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7. Practical implementation of cloud computing and its impact on procurement process

Cloud computing has begun to use by many organisations across the different business

functions as a tool to meet the globalisation demands and IT needs. It has been realized that

cloud computing market had reached to 8.1 billion dollars in 2013 and ill increase ith

same pace in the coming years !"in and Chen# 2012$. %ig organisations for instance &almart#

'eneral (lectric etc. ha)e de)eloped internet designated hub for their buying and selling

acti)ities and centralised procurement for cost reduction and speedy procurement. *any

ma+or automoti)e industry players like ,ord# '*# Chrysler etc. has +oined the e-procurement

consortium for their competi)eness !%usiness &ire# 2013$. (-ordering system and e-ser)ices

has been noted used many retail# restaurant and other businesses for effecti)e procurement

!rbin# 2008$. *any organisations ha)e been successfully shifted to cloud computing but feface problem in their success !"in and Chen# 2012$. This section ill discuss organisation/s

practical cloud computing implementation and its impact on the core business functions

especially procurement process through different case studies analysis and practical

eamples.

7.1. Unsuccessful implantation of cloud computing

7.1.1. Integrated ERP systems for a decentralised company

ospital operating en)ironment has dramatically changing hich demands *edical e)ice

Corporation !*C$ for organisational restructuring and stri)e for greater purchasing poer

through consolidating the purchase ith increasingly less )endors. This case study discusses

the trend of formation of buying groups and use of e-procurement system for purchasing.

*C as folloing the decentralised management approach and beside some benefits of

decentralisation# *C as facing measureable drabacks such as lack of update data

a)ailability# duplication of ser)ices# difficulties in managing in)entory# cost and standard

inefficiencies. The aim of *C !i.e. a leading medical de)ices manufacturer and distributor$

is to implement an e-procurement system to increase the efficiency of the purchasing

transaction and add )alues to customer satisfaction. This case study describes the *C

integration strategy in the contet of medical supply industry/s uniue features and

en)ironment of immensely changing ork processes ith different regional characteristics

!%ock# ,lores# "atumahina# "am# 4tephanie and 5ang# 2006$.

%efore the implementation of the e-procurement system# *C has to standardise and

integrate their ork processes in different regions and integrate incongruent (7 system

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respecti)ely. *C conducted integration in 2 segments but unable to achie)e the epected

benefits after go-li)e and produced interoperability issues. 9perating the ne (7 system in

parallel to the legacy systems ere also obstacle for attaining desired outcomes. ata uality

and transformation ere underestimated for the implementation and thus it caused the related

issues. *C ould not be able to use the ne (7 system to accommodate the ne hospital

buying group segment. 9n the other *C also facing the difficulties in (I processes to

ork properly. This affected the processes# real time data a)ailability# in)entory management

and procurement processes !%ock# ,lores# "atumahina# "am# 4tephanie and 5ang# 2006$.

7.1.2 A leading American Furniture manufacturing Company

afford furniture/s )ice president of IT suggested the cloud computing technology solution to

reduce internal IT cost hen the company as financially strapped after a hurricane. This

ould help to donsize the internal IT department employees from 12 to : and IT

infrastructure ould be pro)ided by the )endor i.e. cloud. The company has been facing

different problems for instance the *I4# decision support system and financial control system

as using ith the traditional ;< system. The company has been shifted to cloud

computing solution i.e. 4oftare as a 4er)ice !4aa4$ but it as pro)en disaster for them as

cloud system affected the hole procurement process and other business processes. This case

study discusses that rash decision ere made# proper o)ersight as ignored as president had

took all the matter in his hands and selected the )endor ithout folloing the protocol. ue

to lo technological capabilities# )endor ent bankrupt and left the company to dire situation

!"e)ine# . &hite# 2013$.

7.2. Successful implantation of cloud computing

7.2.1 Company saed million !y optimi"ing and centrali"ing purc#asing process in

cloud

7ent-a-centre incorporation# an merican company nearly four thousand locations and

tenty thousand employees has been going through challenges of decentralization# manual

procurement processes and time consuming and complicated supplier on-board procedures.

&hole procurement process as not efficient enough for better optimization of pricing#

contract# in)oice and supplier management processes. I%* and Coupa pro)ided solution for

the company and using the I%* emptoris deli)ered through 4oftare-as-a-ser)ice !4aa4$ and

%usiness rocess-as-a-4er)ice !%aa4$ model used to re)amped procurement process and

this model has reduced the sourcing cost and cycle time and increased cost sa)ing# 79I and

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capacity of large sourcing. rocurement suit helped the company to manage the supply and

demand processes through automation hich can be deli)ered )ia 4aa4 or cloud deli)ery.

This ould streamlined and control the supplier management and centrally reporting solution.

Company uses this procurement softare across the orld and used for local sourcing and

procurement in nely open 60 stores in *eico. This ould minimized the cost and

increasing the company efficiencies especially procurement process !%usiness &ire# 2013$.

7.2.2. C#aes County and City of Arada

In 2013# Cha)es County purchasing department orks ith 30 different county departments

but due limited resources and staff ithin purchasing department Cha)es County as

obser)ing the difficulties in finding strategic sourcing# faing tenders# tracking return receipts

and )endor contact information update and streamline purchasing processes. To cope these

challenges Cha)es County used the

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Re&erences'

Lin, Angela, and Nan-Chou Chen. "Cloud computing as an innovation !ercepetion, attitude, and

adoption." International Journal of Information Management2, no. # $2012% 5-5&0.

'rilo, Ant(nio, and )icardo *ardim-'oncalves. "Challenging electronic procurement in the A+C

sector A -/ased integrated perspective."Automation in Construction20, no. 2 $2011% 10-11&.

Rent-A-center saves millions through cloud procurement innovation with coupa and IBM smarter

commerce. (2013 Mar 22!. Business WireRetrieved "rom

http#$$search.pro%uest.com.d&gw.lis.curtin.edu.au$docview$131'1)**+accountid,103'2.

Ar/in, atarina. "he road to3ards success4ul e-ordering implementation success 4actors and

/arriers." International Journal of procurement management1, no. & $200% &15-&26.

oc7, 'ee-8oo, +milia 9lores, :onald Latumahina, ;arr< Cheng, =u ung Lam, Chan Stephanie,

)onald Soeharto, and >oun *ung ang. "ntegrating +)! s