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For companies operating in an Everything-as-a-Service (XaaS) paradigm, leveraging managed services — also known as Procurement-as-a-Service (PaaS) — as a part of their spend management strategy, makes sound business sense. Companies are increasingly engaging with PaaS providers to manage strategic spends that enable measurable cost savings. This partnership allows companies to channelize their efforts toward managing core spends and competencies to maximize their strategic value-add.
Companies looking to employ the PaaS model should be aware of the following nuances:
PaaS should not be equated with traditional outsourcing, characterized by the ‘lift and shift’ approach. PaaS enables achieving nearly instant scale, without procurement ceding spend management control to third-party providers
Judicious selection of the spend that will be managed via PaaS is critical. Determining the target spend for PaaS helps companies to define their own spend management priorities
It’s best to start small when it comes to PaaS execution. Begin with low-risk projects and choose spend categories that are mature
If implemented with foresight, PaaS allows companies to enhance operational efficiencies, improve stakeholder satisfaction and elevate the stature of procurement, as a strategic partner. It is important that PaaS providers and buy-side companies are aligned to achieve these overarching goals.