proxima 2 week beginning 11th sept NEW

Are we tipping or turning? eveolution into next generation of procurment

How digital integration, automation, and future systems are impacting procurement

If we look at the current landscape chock full of digital disruption, most of us can agree that there’s no slowdown in technology investments. But what does that tell us? How exactly are these disruptions, integrations, automations and yet to be discovered innovations impacting our businesses? And will we be better for it?

Let’s start by considering it’s still a growing market. By 2018, the technology market will be worth more than $6.5 billion globally. Within that, procurement technology continues to attract major investment:

• Growth prospects for P2P are strong, with double digit gains — 11.6% — forecast as the 5-year compound annual growth rate (CAGR); ;
• Strategic sourcing suites hit $1.1 billion in 2014 and continue to have a good growth outlook with about 8% CAGR;
• Cloud technology growth will be greater than CAGR 20%, with top vendors exceeding 60% annual growth.

And the market is ready for disruptors. Non-native ERP vendors are listening to customers, taking action, and leading the market with a plethora of niche solutions enjoying good growth. The Cloud providers now offer integrated solutions and are doing exceptionally well. And with high short-term growth rates, we can expect new entrants to continue to appear to meet the growing demand.

So there is a lot of technology investment and we love the results, right? Well…

Technology for technology’s sake?

When it comes to technology, we seem to be in a cycle: we spend money, we don’t like the answer, but we seemingly keep spending it anyway with the hope of finding a problem for the solution to solve. For instance, many organizations have made big investments in P2P but are not necessarily using it as they had intended or envisioned. Some have yet to realize the value of the system and still more struggle to show how it supports their business objectives. Other organizations may have made smaller but significant investments in Source to Contract (S2C) systems but are left wondering if they have prioritized the right things and fall short in being able to show where they are getting value.

It seems the real question is whether you are spending the money on the right things? Have you looked at what you use versus what you value? Does the solution solve your issues or create new ones? What needs to change in order to get what you expected? How do you get there, and what does the future look like?

The rise of the machines

Some argue that the answer lies in automation. Others say robots will never replace the humans needed to run procurement. One thing seems pretty certain, regardless of where you sit on the human versus robot spectrum: the balance between human and machine will change because as technology advances, it is encroaching further into the human space as even decision-making becomes more consistent and reliable.

For procurement this opens up the opportunity to drive integrated commercial management, enabled through technology, and taking procurement activity out of its current functional boundaries and beyond the transactional into the areas of large scale data analytics, applied learning, and judgement.

Thus there is a procurement function in the future, with a level of automation involved through new technologies, but it is not sourcing or supplier management. It is enabling the rest of the business to do most, or all, of what procurement currently does. What we see as core today will be transformed beyond what most of us can envisage, leading to an organization where there is less need for human price discovery and sourcing and where activities such as compliance and structured supplier management are enabled and driven back to the stakeholder community.

And while procurement may not be there to run processes, they will be the ones creating architectures, seeking out innovation, and supporting the business. The direction of travel for technology is much more of a turning point rather than a tipping point for the next generation of technology-enabled procurement and commercial management. Don’t you want to be the one leading your organization into that future?