Coming to Procurement Soon: The Internet of Things
One of the major trends in technology today that most sparks my imagination is the Internet of Things (IoT). The premise of the Internet of Things is that ordinary devices around us will soon have intelligence and the capability to interact with each other and their environment. Your dishwasher, for example, could be equipped to gauge its fluid levels and take the initiative to text you a message: “Hey, I’m running low on rinse aid – would you like me to place an order for some on Google Express?” You would click “yes” and your dishwasher would place the order.
Your connected toothbrush could transmit data about brushing habits and bristle wear to your iPhone—or perhaps more ominously, to your dentist or dental insurance carrier. There are a lot of possibilities, not just for consumers but for business too, and specifically for things like procurement, sourcing and inventory. We already have procurement automation. Now all we need are connected devices to let us know what we need and place the order. I think this will happen sooner rather than later.
As more and more appliances are outfitted with sensors and connectivity, consumer expectations will change. They won’t find everything the Internet of Things has to offer useful, but they will come to expect a certain capability to automate predictable chores and to get information they can use to improve their lives and spend their time and money more efficiently. As we’ve seen with online shopping, once consumers experience a new level of convenience in their personal lives, they expect the same at work. In fact, IDC predicts that the IoT market opportunity will be over $7 Trillion by 2020 with over 25B devices connected.
The Internet of Things is already coming to business. For example, there are companies building light bulbs that not only tell you when they’re about to burn out, but also act as sensors, collecting and transmitting information about the number of open spaces in a parking lot through a network to business owners so they can reduce energy costs and implement a variety of other applications.
Where I think the IoT is highly relevant to procurement is in the area of tracking and visibility, replenishment and predictive analysis. There a lot of things in a company similar to rinse aid and toothbrushes that need to be replenished based on fixed-term contracts or predictable cycles. Take supplies like paper for example. Companies can order this through an automated system, but someone has to go to the stockroom and see how much there is on hand and place the order, or ask someone else to.
Imagine having a smart rack or pallet that stores reams of paper and can tell by the weight on the pallet when it’s time to place an order. The appliance would notify the office manager and prompt him or her to approve a new order, which it would then have the means to carry out.
Sound far fetched? We long ago solved the problems of creating smart devices, such as printers that can tell you they’re running low on ink or toner. The Internet of Things is the next step. It’s hooking these smart devices up to networks, and we have APIs (Application Programmer Interfaces) that can connect networks, conduct transaction and transmit information back and forth.
The business benefits of this, I think, are obvious. For one thing, automation of predictable tasks frees up employee time to work more strategically. It also gives you real-time visibility, reduces the risk of loss of productivity or resources due to inefficient replenishment.
Business applications for the IoT are closer than you’d think. Much of the infrastructure is already in place. It’s just a matter of finding the use cases and integrating the actual devices into this network. You can hook a smart device into Coupa today using our API’s, and I look forward to the day when a customer applies Coupa as part of their IoT solution. We’d love to hear your thoughts on Coupa and the Internet of Things.