How AI is transforming the ways companies source enterprise services

We recently shared how AI-powered solutions are turning procurement into a catalyst for company value. In this second article, we delve into how service sourcing is being dramatically changed by AI — a previously untapped domain and significant opportunity for businesses.

The pace of change has never been faster. Companies are accelerating the digitization of business operations and processes, resulting in the re-engineering of work around the world. Nowhere is this more prevalent than in procurement. Companies are revisiting their digital strategies to ensure near- and long-term continuity and resiliency across the value chain, all of the steps needed to keep a business running.

One of the biggest challenges for procurement remains the sourcing of enterprise services. Of all the areas that procurement addresses, services spend is among the most complex. Services sourcing is often hampered by spend that extends across multiple categories and company functions, not to mention unclear or inconsistent processes and cumbersome, outdated tools.

Procurement leaders must address the needs of multiple stakeholders with a continuous focus on increasing agility and flexibility to quickly adapt to and understand their specific requirements. More than ever, procurement must establish itself as a trusted partner across business functions and all stakeholders, as well as externally with suppliers.

This requires insight into spend and supplier utilization, both of which can be extremely challenging to achieve given all the factors that are beyond procurement’s control. Striking the right balance requires procurement to use a dramatically different operating model and processes from the past, and this is only possible with technology that fully integrates information, data analytics and insights for better decision-making.

This is where the power of AI comes in. As recent McKinsey research shows, a correlation lies between companies that adopt digital technologies early and at scale and those that excel with value creation. Cross-functional platforms that provide an end-to-end view of services including IT, HR, marketing, legal and other categories are now critical for businesses that strive to maintain a competitive edge with customers, employees, partners and suppliers.

AI-based platforms for sourcing services must also meet the requirements of nonprocurement business stakeholders. The technology must be easy to use and provide a customer-centric, consumer-facing experience — similar to how people decide to use a service for restaurant or grocery delivery, transportation, vacation home use and other services online, and the technology must be in alignment with the global workforce’s expectations.

Understanding complex intent

Selecting suppliers for enterprise services is rarely simple. Buyers come to procurement from a variety of departments and business functions with requests that span different types of services, geographies, scope and duration. To manage these multiple variables successfully, transparency and collaboration across departments must increase.

When a requirement needs to be defined and taken to market, the traditional request for proposal (RFP) process often cannot address the complexities involved with enterprise services or efficiently and accurately lead to the best award decisions. Boilerplate forms or tools that simply gather redundant information only lead to long, drawn-out processes that do not necessarily result in clear requirements and expectations.

With AI-based technology, procurement teams can enable business stakeholders to scope out and match their requirements with suppliers that are the best fit for a specific service. AI can also uncover the untapped capabilities of existing suppliers or bring together complementary suppliers to meet a highly complex service need.

Having the capacity to improve supplier vetting and management is critical for services sourcing. Multiple pieces of information — including each supplier’s full capabilities, geographical coverage, team backgrounds, awards, clients and previous successes — provide procurement with the insights it needs regardless of the service requirement. Whether the work calls for a one-time need, multiple projects with the same supplier or even a search for a traditional agency of record supplier, the information is readily available.

Sourcing platforms must be easily used by both procurement and business stakeholders. When employees and suppliers have access to the information they need when they need it, making quick, well-informed decisions becomes easier. Having a transparent, ongoing process for communicating expectations and deliverables from the beginning of a service being sourced leads to better long-term success and results.

Data, transparency and tracking

The value chain is integral to companywide operations, and enterprise sourcing must be fully integrated with end-to-end procurement processes. Bringing together multiple data points outside of and within the company provides invaluable insights for individual business functions, the broader enterprise and suppliers.

Data analytics can provide deeper insights into regional, national and global markets, arming procurement with information that can inform strategic planning and decision-making. For many companies, the ability to incorporate predictive analytics is an effective way to manage current and anticipated enterprise service needs.

Technology enables more accessible, shareable knowledge across functional teams and stakeholders, which can benefit multiple projects and services. This transparency can also facilitate earlier, more collaborative stakeholder involvement and follow-through. This means faster, higher-quality insights about relevant suppliers and a greater likelihood of quick, well-informed responses. When a service engagement ends, data can be used for stakeholder reviews to inform future supplier selection decisions.

Sharing data openly changes how organizations manage institutional knowledge. The responsibility no longer rests with one person or team; information is amassed and organized using AI, so there is greater continuity regardless of internal team changes or supplier relationships.

The full-scale capabilities for metrics and analytics that AI-based technology provides can improve procurement progress tracking and outcomes. Teams can easily investigate and report which KPIs are met, and when the rationale and context are readily available, these often result in aggressive gains in accountability and measurement. Better tracking of suppliers can minimize the rounds of revisions with proposals and contracts, improving speed to market.

Global collaboration and integration

The world is going through digital transformation, with technology affecting many facets of every type of work and industry. Business is now conducted via online conferencing tools, bypassing conference rooms. Real-time chat tools allow co-workers to communicate instantly, regardless of time zone or location. Business conferences have become digital, virtual events.

With the rapid change in the way businesses operate, global companies need technology platforms that perform seamlessly across entire organizations, providing the same integration and functionality for all users and stakeholders. In many companies, procurement is one of the last areas still relying on legacy enterprise technology solutions that do not scale to its rapidly evolving digital needs or the user-experience demands of business stakeholders.

Procurement teams can bring tremendous value and change to the nature of how they work with business stakeholders by transforming the current sourcing process. With a self-service, AI-powered platform, users have immediate access to information from any place and at any time, providing the flexibility and resiliency that are critical in a rapidly changing world.

As the global economy presses forward, companies may find their success predicated on how well they can work virtually as an outcome of their digital transformation. No company or industry is likely to escape the change.

In the next article, Spend Matters will talk with Globality’s Chief Revenue Officer Keith Hausmann about actions that procurement leaders can take to be catalysts for enterprise transformation and deliver new sources of value to their companies and stakeholders.

This Brand Studio post was written with Globality.

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First Voice

  1. Russell Ruggiero:

    Thank you for the informative article.

    Would like to touch upon three key areas.

    First Open Government Data Act
    This 2019 effort mandates the use of non propritarty formats among Government Agencies. (StratML Part One)

    Two
    Performance Planning. This is essential in both the public and private sectors. It really comes into play regarding tax payer dollars.
    (StratML Part Two)

    Three
    Artificial Intelligence: One development direction could be to leverage identifiers (e.g., vision, mission, stakeholders, value, etc.) imbedded in elements, then use open standards like XSD, RDF, and OWL to take matters to the next level. (StratML Part One)

    It seems that Strategy Markup Language (StratML) has many uses. It is an ISO Standard (17469-1) and solves numerous issues you outline in your article such as the use of open standards (formats) and Performance Planning (tax payer dollars), along with the ability to create a true AI framework.

    Again, thank you for sharing.

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