How and Why Digital Transformation Will Vastly Reshape Procurement & Finance Roles

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When a business upgrades a department like procurement or finance, the goal usually involves cutting costs, improving that one department and using data to assess their past performance.

But that version of business is fading quickly as automation, digitization and changing trade force companies to be forward-looking and dynamic in their use of data.

That future also promises much more visibility for companies and consumers to be empowered and make better decisions.

But in the present, executives must prepare for the digital transformation of business operations and plan for more radical change across the whole enterprise. This will require them to figure how best to invest in technology, reshape their workforce and create bold visions of the future.

For example, finance will be able to use robotic process automation (RPA) and artificial intelligence (AI) to automate its rules-based payment processes, improve forecasting for budgeting and cash flow, and produce better audited internal data quality.

Those same digital tools in procurement will help it be a better partner with finance so that the departments work together to get beyond just cost-savings and realize the full promise of purchase-to-pay (P2P) systems. Too often procurement and finance operate separately even though they share the same goal. A Spend Matters series analyzed 10 reasons why finance and procurement should get closer, including reducing risk and improving supplier relationships to boost financial performance.

Imagine that these digital tools become so powerful that they offer unprecedented visibility into every transaction, that they give fewer workers more power to effect change, and that they even improve the customer experience so much that it benefits society as a whole.

The Future of Finance and Procurement

A recent survey report conducted by The Economist Intelligence Unit and sponsored by the purchase-to-pay software company Basware, found that loftier goals exist for reshaping the procurement and finance departments. About 400 executives in the U.S., U.K., France and Germany shared their insights into how businesses are responding to the challenges that will stem from digital transformation. In the survey, respondents discussed how their organizations are preparing for three macrotrends set to shake up finance and procurement over the next two years:

  1. Digitization
  2. Automation
  3. Changing global trade dynamics

“This adaptation will require some upheaval,” said the survey report, titled What’s Now and Next for Finance and Procurement. “Respondents expect both automation and digitization to increase technology expenditure, and to reduce their human headcount. Trade dynamics, meanwhile, will increase costs and drive them to seek new sources of growth.”

 Key Survey Findings on Automation and Digitization: 

  • The biggest impact of automation will be on internal processes. Respondents expect the automation of payments, procurement processes and supply-chain management to have the greatest impact on their organizations, ahead of AI-powered decision-making or decision-making within other key finance and procurement processes.
  • A smaller headcount will be performing higher skilled tasks, with nearly as many respondents (34%) believing that automation will free up time for them to focus on more strategic initiatives.
  • Headcount will be counterbalanced by increases in technology investment and digital initiatives.The most common way for survey participants to prepare for automation is to increase their technology budgets, a strategy adopted by 39% of respondents.
  • Digitization will reduce overall costs but also intensify competition for talent, respondents believe. Just under a third (32%) expect digitization to bring down costs, the second-most commonly expected impact, but almost as many (31%) agree that recruiting employees with specialist digital skills will be critical to unlocking digital transformation.

The survey recounts how some experts in the field expect that “guided buying” will become more prevalent in procurement, making transactions more like an Amazon experience. Spend Matters analyst Xavier Olivera’s recently wrote a research brief on guided buying, saying:

“Although we have not yet reached the concept of truly holistic guided buying, there is already an advance toward it. For now, what we see in our SolutionMap analysis of e-procurement solutions toward guided buying features is still obvious and conservative, but we have observed some more advanced elements.”

The survey also points out that as finance becomes better at using technology and automating its processes with RPA, machine learning and AI, it will be able to do more with fewer workers and will align with procurement.

New Rules for Greater Visibility

One current force that’s driving procurement and finance roles together is the new U.S. accounting rules that force the disclosure of all leased property on balance sheets for public companies. Finance is having trouble finding this information, and procurement can help, as Accounting Today notes about acting on the new rules: “Implementation isn’t just an accounting endeavor, as many companies have found. Procurement, for instance, may be needed to help pull together the full population of leases.”

These new rules are forcing visibility into how companies work. And when artificial intelligence gets more robust in its data analysis and more common in procurement and finance functions, then visibility will increase even more for businesses and consumers.

These strides in technology underpin Basware’s belief in “visible commerce” — what is described as a call to action to embrace technology and data to create a “better business, better society and better humans.” Customers want businesses that are ethical, and the visibility of who you’re doing business with is a key goal of Basware’s. To achieve that, the focus will be on tools that help people make sound decisions, not forcing people to be beholden to technology.

It’s important for companies to be transparent and uphold corporate social responsibility (CSR) by knowing the supplier’s supplier and seeing ever deeper into the supply chain. If you have blind spots in your supply chain, that creates risks. New technology can remove those problems, offer more insightful data, and give people better options for doing business in a more ethical way.

For Basware, visible commerce is believing that technology and humanity are interdependent and not in competition with each other — it’s a symbiotic relationship that enables people to be stronger and faster, but with the need to make certain that people are also better because of it.

As ideas develop about the future shape of procurement and finance, it’s clear that technology and some creative thinking about common problems play a role in how those functions evolve.

In the next article in this series, we’ll talk to Basware’s analysts relations specialist, Jeff Meredith, who knows the products and what’s in the pipeline, along with our analyst Xavier Olivera, about the technology of tomorrow.

This is a Brand Studio article written for Basware, not as Spend Matters’ analysis or news content.

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