Should You Move to Procurement as a Service? What To Know

Digital transformation is a priority for many companies. Learn how using procurement as a service can reduce costs while making life easier for your teams.
Written by:  Mark Saltarelli
Published:  January 16, 2025
team talking procurement

Software has transformed nearly every aspect of modern business, offering tools that increase efficiency, cost savings, and productivity. Though procurement and invoice processing aren't often the first priorities of digital transformation, moving to a procurement as a service (PaaS) solution early can lay the foundation for stability and cost management as your business grows. 

This guide shares the basics of the procurement as a service approach, outlines the many benefits of moving to digital procurement, and provides tips for choosing the right procurement service provider. Read on to learn how a scalable procurement software solution can transform your purchasing process.

Download the free tool: Procurement KPI Tracker Template

What is procurement as a service?

Procurement as a service, a component of the larger platform as a service (PaaS) digital transformation process, is an outsourced purchasing model where a company leverages a procurement platform to access suppliers and manage procurement activities. 

Procurement as a service helps businesses centralize and streamline purchasing activities, including: 

  • Vendor selection 
  • Strategic sourcing and procurement
  • Supply chain management
  • Spend analysis and reporting
  • Budgeting and spend management
  • Order tracking and reconciliation
  • Category management
  • Contract management
  • Supplier performance management 
  • Procurement KPI monitoring

By adopting PaaS, companies benefit from improved procurement strategy and practices to enhance efficiency, reduce costs, and leverage economies of scale. 

Using technology-based procurement solutions allows organizations to focus on their core business processes while ensuring their procurement activities are optimized and aligned with industry best practices. This collaborative approach can help companies achieve a more agile and strategic procurement function.

7 Key benefits of procurement as a service

Investing in platform-based procurement offers organizations valuable operational and financial benefits. Businesses that move to a procurement platform often do so to leverage the following seven advantages:

1. Time savings

Traditional procurement methods are time-consuming. Using a procurement platform to centralize and streamline procurement takes much of the heavy lifting off of procurement and accounts payable (AP) teams' shoulders. Platforms use guided purchasing to increase purchasing and procurement compliance, speed up approvals, create a central intake system, and automate much of the AP process to leave time for more impactful activities. 

2. Cost reduction

Using software for procurement management can significantly lower procurement costs in several ways:

  • A platform ensures your company always buys high-quality, policy-compliant goods from reliable suppliers. 
  • It helps consolidate the vendor pool, which opens the door to volume discounts and better contract terms.
  • Automating the purchasing process reduces labor hours dedicated to processing, approving, and paying invoices, giving AP teams time to focus on activities that improve revenue and reduce expenses.  

3. Enhanced efficiency

Streamlined procurement processes lead to quicker turnaround times and better approval workflows. A platform like Order.co, which features a curated procurement catalog, makes it easier for employees to select and reorder the best items.

4. Improved spend visibility

Enhanced data analytics and reporting tools give businesses greater insight into spending patterns, helping them make more informed decisions. Centralizing all spend data within a platform allows companies to easily analyze procurement trends and insights by vendor, location, category, or other relevant parameters. 

5. Supplier management

Supplier performance management is an important factor in keeping prices and services competitive. Software helps your business evaluate each vendor's performance metrics, benchmark them against the industry, and enter negotiations with real-time data to reach mutually beneficial terms.

6. Scalability

Procurement grows as your business expands and evolves, and a platform creates the proper framework for scalable processes. Its AP automation features enable accounting to handle hundreds or thousands of orders and invoices automatically and pay multiple vendors in just a few clicks. No matter how many locations your company opens or orders it places, the right software solution will scale with you. 

7. Risk management

Third-party risk is one of the biggest challenges in procurement. Problems like disruptions, financial losses, data security breaches, and contract noncompliance can be costly and difficult to fix. A procurement platform with the right security features reduces the risk of data breaches and eliminates the visibility issues of manual procurement that can lead to procurement fraud.

procurement kpi tracking on a laptop
Tool

Procurement KPI Tracker Template

Download our free Procurement KPI Tracker Template today to monitor essential procurement numbers and demonstrate value in your procurement strategy.

Download the tool

Are there any risks of using a platform for procurement?

While procurement software solutions reduce many of the risks associated with manual procurement, businesses should select a high-quality provider to avoid the potential drawbacks of using managed services. 

