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To maintain the benefits initially installed version of contract management automation solution, PepsiCo turned to its solution provider for help. The provider offered a fully hosted On Demand version application that PepsiCo had come to rely on for it contracting and contract management success.
PepsiCo’s executives and IT department had the expected concerns about moving such a critical application and information outside their firewall. Concerns about the On Demand model included: data security, support and availability, costs, physical security and disaster recovery. However, McKee reported that, after thorough audit – including review of SAS 70, Type II audit — led PepsiCo’s Chief Technology Officer concluded, “Our data is probably safer behind [the provider’s] firewall than behind our own.”
PepsicCo converted to the On Demand solution in April 2005. In addition to the benefits with the initial implementation, McKee says the On Demand model has delivered the following benefits:
- Eliminated ongoing internal IT costs and the need for internal IT resources to support the solution
- Enabled remote access to contract module outside the internal network
- Improved corporate bandwidth between locations
- Full backup and recovery
McKee also noted some unexpected benefits of transitioning to the On Demand model.
- The solution provider delivers better and more responsive user support for the contract management solution than PepsiCo’s internal IT group had traditionally delivered.
- Functionality enhancements are more frequent under the On Demand model.
PepsiCo’s strategy and experience debunks widely accepted urban myths that On Demand is only appropriate for mid-sized companies or only for use for non-critical activities. With global leaders like PepsiCo embracing the On Demand model to manage critical contracting and supplier management processes, signals that On Demand has arrived as acceptable — and even preferable — model for enterprise application delivery. Stay tuned for more global corporations to hop the On Demand bandwagon.
6 responses so far ↓
1 » On Demand: Blockbuster or Just a Bust?- Supply Excellence // May 25, 2006 at 8:59 am
[...] Not at all. The Triple Tree/SIAA report also finds that, while traditional enterprise application providers “charge for software upgrades, maintenance, and generally have new software release cycles every two to three years, software as a service firms provide free software upgrades, include maintenance and support more frequent [several times per year] and seamless software releases and upgrades.”These findings are validated by users such as PepsiCo, which rated frequent application enhancements and upgrades among the key benefits of the On Demand solutions it uses. (PepsiCo also reported that their On Demand service provider delivered better, more responsive report than its internal IT group.) Fellow blogger and supply management software market watcher Jason Busch also predicts that rapid innovation were emerge as the most critical benefit of On Demand and SaaS solutions. [...]
2 » …And What I Learned From Top Performing Supply Organizations- Supply Excellence // Jun 6, 2006 at 8:52 am
[...] Use On Demand solutions to speed results and reduce risks. Many Forum attendees touted the benefits of On Demand solutions, indicating that the low-risk, low-IT-impact, and subscription-pricing model helped them avoid the challenges and delays of securing IT budget and resources. The use On Demand solutions also enabled them to drive quick and measurable supply management value required to gain early executive and stakeholder support. Attendees also said converting to On Demand improved system support and provided access to frequent functional improvements. [...]
3 E-Sourcing Forum: the source of information and best practices in strategic sourcing // Jun 23, 2006 at 5:22 pm
[...] I think PepsiCo’s CTO said it best: “Our data is probably safer behind [the provider’s] firewall than behind our own”. IT is your provider’s business, and the security of their data and yours is their utmost concern. Not only will they have developers on staff with security expertise, but many work with leading security firms who will conduct regular audits and monitor your provider’s domain(s) for external assaults, stopping them before they even get to the firewall. [...]
4 Supply Excellence » Aberdeen Strikes Back: New Report Finds On Demand Delivers “Quicker and Better” Supply Value // Jul 10, 2006 at 12:30 pm
[...] Data security and application integration capabilities remain top perceived concerns for On Demand. No news here. Security and integration have long been positioned as the Achilles heel of the On Demand/SaaS model. (A perception fostered no doubt by nervous purveyors of installed software applications.) What is news doesn’t show up in Aberdeen’s benchmark data. Well aware of these perceptions, leading On Demand providers have made great strides in elminating these issues. In fact, with disparate application environments and scarce IT resources commonplace, On Demand/SaaS providers are in many cases delivering better security and integration performance than can be satisfied through an on-site installation. (Although Aberdeen’s report suggests that On Demand providers need to do a better job of evangelizing these enhancements.) [...]
5 Supply Excellence » Top Negotiated Terms Redux: Are You Spinning Your Wheels? // Jan 13, 2007 at 9:14 am
[...] The collaborative or lean contracting approaches espoused by the IACCM are being employed with great results by top-performing supply and contract management organizations, such as Toyota, Pepsi, and Qualcomm. [...]
6 Supply Excellence — On Demand: What Software Companies Don’t Want You to Know // Aug 27, 2008 at 6:37 am
[...] sentiment echoes those of Pepsi CIO (as reported in a previous Supply Excellence post ) who, after a security audit of an On Demand solution provider, concluded “Our data is probably [...]
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