2/09/13: Software purchasing decisions have traditionally been made from the top down. The advent of cloud and Saas applications such as Adaptive Planning has challenged this tradition for the reasons highlighted in this blog.

Large companies with multiple divisions and regions, each with their own P&L manager and finance function have traditionally relied on the head office to make software procurement decisions. Once the software has been purchased by head office, the divisions and regions wait their turn to be ‘switched on’ and are then cross charged for the project costs and the ongoing cost of ownership.

This model works well for the large and expensive on-premise applications. The high cost of ownership and implementation forces companies to implement the software into each division or region to build up the business case benefits. Otherwise the purchase would never get approved.

However, the software purchasing landscape has changed with the advent of new technologies and concepts – Cloud and SaaS. Cloud based and SaaS licensed applications empower divisional or regional managers to make their own purchasing decisions in two ways.

Firstly, there is no need to seek approval for a large capital outlay as most of the cost is an operational expense which is often within the managers approval limit. Therefore, avoiding the burden of justification to head office.

Secondly, the absence of hardware and technical support skills reduces the need for technical expertise to get involved in the purchasing process. Managers do not need to refer to IT for technical hardware specifications or to provide specialist IT resources to support the hardware of the application.

This freedom to purchase software independently eases the strain on the relationship between head office and division/region. No longer are the divisions reliant on support provided by head office that is expensive and often poorly serviced. No longer do the divisions have to wait for purchasing decisions that can take years and then even longer to roll out. No longer do the divisions need to pay for a service that was forced upon them.

As an Adaptive Planning partner based in Australia we have encountered many situations that fit into this category as there are many global organisations with operations in our region. Budgeting and Forecasting software is an excellent candidate for such a purchasing scenario.

Contact GK Horizons for more information