governance dictates that a government should implement policies, laws, and regulations, which result in the creation of a sustainable economy. In furtherance of this goal, governments must establish procurement procedures that not only obtain value for money, but are also dynamic, efficient, and sustainable. Hence, the birth of digital procurement transformation. 

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Additionally, the impact of the Covid-19 pandemic on the procurement of goods and services has reiterated the importance of stepping away from the traditional, manual modus operandi to a more streamlined, digital process flow. Therefore, governments across the world have been diligently seeking out advancements in the digital procurement world. The basic laws of the economy state that “high demand increases supply”, hence the creation of government software solutions for procurement, specifically, cloud-based procurement systems.

A cloud-based procurement system is one that enables an organization to create, monitor, and complete a procurement process electronically, with the data being accessible through a cloud. A government procurement software serves to eliminate manually generated supplier invoices and automate the entire procurement process from end to end. 

The implementation of such systems typically includes the use of cloud-based procurement software. Sometimes, a procurement system may consist of the use of multiple software, including, but not limited to a cloud-based purchase order software, or it may be a complete system working as one. This type of software reduces inefficiencies in the procurement process and results in a more streamlined procurement process flow. 

Some governments refrain from implementing systems like these as they believe that public procurement laws and policies are too cumbersome to fit into such systems. Additionally, the procurement of a system that maps the procurement process from end to end is typically expensive and takes a long time to develop and implement, which is another repellent for governments that are endeavoring to maximize their budgets. 

However, with the demand to increase sustainability through the use of technology, more and more SaaS companies have responded to the need for the creation of government software solutions by either adding features to their existing products that are tailored to the government and public procurement procedures or creating a completely different product, that is, a government procurement software.

The main advantages of using a cloud-based procurement software are; increased spend visibility, optimal cost savings, and improved supplier relationship.

Increased Spend Visibility

One of the major shortcomings of public procurement is that multiple sub-groups and stakeholders are often involved in the procurement process, which results in the process becoming so fractured that the ability to accurately monitor spending, throughout the organization, and in real-time is almost impossible. However, with the advent of cloud-based procurement systems such as Tradogram, senior management is able to gain 100% visibility into the organization’s spending, and track budgets in real-time. Tradogram offers its customers the ability to track, manage, and report on procurement activity within the company regularly.

Increased visibility will enable management to be more decisive in matters that are important and have time constraints. It will also help the organization control maverick spending and maintain the allocated budget for each department/ sub-unit.

Reports generated by a cloud-based procurement software may allow management to practice strategic procurement, and adhere to its strategic objectives. These reports may also be able to highlight areas of overspending or fragmentation of contracts. Increased visibility of an organization’s spend will definitely enable its management to stick to its “value for money procurement mantra, as well as increase efficiency.

Optimal Cost Savings

Optimal Cost Savings

Apart from the savings that will result from the generation of requisitions, purchase orders, RFQs and other documents relating to the procurement process, instead of manually printing and preparing via hardcopy, an organization will save money if a procurement software is at the center of its procurement process. This is so as the pricing strategies of this software may allow for a monthly subscription that is much cheaper and more flexible than if a system were to be designed from scratch. 

Additionally, they are generally ready to use upon installation, and very simple to understand. Consequently, there will be little to no downtime for staff, and the learning curve would be flattened due to the perceived smooth transition. As much as they are standard, value can be added to the procurement software, as most if not all of these types of software can be tailored to suit an organization’s specific needs.

Improved Supplier Relationships

Tradogram is a cloud-based procurement software that can be used by both the supplier and government agencies. It is an effective government procurement software as it provides the ability to record supplier information and performance, as well as, maintain communication with the supplier. Having an open and consistent channel of communication with suppliers can only serve to strengthen the relationship, which will result in better bids received from suppliers, as well as increased participation in bidding for government procurement contracts.

A cloud-based software will enable you to keep a detailed database of suppliers within specific markets. This will help to improve strategic sourcing, which will result in better outcomes from supplier negotiations

Additionally, financial information from the suppliers, such as preferred payment currency, and payment terms can be automatically applied to orders and will shorten the time taken to process payments. Most cloud-based software also provide suppliers with the ability to track orders, invoices, and payments easily, thus creating transparency and accountability for all parties involved.

Adopting a cloud-based procurement software is becoming less of a nice-to-have and more of a must-have to stay ahead and grow. Start your journey with this digital procurement transformation guide.

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