[Editor’s Note: Ardent Partners recently published its Procurement-themed report, “Procurement 2024: BIG Trends and Predictions.” Over the next few weeks, this site will feature articles highlighting the key discussion points from the report.
Chief Procurement Officers and their teams head into 2024 with a continued lack of clarity and a need for caution. While a recession was avoided last year and inflation slowed its pace in most regions, economic and overall market uncertainty remains. In addition, geopolitical unrest in the Middle East and climate conditions in Central America are causing big delays and increased costs in global shipping, forcing many procurement teams to seek alternative sources of supply. While the details fluctuate year to year, procurement’s headline remains the same. In 2024, CPOs face a series of new challenges that must be managed while operating with high uncertainty … AND great opportunities exist for the teams who are best prepared for them.
Over the next few weeks, we’ll feature the BIG trends in procurement followed by equally BIG predictions for 2024 that will help CPOs and procurement professionals understand the key issues at hand and better prepare them for the year ahead.
Prediction #4 – AI Becomes a Procurement Reality
AI is poised to revolutionize procurement in 2024, streamlining processes, improving decision-making, and unlocking unprecedented efficiency, allowing procurement teams to develop new and better insights into the underlying drivers of value. Two years ago, solution providers were talking about their future AI plans and roadmap. Today, they are talking about the new AI features in their solutions driving customer results.
This year’s newest releases of supply management solutions will have embedded AI capabilities with the potential to unleash a new era of productivity for procurement. Many of the leading solution providers have begun to integrate AI within their core solutions. By the end of 2024, new AI innovations will begin to significantly change all facets of supply management technology, with a real revolution likely to start in the next 12 to 18 months.
Prediction #5 – CPOs Will Match AI Usage with Strong Governance
Through the normal technology upgrade cycle, procurement teams that have automated some or all of their core processes will have an opportunity to test, pilot, and use AI within their current technology stack. The number of potential use cases for AI in procurement is already quite large. This has the potential to overwhelm procurement departments. And while most of the initial uses for AI in procurement this year will be smaller and tactical in nature, governance is essential when dealing with such a broad-based and rapidly-advancing technology.
At the enterprise level, most IT departments should already be working on AI governance (in the mid-market, IT may be a resource, but CPOs should be prepared to establish their own policies). IT will serve as a resource for procurement departments wanting to establish robust protocols and standards on how AI will be used, by whom, and to what extent within the procurement operation. The guidelines and frameworks emerging from these exercises should be adaptable in their design with the goal of empowering teams to harness the full potential of AI technologies. Concurrently, those guidelines should establish the proper checks and controls to avoid major issues, particularly in the areas of data access, usage, and privacy as well as the checks and balances needed to validate AI-driven results.
Prediction #6 – 2024 will be the Year of Intake & Orchestration
A once-staid industry, the procurement technology market has experienced a rousing level of innovation over the past few years, with many new technologies hitting the market designed to enhance or expand the capabilities of the standard source-to-settle solution. Frankly, the level of investment and innovation is impressive, and it makes the overall market much more interesting and exciting to cover. Two technologies that are poised to make an impact in the procurement space this year are:
- Intake Management (IM): IM solutions provide a single-entry point for end-users that automate keeping track of the unique procurement systems and processes used for different types of requisitions and other activities. IM solutions guide end-users through different workflows that are designed to capture the relevant information and requirements needed to generate a requisition (or other actions). The solutions then route the requisition to the relevant solution or approver(s) needed to generate the request. This means end-users only work in a single platform. And, as a result, do not require training on (or licensed to use) the underlying procurement technology driving the transaction. After capturing the correct information, IM solutions can then automatically drive the desired process, ensuring that the proper policies and procedures are followed.
- Procurement Process Orchestration (PPO): PPO solutions, on the other hand, are focused on executing the request created during the intake process. PPO solutions coordinate and transfer the necessary information between the different systems required. PPO solutions must be integrated with the necessary applications to execute the proper process.
