Spend Matters Procurement Predictions: Five Scenarios For the Next Decade (Part 4 – B)

Click here for the first, second, and third posts in this series. You can also read Part 4 - A by clicking here.

In the first part of this post, examining the procurement scenario that Technology Proves More Than Transformative, we explored the proverbial "why" and "what." In this follow-up post, I want to focus entirely on the "how." But just to recap, this procurement scenario (and broader series looking at procurement in the next decade) is meant as a primer to showcase potential sourcing and operations endstates that may happen -- independently, concurrently and/or sequentially. My main goal in coming up with them is to show, in many cases, how procurement and supply chain organizations are focusing on too narrow a set of areas today and are attempting to respond retroactively to past issues rather than keeping an eye on what the future will ask and require of them. When it comes to technology, it will be critical for procurement to better understand and embrace the building blocks of what is coming down the solution pike.

There are a number of technologies I believe will be essential to enable a transformative technology scenario. These include underlying stack capabilities such as in memory databases that will allow organizations to crunch through massive datasets almost instantly -- examining structured and unstructured content that exists within the enterprise as well as the world outside. This scenario will also require true technology virtualization through the cloud-based architectures that enable users to tap computing, network and connectivity power as they need it. From an application standpoint, the providers that embrace a platform approach while also opening up their ecosystem to third-party tools and developers stand to benefit the most. Two players to watch here, incidentally, are Rearden and TradeShift. Both have some truly game-changing, platform-driven capabilities in store and two distinct distribution approaches to go viral with the acceptance of their models. Other platform-like models to watch in this space include Intenda, FullStep, and those building off of the SalesForce.com platform, including Ariba and SupplierSoft.

Another enabling technology area that will prove critical will take the form of master data management (MDM) and customer data integration (CDI) tools applied to procurement. For the sake of argument, let's call this new space SsDI (for supplier/spend data integration). As we've written previously, the secret sauce behind CDI technology is that it actually improves the integrity of the data from individual sources, allowing users to match and link disparate information sources with varying levels of accuracy. CDI tools can correct for data-entry mistakes, such as misspellings, across different data sources to provide an accurate picture. In turn, this can help the actual user (regardless of industry) gain access to complete, accurate, up-to-the moment snapshots of customer-facing, back office, and business intelligence systems that reside both within and outside of an organization.

Now, think for a moment about the applicability of this technology to the supply chain. Consider the current batch-based limitations and challenges of current systems, including spend visibility tools, supplier performance management systems, and supplier information management. These tools operate in an environment analogous to CRM, where information typically comes from only one or a handful of data sources that are then integrated into a single system or record (vs. CDI, which serves up information as required in true real time). Imagine the power of an SsDI to look at supplier records from both internal systems and external content providers (even your supplier's systems) in real time versus waiting for the next batch upload or data dump.

SsDI will provide an entirely new approach to looking at supplier information, one that paints a complete and accurate view of supplier data without creating a new system of record, providing potentially unprecedented real-time access to information that exists both within and without a company's four walls. SsDI will also enable users to integrate new information sources in an often simple and rapid manner (vs. requiring underlying surgery, as it would in a database or data warehousing-centric approach). In addition, SsDI will complement the necessary set of front-end analytics, visualization, mapping and related capabilities that will be essential to turn mass amounts of decentralized data into structured insight.

Aside from underlying enabling technology such as in-memory databases, platform-based application delivery models, SsDI, and next generation analytics, I believe that supplier networks will play a material role in this scenario as well. Some networks will undoubtedly focus on supplier monitoring, collaboration and development -- spanning such areas as supplier background information, credentials, accreditation, materials/substance usage, production processes, labor practices, etc. Other efforts will dovetail or slot in alongside these collaborative approaches to enable faster and more efficient on-boarding, enablement and transaction management for buyers and suppliers. Still others will focus on benchmarking and shared intelligence for members.

Without a doubt, I'll make the call that technology will prove absolutely transformative for procurement. The question is whether or not the set of underlying capabilities I've described in this post truly go mainstream and viral in the next decade. I personally believe many of them will.

Jason Busch

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