When I was approached to write a five-part series on the current state of spend management technology, one of the first things that came to mind was a Larson Far Side cartoon where the mother and father snake were lamenting the fact that they could not contain their bountiful off-spring within their old wooden-barred crib.

This is a great cartoon on so many levels. In the context of spend management technologies, the parent snakes are ERP vendors like SAP, Oracle, and other older businesses that came of age during the boom years of behind-the-firewall enterprise software (like the “now you see it, now you don’t” DNA-altered Ariba). But the market has changed, and despite the old guard’s futile efforts to control and contain the inevitable evolution to a more efficient and effective reality, the baby snakes are taking over. The new reality I am talking about, of course, is one where true SaaS vendors make old tools obsolete.

What’s interesting is that the big boys knew as far back as 2000 that the paradigm shift the industry is now experiencing was inevitable. Vendors like Coupa are now taking the lead, and the old guard saw it coming.

Back in 2000, the Software & Information Industry Association’s (SIIA) eBusiness Division released a white paper titled “Strategic Backgrounder: Software as a Service.” As part of my original coverage I wrote the following:

In its opening paragraph, this seminal effort to explain the evolution from traditional licensing models in which “packaged desktop and enterprise applications will soon be swept away by the tide of Web-based, outsourced products and services,” accurately establishes the core principles or elements of the SaaS or on-demand model. Specifically, the paper states that the new model will “remove the responsibility for installation, maintenance and upgrades (and the associated heavy costs) from over-burdened MIS staff.” And that as a result, “packaged software, as a separate entity will cease to exist.”

I then go on to write:

“Even though the SIIA report at the time of its publication stressed that ‘due to technical and business issues, such drastic predictions,’ had not yet happened, it nonetheless sent up the first flare indicating that a change was definitely on the horizon. A change will forever alter the software industry landscape.”

There’s no denying some business and technical issues persist, but there is mainstream recognition that traditional big-budget licensing and consulting models are no longer a viable option (not that they ever were).

In a December 17th, 2010 post, I discussed an announcement by UK Cabinet Minister Francis Maude. Maude, at a meeting with 31 major government suppliers (including BT, Hewlett Packard, IBM and Cap Gemini), stressed that large-scale bespoke IT systems – many of which have gone significantly over-budget in the past – would henceforth be replaced by less expensive and “off the shelf” offerings.

Further, a senior employee at Cap Gemini disclosed the advent of the new SaaS model meant Cap Gemini now has to think in terms of months or even weeks relative to producing a tangible result for clients. It’s pretty clear the aforementioned paradigm shift is at a point of critical mass or, for you Malcolm Gladwell fans, tipping point.

In short, the change is happening. The only questions that remain are: How did we get here and what does it mean to me as a purchasing professional (particularly if I am a CPO)?

This five-part series will address those questions.

Over the coming weeks, I will endeavor to provide a contextual reference point as to why the industry is where it is today. I will cover the transition from traditional ERP licensing models to the present SaaS-driven, on-demand models that a rapidly growing number of organizations are adopting. From there, I will share with you, via case references, what you as a purchasing professional MUST do to influence and be a part of the changes that are reshaping your organization and the broader marketplace.

The snakes are out of the pen. What are you going to do about it? This series will help you answer that question.