Words of Encouragement for the Journey to Digital Procurement
Digital procurement has become a competitive necessity. Without it, organizations will be hard pressed to shift to the new business models of the future.However, getting there is a multi-step process, and one that companies need to start now.
In a four-part series on The Intelligent Operations Blog, experts in procurement transformation and operations at our partner Accenture share their vision for an AI-powered model that challenges the idea that the procurement process has to be hard, and their experience from helping hundreds of companies make the transition. We are pleased to be able share their vision and knowledge with you on the Coupa blog. In today’s post, the fourth and final in the series, they share three pieces of encouragement for the journey.
As digital technologies continue to evolve and leading-edge capabilities such as AI become more accessible, the opportunities to vastly improve procurement’s performance and contributions skyrocket. A fully digital procurement model is expected to dramatically increase compliance, put a far greater amount of spend under management, potentially increase overall savings, and significantly reduce risk. And it would do so seamlessly. In effect, it challenges the perception that working with procurement makes things harder, and that procurement only cares about saving money. But even more important, digital procurement is a competitive necessity: Continuing to run antiquated procurement processes can stunt growth and prevent organizations from pivoting to the new—whether that’s selling new products, selling to new customers, or adopting new business models.
But companies that want to capture the benefits of digital procurement should be mindful of three key things.
It takes time
There's a very long runway to getting up to speed and actually using digital procurement capabilities. You can't just flip a switch and begin using AI to power buying decisions. In our experience, it typically takes three to five years to collect the relevant data, develop the necessary systems and processes, and build the underpinning analytics and AI. That’s why it’s critical for companies to begin moving today.
It takes money
Building a digital procurement organization also requires a big investment. Fortunately, digital procurement capabilities are increasingly available as-a-service, which could eliminate the upfront investment to build them, and also dramatically accelerate the transformation. Digital procurement as a service can provide the full complement of skills, technologies, best practices and, most important, data necessary to transform a procurement organization.
It takes vision
Although the benefits of digital procurement are substantial and inarguable, it’s a big departure from how procurement has traditionally operated. That’s why a company is encouraged to consider a champion who can define what the future procurement organization will look like and what the company should do to make it a reality. A critical part of that vision is the pace of change the company can accommodate. For example, while you may recognize the power of artificial intelligence and know that at some point you’ll have it, first applying bots to automate routine, manual activities would generate immediate benefits.
The reality is, every industry today faces its own individual challenges. And as part of their response, companies have to think hard about what they need from their procurement organization. That’s something Accenture has been focusing on as we work with companies around the world to define, and prepare for, the future of procurement. While the specifics may differ from company to company, they all know they should “do procurement differently” to support the changing needs of the business. Transforming procurement into a truly digital organization—one that’s data-rich, analytics-driven, and AI-enabled—is key to fulfilling that mandate. And the time to start is now.