Key Procurement Tensions/Trade-offs for 2017 – Simplified Technology versus Greater Capability

Last week, we outlined five key areas of interest or tensions maybe for procurement in 2017. This week, we’ll look at each in a bit more detail, and in each case, give three key actions for 2017 that might strike a chord for you. Today, our tension is around simplified technology versus greater capability.

Generally, most providers of business software in every field are striving to make their software easier to use. That certainly applies to much of the software used in the procurement industry, whether that is analytics, purchase to pay, risk management, sourcing, or one of the less mainstream obscure solutions.

That gives organisations (and procurement functions) the opportunity to get end users doing activities themselves, rather than having to perform a hand-off to another more specialist function. We have seen this already with purchase-to-pay processes and simple ordering and catalogues becoming mainstream, taking procurement out of the requisition / purchase order loop. That does bring some challenges for procurement of course – more on that tomorrow.

We believe we will also see lower-complexity sourcing activities become increasingly simple and therefore end-user friendly. Yet we also see technology getting smarter and deeper, for instance in the optimisation area, at the more complex end of sourcing. Similarly, while basic spend analytics will be available to all, the “power-user” of leading-edge analytics technology is going to have access to huge computing power, artificial intelligence and machine learning, which will open up new opportunities to use data to identify opportunities.

So, our three thoughts for 2017 are:

- Every organisation should have – must have – a procurement technology strategy and plan. That needs to be aligned with overall procurement objectives and operating model, and will also have to be mindful of the organisations technology strategy.

- CPOs and procurement executives cannot hold back the tide. As technology becomes cheaper and more user-friendly, more work that has traditionally been the preserve of procurement will move to the user population, just as we have seen in areas such as order placing. Accept this, get on the front foot and identify where the organisation can benefit from this change.

- But bear in mind that the most advanced technology can bring real competitive advantage, and may well be something that requires specialist handling and operation. We are still in a situation where more organisations should use sourcing optimisation processes and technology for instance, and getting the most out of that does require some deep knowledge and skill. But that growth may well be accompanied by more basic sourcing activities being devolved (with the appropriate technology) to budget holders.

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