Procurement’s digital journey has been on a rapid acceleration path over the last few years, with everything from cloud computing to the Internet of Things (IoT) to Artificial Intelligence (AI) being used to support good decision making and streamline the overall procurement process.
With these and other advanced technologies becoming cheaper to buy and easier to implement (aka, a “democratization” of technology), a wider range of companies are investing in them and putting them into action. “Larger companies with more budget and resources will no longer be the only ones that pursue [digital] transformation,” procurement and supply chain solution provider GEP points out in a new report. “Small and mid-sized companies will also seek change.”
5 Digital Transformation Trends to Watch
Here are five more digital transformation trends that are currently impacting procurement:
1. More companies are pursuing “digital-first” strategies. According to GEP, this involves leveraging existing and rapidly emerging modern technologies such as AI, cloud-based solutions, advanced predictive analytics, cognitive computing, and natural language processing (NLP) to transform business models, modernize their functional strategies and digitize end-to-end processes to drive innovation. “Technology will no longer be a tool for helping processes,” the company states. “It will be the definer of new capabilities within the organization, such as advanced, best-practice processes in which manual ones are automated and some are eliminated entirely.”
2. Procurement is taking an active role in these pursuits. A strategic partner that interacts with the supply base as well as with internal functions and business units, procurement will continue to play a part in defining a digital transformation strategy and enabling other departments to fulfill their digital duty. “Rather than just digitizing or eliminating process steps, procurement’s holistic source-to-pay (S2P) solutions will empower end-to-end visibility, deeper insights, and greater collaboration internally and externally,” GEP points out.
3. Companies want “agile” procurement transformation approaches. “Organizations will learn that change is a constant,” GEP states in its report. “Their transformation journeys will perpetuate themselves by driving the introduction of new emerging technologies, digital talent, new capabilities, greater insight creation, and continuous training of the workforce to keep up with the pace of change.” For example, it says cloud-based solutions and external services will continue to make new functionalities and capabilities easier to acquire and adopt. In turn, organizations will implement agile talent acquisition strategies, “including internal and external crowdsourcing options to source the needed talent.”
4. Interest in source-to-pay is growing. “Most CPOs and CIOs are now aware of the disruptive nature of a fully integrated S2P platform,” GEP points out, noting that most have already moved, or are in the process of moving, most of their S2P processes to cloud S2P applications. “High-performing organizations have made major strides in decoupling key procurement processes and data from their Enterprise Resource Planning (ERP) systems and leveraging cloud-native S2P applications that can operate independently to store data and enable end-to-end process flows, from category strategy to invoicing.”
5. Procurement continues to grapple with lack of contract compliance and poor end-user experience. According to GEP, the two main causes of these problems are “over-parenting by procurement” and the lack of an integrated solution to support end-user requirements. These persistent problems have been solved by a number of leading organizations by combining technology, business process, and data. Guided workflow solutions, for example, ensure that the end user’s experience is comparable to consumer sites like Google and Amazon. For example, the user who wants to make a purchase can type in a query or tell Alexa her request. “NLP- and AI-based tools recognize the demand trigger, identify the user’s intent, link it to the right S2P document, identify the workflow trigger,” GEP explains, “and select the contracted item and price.”
GEP also predicts that procurement organizations will continue to search for the right balance between human labor and advanced technology solutions—all in the name of creating a well-rounded, effective digital transformation strategy.
“Successful organizations are the ones that are giving equal weight to people skills and technology skills,” GEP concludes. “As human-machine collaboration continues to increase its normative status in the procurement function, the composition of the workforce will correspondingly shift away from those who feel intimidated by software toward those who are happier working with technology.”