Alexa Can Wait – Technology Basics In Procurement Must First Be Secured  

Ed Cross, Executive Director of Cheshire-based procurement advisory firm, Odesma, discusses the role of voice-activated assistants in procurement.

While voice-activated assistants such as Alexa are becoming a common feature in many UK homes, for procurement, an industry typically slow to adopt new and emerging technologies, the idea that it may be the ‘next big thing’ is unrealistic at best.

Current digital landscape for procurement

The digital focus so far has been on the adoption of enterprise systems that include a procurement component. For example, many large businesses have implemented financial management enterprise systems for managing financial processing ultimately in support of statutory and budgetary accounting. An element of these systems often includes a transactional procurement function – however, given the deployment was not driven by procurement, more it’s cross-division functionality was a side effect, procurement’s technology usage remains tactical at best.

In procurement, there are three macro processes – purchase transaction, strategic sourcing and risk and compliance management. The digital journey to date has focused mainly on the transactional process as that’s the basic functionality offered by these financial enterprise systems where procurement is not a priority.

However, we’re seeing an increasingly supplier-driven agenda when it comes to technology in procurement. The emergence of players, such as Coupa, has truly shaken the market for procurement systems. These vendors are bringing a consumer purchasing interface, like Amazon, to procurement and, as a result, are revolutionising what CPOs are coming to expect from their transactional process. As such, I think this is the biggest digital shift and will continue to see enterprises, including SAP, respond with similar offerings such as SAP Snap in order to compete in the SME as well as enterprise markets.

How to move procurement on – digitally

The next step for moving procurement forward digitally, and before the likes of Alexa can become a consideration, is to become the focus of technology decision-making rather than the side effect. At Board-level, there is nobody with specific responsibility for driving the digital transformation of procurement. And Board members are not pressuring divisional leaders to drive that digital journey.

In order to begin transforming digitally, business leaders must prioritise organisation-wide transformation and deploy technically knowledgeable divisional leaders to deliver that change.

Perhaps because there is a lack of digital leadership and vision at the top of business and the procurement function, software providers have been slow to develop solutions that respond to the two remaining macro processes – strategic sourcing and risk and compliance management. If these providers can see demand growing for a more holistic, procurement-driven platform, then the idea of a digitally-focused procurement sector is much more realistic.

Where does Alexa fit in?

Before we can consider the mechanics, feasibility and potential of voice-activated apps, it’s vital to first consider and embed the technologies that sit behind it – prescriptive and predictive analytics. For procurement, the likes of Alexa will harness the power of prescriptive analytics, for example, alerting a CPO when stocks of certain products are running low and telling them to reorder now and by how much based on expected need and demand.

Currently, however, the use of Alexa and its counterparts is limited to activities such as playing the radio and responding to questions (think Siri). Until these voice apps are commercialised for the business sector, it is unlikely that even the most progressive, forward-thinking industries and companies will embrace it.

That said, work is well under way to create digital solutions that use Natural Language Processing (NLP) rules – these will listen to a human and convert into computer language in order to provide accurate answers. By using NLP and machine learning, voice-activated assistants will pull together information from a range of different systems, for instance, budgets, spend patterns and exchange rates, to provide an accurate and up-to-date answer. This combination of NLP and machine learning will make the role of the procurement professional much easier.

This is where I see the next big development for the digital transformation of procurement – NLP will provide an Alexa-type experience to give a prescriptive view of the business; driven by Artificial Intelligence, Alexa will start to tell you things you should be thinking about rather than simply responding to questions. At this point, the traditional role of the procurement officer will come under scrutiny as technology starts to offer similar capabilities.

The importance of establishing strong foundations

Before any level of digital transformation of procurement can take place, it’s vital to get the basics right. And that must come from the top. Businesses need people who understand and embrace the role of technology across the organisation, as well as at specific divisional levels. Named individuals must have responsibility for driving a digital agenda, which will require a major shift in mindset at the leadership level.

For procurement to move forward digitally, investments must be made in experienced people who will drive that digital thinking. Currently, there is no-one in procurement innovating the function or owning digitalisation. Empower the right person and true transformation can take place.

The future for digi-procurement

The long-term future is likely to feature Alexa and her friends, and for procurement, that’s going to impact on the need, or lack thereof, for humans to deliver the day-to-day elements of the function. Once the three macro processes are digitally catered for, then lots of procurement tasks could be completed by Artificial Intelligence (AI), for example deciding which suppliers to use and compiling contracts, while processes can be streamlined and automated by Robotic Process Automation (RPA). And once Natural Language Processing, machine learning and AI combine, voice-activated apps will provide instant, prescriptive alerts, making the role of the human in procurement even more obsolete.

As the industry continues to transform digitally, the role of the procurement officer in its current form will continue to change. While it’s perhaps a step too far currently, voice-activated assistants will, at some point, infiltrate the procurement function. But for now, we need to concentrate on finessing and harnessing the existing technological advancements that will provide the foundations and building blocks for procurement of the future.

 

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official position of Spend Matters.

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