Here are some things to look out for when evaluating procurement outsourcing options: 

Third-party risk: Entrusting sensitive company data to an external service provider poses risks of data breaches or misuse of confidential information. To reduce disruptions, look for a provider with strong security features and service-level agreements (SLAs) so stakeholders can access and use the system without the risk of breaches or downtime. 

Hidden costs: While procurement as a service can offer savings far beyond the cost of implementation, look for hidden or unexpected fees to avoid expenses that erode financial benefits. Seek an easy-to-implement solution with competitive pricing, as platforms requiring extensive support or consulting may delay your return on investment. 

Contract compliance and regulatory risks: Third-party suppliers may fail to meet required regulations or compliance standards, increasing potential risk. Evaluate your provider’s ability to deliver services that align with your industry requirements and internal minimum security standards. 

Processes a procurement platform can help you automate

In-house, manual procurement processes require teams to invest time in creating, approving, troubleshooting, and fulfilling requests—but automation can make everything easier.

Here are several procure-to-pay processes you can automate with software:

Purchase requisitions: Automating requests for goods or services allows individual stakeholders to order what they need for their department or location, streamlines approvals,  and ensures all requests adhere to company policies. Top-tier platforms offer guided procurement to ensure goods are compliant and purchase requests are within budget.

PO (purchase order) processing: Procurement platforms automate the PO process from creation to fulfillment, speeding up order placement and reducing manual errors.

Departmental approvals: A platform allows administrators to establish departmental approvers for every purchase based on specific parameters and route those requests to the appropriate parties for faster approval.

Invoice processing: Automation helps accounting teams efficiently manage incoming invoices, reconcile them against other data, and prepare them for payment.

Three-way matching: Software can automatically compare the purchase order, the received invoice, and the delivery receipt to ensure consistency before payment.

General ledger (GL) coding: Automating the assignment of expenses to the correct general ledger accounts ensures accuracy in financial reporting.

Spend analysis: Procurement platforms can aggregate spending data across departments to identify trends through procurement analysis, improve cash optimization, and make negotiating contracts easier.

Payments: Integrating a procurement platform with the accounting system streamlines AP processes. It accelerates workflows, reduces errors, and helps maintain good supplier relationships by ensuring payments are accurate and on time.

procurement kpi tracking on a laptop
Tool

Procurement KPI Tracker Template

Download our free Procurement KPI Tracker Template today to monitor essential procurement numbers and demonstrate value in your procurement strategy.

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How to choose a procurement as a service platform

While there are plenty of procurement tools on the market, finding the right mix of cost and capabilities is essential to procurement success. A well-featured solution with competitive pricing and flexible workflows is the best option for integrating purchasing and accounting to remove manual tasks and the potential for errors. 

Look for the following features when considering your options: 

Customization and flexibility: Seek out a platform offering customizable solutions that can adapt to your business needs and requirements.

Integration capabilities: To ensure smooth procurement operations, the platform should seamlessly integrate with your organization's existing systems and tools, such as enterprise resource planning or accounting software.

Robust security: Ensure the platform has strong security protocols to protect against data breaches and unauthorized access to sensitive information. 

Reliable support and service: Implementation and customer support are important to long-term success with a procurement platform. Opt for a provider that offers reliable customer service, including training and troubleshooting.

User-friendly Interface: A user-friendly, intuitive interface is crucial for the efficient operation of the procurement platform. Look for an easy-to-use UI and straightforward purchase process that lets stakeholders get what they need regardless of their technical expertise. 

Reporting tools: The data in your procurement function is a valuable business asset, but its usefulness depends on your ability to see and analyze it. Look for a tool with detailed analytics and reporting capabilities to help decision-makers understand spending and procurement trends. Some tools incorporate AI in the procurement process to further enhance visibility. 

Vendor-agnostic purchase support: Businesses often build strong partnerships with vendors before they move to a procurement platform. Moving to a procurement technology solution shouldn’t mean leaving your preferred vendors behind. Look for a tool that helps you shop from any vendor, even those that use non-integrated order processing methods such as phone, fax, or email POs. 

How Order.co changes the way you do procurement

Using a procurement platform like Order.co delivers all the benefits of procurement as a service while ensuring support and flexibility in your purchasing process. Order.co’s intuitive, fully-featured platform is backed by strong onboarding and customer service teams that will help your business create a highly personalized, full-visibility user experience for stakeholders, procurement teams, accounting, and more. 

Want to see how Order.co can make your procurement function more cost-effective? Schedule a demo of the platform.

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