In the first part of this Spend Matters Conversation, Founder and Head of Strategy Jason Busch talked with SAP Ariba President Alex Atzberger about how technology is changing procurement. This second installment explores specific new technologies procurement will start using in the next decade and how their use will be a game-changer for businesses.
Jason Busch: If we take technology down to a practical level in procurement how is procurement getting smarter through technology? There are different ways to think about this. Guided buying is obviously one area to explore. There is also so much around prescriptive analytics — not just dashboard reporting, but putting information in the context of buyers. There’s the data and metadata exhaust that comes from invoicing and networks. How do you see technology making us smarter at what we do around procurement generally?
Alex Atzberger: It’s a very exciting space. There are things that are happening right now, and things that are building blocks of the future. If you look at right now, the things that are helping procurement become smarter, and more usable are advances in search and analytics technologies.
If you think about the catalog within your procurement system, it’s about how often you click to find the item you’re looking for. Core search technologies can have an enormous impact on the usability of your system. When we look at catalogs, and processes, improvement processes, all of these things are things that can be much smarter and enriched through predictive analytics. You shouldn’t be alerted at checkout that you can’t spend a certain amount on a certain item. Your system should automatically know who you are when you log in and based on your role, guide you to the items you need and purchase them in compliance with company policies.
This onset of in-context decision-making is the future of procurement. It’s all about the ability for people to get the job done and making it very simple for them to do so. And I think the future of technology shows that there’s a lot more exciting stuff coming down the road.
JB: Just a few thoughts to top out here. I think there’s a few needs. One is virtualization; we can look at virtualization up in the cloud, kind of what AWS gets a lot of credit for out there, and Google and others are doing around capacity. That’s one side of it. I think there’s another one, which is just beginning. It enables your technology, which is a virtualization of the function.
I almost view there’s going to be a future kind of Turing test within the business, that asks, “Am I dealing with my own procurement organization or am I dealing with a machine? Am I dealing with an outsourced partner that’s delivering a service on behalf of procurement?” There’s this notion that procurement becomes much more of a service provider to the business through technology, and whether that’s delivered through internal resource, external resource, through pure technology, whichever capacity or manner it takes. I think there’s really something there around virtualization. Obviously, technology underpins a lot of the service delivery with it.
The final thing, which I think is fascinating to talk about, is radically upending technology building blocks, not just architecturally from a solution perspective in memory databases where there might be a step change, but the notion of a blockchain, for example, and kind of a public system of record, and the fact that there might be a need for new systems of trust. I think this stuff is going to come a lot more quickly than we think. It could transform how we look at networks, how we look at platforms, how we look at audit trails associated with what we buy and our suppliers’ behavior. I’ll leave it at that, but I’ll toss it to you. I would love to get your thoughts on next-generation building blocks.
AA: There’s a lot of exciting next-generation building blocks; you mentioned some of them. Let me add to that list some things that we are actively working on. (That’s obviously a big benefit of being part of a company like SAP, because there’s a lot of means to explore new technologies.)
One area that I’m fascinated by is what’s also happening in machine learning and the application to the procurement area. To give you a very complete example, for instance, I’m now working with one customer, and they asked us a simple question: “Do you know how long approvals normally take inside the mother app?” We can actually measure how long somebody looked at an approval before they actually make an approval; we can measure that time. Now imagine for a company, you were actually putting machine learning behind that, you could see which approvals takes less than five seconds every time. Then you could ask yourself, why do we even need the approval if it’s a five-second decision, or a two-second decision? That should be auto-approve. That’s one thing where I think machine learning is going to have a big impact.
You mentioned early on in the conversation invoice matching and three-way matching. Those are the sorts of things where machine learning can have a big impact. I think machine learning is going to be a core technology and a core approach, which most people associate with artificial intelligence, but basically the notion of learning from previous events and therefore making future events more automated.
There’s also the blockchain, as you mentioned. People tell me that it’s a couple of years out to get to the use cases and opportunities, but certainly it’s very disruptive and a core technology that can certainly have an impact in terms of how we even think about who has which role in the supply chain.
Another big building block, I think, is going to be things like 3-D printing for a lot of the manufacturing-based industries. When you look at the UPS case study in terms of how you can actually think about providing 3-D printing hubs across the world, and then connecting those hubs to the procurement process to actually cut down on delivery times, that’s a disruptive change that will obviously impact procurement.
The other area I’m very interested in is things being done to augment our reality. Because that’s going to change the way maintenance and manufacturing jobs work. Being able, out of those sorts of activities where you have an augmented reality scenario, to start an auditing process, especially in the manufacturing of field services, will be very, very disruptive.