Thought Leaders in Cloud Computing: Rob Bonavito, CEO of Jaggaer (Part 2)

Rob Bonavito: We just completed a census about a month ago. We sent it out to about a thousand customers. We had over 500 responses. Overwhelmingly, they indicated that they were looking at more of focus around procurement and the ability to interface with the rest of the organization and pull that supply chain in even closer. What people don’t realize is when you look at the cost of product that a company will acquire or manufacture, 60% is that initial cost on buying the product but there’s another 40% behind that that could reflect in location, logistics, and quality. There’re all these other hidden costs.

In order to stay competitive, many companies are starting to look at procurement and spend management as an important factor of their businesses. Our customers are telling us this. We’re looking at prospects out there that are saying this. It’s going to be a major trend going forward. In terms of driving efficiencies and benefits, the cloud is going to be a big part of that. It’s not just cost effective to invest millions and millions of dollars into behind-the-firewall tools. The cloud enables people to get access to technologies for pennies on the dollar. Everyone we’re talking with are looking at leveraging the cloud to drive more efficiencies in their business.

Sramana Mitra: It’s very interesting. We’ve actually covered the cloud-based procurement space in quite a bit of detail. One of the most interesting companies I’ve seen in recent times is a company called Inspyrus. Are you familiar with this company?

Rob Bonavito: No, I’m not.

Sramana Mitra: They’re doing something very cool in helping large enterprises negotiate their procurement terms. If they pay in 90 days, there’re certain terms from the vendor. If you pay in 30 days, there’re different terms.

They are able to really save huge amounts of money for their enterprise customers just by negotiating the terms especially for vendors who care about being paid early. They’re willing to negotiate on terms. The reason I bring that up is I’d like to hear what’s happening in the cutting-edge of cloud-based procurement from you.

Rob Bonavito: There’s a major move, especially for manufacturers, to do what we call advanced sourcing optimization. What we mean by that is if you have several hundred suppliers, several hundreds of routes, and you have multiple distribution points, to be able to go in and analyze the most cost effective supply route and supply chain provider is a very complex process.

We actually have a product. It’s starting to gain momentum in the marketplace. Four scientists actually developed the technology. That’s going to be a huge area which companies look towards in the future. It’s a new trend. I would probably say that there are less than 200 major corporations around the world that are endorsing this technology. We’re starting to adopt it. We’ll see more and more of that going forward.

This segment is part 2 in the series : Thought Leaders in Cloud Computing: Rob Bonavito, CEO of Jaggaer
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