Editor’s Note: Over the next few weeks on CPO Rising, we’re publishing some “best of” 2018 articles as we reflect on the year and prepare for the new year ahead.
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us….” ~ Charles Dickens, A Tale of Two Cities
In some ways, the state of procurement technology (and business technology, in general), is akin to London and Paris in Charles Dickens’ classic novel about pre-French revolution Europe. Cutting-edge procurement shops are riding a wave of technological innovation, the likes of which include artificial intelligence (AI), advanced analytics, Blockchain digital ledgers, and robotic process automation (RPA). But the advances that these procurement teams have made in the last few years obscure a harsh reality: so many other procurement teams are still struggling to digitize and automate, and they remain shackled to manual, paper-based systems and processes of the pre dot.com bubble.
And so, while it is fun and exciting to research and write about Industry 4.0 and Procurement 4.0 technologies — how they can drive enterprise value, improve people’s lives, and make the world a better place — how can we do it knowing that so many of our brothers and sisters are still stuck in the 20th Century? In fact, a 2017 Ardent Partners survey of more than 300 Chief Procurement Officers (CPOs) and other supply management leaders revealed that a majority of sourcing and procurement teams still have not adopted many automated (and common) source-to-settle solutions, like spend analysis, contract authoring and repository tools, and supplier management platforms and tools. These organizations may have related business processes and systems in place, but they have not taken their technology strategies to the next level. Despite their best efforts (or their reluctance, or budgetary constraints), they remain firmly entrenched in manual and/or paper-based processes and systems and are light years away from accessing Procurement 4.0 technologies.
Still, it is always darkest before dawn; and for many organizations, dawn is about to break. While many laggard procurement teams may be overwhelmed with how advanced Industry / Procurement 4.0 tools are these days, they need to “punch their weight,” at least for now. They need to focus on digitization and automation before getting down in the weeds with emerging technologies, like AI and Blockchain-enabled business tools, many of which are still in their infancy, anyway. And so, here are three things available right now that can help procurement teams get with the times:
1. Cloud-based solutions: It is difficult to discuss digital transformation without acknowledging the centrality of cloud-based solutions (alternatively known as on-demand applications, Software-as-a-Service, or SaaS). Cloud-based solutions are a cost-effective alternative for small procurement teams that lack the IT infrastructure of a mid-sized or large enterprise. For a monthly subscription fee, procurement teams can access a hosted, on-demand solution or solution suite for a fraction of the total sunk cost that an installed, on-premises solution would require.
The cloud solution provider takes care of hosting the solution, installation, setup, maintenance, security, troubleshooting, and upgrades. Because it is a subscription-based service, users are under no obligation to continue after the following month and do not have to worry about a long-term investment; the solution provider does! Because many providers offer a month-to-month subscription model, they continuously work for business, and offer regular remote updates of the service, and frequently outside of peak business hours.
2. Solution Suites: End-to-end digital transformation is the ultimate goal for many procurement departments, and one of the most cost-effective and seamless ways to achieve it is through the adoption of source-to-settle solution suites. They provide procurement teams with a “Big Bang” approach to digital transformation, with a common look and feel across the various business applications. Single sign-on capability and machine learning algorithms embedded within these business tools make for a seamless user interface and user experience. Many also allow for incremental adoption of applications and tools as budgets, personnel, and time allot — meaning that procurement and IT leaders can worry a little less about potentially investing long term in a system that does not meet the needs of the enterprise. There is no commitment.
3. Mobile-first / mobile-ready applications: wait, yes, there is an app for that! Mobile applications have exploded onto the scene in large part because most of them are free; but also because many more people now have access to smart phones that enable them to “get smart” on various events and issues. Solution providers have seen the demand for mobile-first applications soar and have been developing new business tools that can just as easily be accessed, monitored, and manipulated on our smart phones as on our desktops or laptops. Having this information online and in our phones can help to drive visibility into and control over events as they occur. Many websites and applications are now available “optimized for mobile use,” and make for a smoother browsing and purchasing experience.
Final Thoughts
While it is true that the State of Procurement in 2018 includes many organizations that are still a couple of decades behind industry leaders, it is also true that there are cutting-edge teams working to integrate innovations like AI, advanced analytics, Blockchain, and other tools onto their next platform. One of the goals of adopting enterprise technology is to democratize information technology advancements; but an unintended consequence of the digital revolution is that it can exacerbate existing disparities among maturity classes. Fortunately, the three aforementioned tech innovations are low-risk ways that immature procurement teams can adopt in order to get the ball rolling towards digital transformation.
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