The predictions from the ProcureTech100 were focused on 4 main themes of:
1. Digitalisation, 2. Intelligence, 3. People, Planet and Prosperity and 4. Organisation.
Digitalisation predictions point to greater investment in AI, RPA, intelligent automation and advanced analytics that will make digital procurement more resilient, intuitive, flexible, standardised, streamlined, transparent, agile and predictive.
This drives supply chain convergence and best of breed, ‘composable’ solutions that address new and existing challenges.
Sophisticated, yet simple solutions augmenting specific capability or category needs.
In 2022, we’ll see ‘trigger’ events initiating change, from significant cyber security events and inflation to broader company initiatives eg S4Hana and action on Environment, Social and Governance (ESG).
In part 1 of 2, we share predictions and insights from the ProcureTech100 pioneers on the digitalisation of procurement from investment to agility.
“There are some incredible innovations now, especially in AI and ML. In some cases, it’s being deployed faster and cheaper than end-to-end solutions.”
Adam Brown, Head of the Digital Procurement Garage & Senior Transformation Manager at BT Sourced
Use AI to protect against the economic downturn
Lofty stock market valuations, supply chain congestion, inflation and other overheating signs are predicting an inevitable economic downturn.
The technology landscape has changed though. Large enterprises have access to AI technology that could massively and autonomously reconfigure the enterprise, including customer and supplier contracts if the environment changes.
In an inflationary environment speed of adoption and proactiveness become key. Enterprises can use trigger events like a downward spike in fluctuating commodity prices or waning demand to initiate pre-planned renegotiation efforts. Being able to do that faster than competitors is the key to protecting margins during an economic slump.
83% of businesses prioritise AI and 86% of C-level executives are investing in AI. 17%–40% of value in deals is lost due to inefficient contracting, Pactum’s autonomous negotiations creates an average $42,000 in net new value per each $1m worth of spend.
Invest more in AI, RPA, intelligent automation and analytics
Process automation will be essential for procurement organizations.
With an expected continuation in supply chain disruptions, the demand for procurement teams increases, responsibilities broaden and staff shortages persist.
Resilience of the entire supply chain network
Organizations will be more focused on resilience as a key theme for supply chain management programs, rather than on risk monitoring only.
The true value of resilience – such as avoiding unplanned costs, satisfying customer demands, and compliance to ethical and regulatory requirements – requires monitoring, supply chain visibility, and impact-oriented assessments as preconditions to proactively driving resilience across all players within the supply chain. This ultimately leads to resilience of the entire network, as an enterprise’s own resilience is only one part of it. As we know, a chain breaks at the weakest link, and so do supply chains. Our view is also reflected in a recent report by Capgemini Research Institute, in which 62% of respondents said supply chain resilience would be a key priority in the wake of the pandemic.
Intuitive flexible digital solutions to improved experience
While in 2022 we don’t expect to see a surge in procurement organization headcount, forward-thinking strategic procurement and sourcing leaders will look to intuitive and flexible digital solutions to improve employee experience and provide visibility without the need for extensive change management.
With the increasing number of stakeholders involved in any purchase process (e.g. data security, legal, IT, etc.), it’s critical for procurement to provide clear visibility into the cross-functional process for the requester. Visibility is the initial step to establishing trust with the business and branding procurement as a business enabler, not blocker.
Every SaaS company today has a different approach to the way they market and sell their products, and buyers are fed up from the lack of understanding and consistency. The variability drives up the time spent on each purchase, with an average deal lifespan of around 90 days, and it drives down the confidence that the buyer is actually getting a good deal. We’ll start to see standardized MSAs, security questionnaires, pricing tiers, and implementation processes, so companies can focus on what’s most important: getting the right SaaS at the best price.
Approval flows will become more streamlined [speed expectations increase]
One of the major pain points is the approval process and their delivery to the approvers – the friendlier the approval flow will be – the faster the procurement process can be achieved.
From the initial request to the signed contract, all aspects of the digital purchasing process will be visible by all stakeholders involved, in order to speed up the purchasing process, maintain a higher level of consistency between purchases, and increase the confidence of both buyer and seller. Every other industry has seen SaaS disrupt the transparency hidden behind traditional methods of doing business. Procurement is no different and deserves better.
Speed expectations increase
The speed at which procurement teams are able to meet and exceed their stakeholders’ approval expectations will continue to increase.
With the digitalization of procurement processes, teams are starting to report a 30%+ decrease in approval cycle teams, increasing their ability to focus on high-level objectives that will move the needle for their business.
Digitally driven process predicting cost and services
Procurement will move to a more dynamic, digitally-driven process, unleashing new capabilities through the ability to connect multiple data points across the end-to-end supply chain. Moving forward, operational and tactical procurement decisions will not only be able to look ahead to projected service, cost, and cash impact, but also be able to incorporate other strategic metrics that include CO2 emissions and other sustainability factors, as part of the decision. Key sustainability factors like CO2 emissions will now be incorporated at the transaction level.
According to McKinsey research, getting your environmental, social and governance (ESG) proposition right, leads to higher value. Two-thirds of the average company’s ESG footprint lies with suppliers. Procurement leaders who take bold action can make a decisive difference in sustainability.