…Or are they kept awake at night worrying about how to adapt their business to a robotic-centred future? KPMG Australia Chairman Peter Nash reveals two concerns playing havoc with the sleep patterns of business leaders.
How can I adapt my business to a robotic future?
The thing about technological disruption – and machine intelligence in particular – is that people tend to regard it as a challenge to deal with at some point in the future. The key to understanding the scope of the challenge is to break it down into two categories – disruption that we’re already dealing with, and disruption that is yet to emerge.
Robotic process automation (RPA), for example, has been around for decades, with disembodied robot arms a common sight on production lines. Typically, they automate a series of existing processes that were once carried out by humans. We’re just starting to realise the full potential of RPA, with the emergence of bots that sit inside software to automate administrative labour becoming more common.
From his viewpoint into many of KPMG’s client organisations, Peter Nash has seen what an RPA bot is capable of. “If you go into any call centre, you’ll observe staff doing a series of processes as they engage with customers – typically around data capture and data entry. Through observation, you can create “process flows”, and then build software that can be inserted into the call centre and automate the data capture. That’s a classic example of robotic process automation, and it’s happening at pace.”
Interestingly, RPA is resulting in the reshoring of capability from overseas. Nash comments: “You can track the life cycle of offshoring and reshoring. 10 years ago you may have had 100 people doing a job in Australia for the cost of $5 million. Those 100 jobs were offshored to India, resulting in costs being reduced to $1 million. Today, with robotic help, you can have only 10 people doing the same work that 100 used to do – at a cost of $0.5 million. Yes, 90 jobs have disappeared, but there’s the exciting potential for completely new jobs to be created with each technological leap.”
“Artificial (or Cognitive) Intelligence, for example, is only just beginning to emerge. People are very excited about AI’s enormous potential, but at present it’s essentially a solution looking for a problem.”
How do I effectively harness innovation?
Nash comments that there are several models that have emerged in the ways corporations seek to harness innovation. “Many CPOs look for innovation to emerge from down the line, and encourage people, whether they’re in-house employees or suppliers, to bring ideas forward. Other organisations set up innovation capability ‘hubs’ or ‘accelerators’. Another approach is to acquire, or partner with, innovation capability outside of your organisation. Some business are doing a mix of all three.”
“What’s encouraging is that most businesses understand that today, it’s innovate or perish. A culture of innovation, partnered with a culture of flexibility where people have the ability to react and respond to disruptive technology, will ensure businesses are able to take advantage of anything that comes their way.”
Even in a world where data is king, IBM CPO Bob Murphy believes there is nothing so important as professional development and human relationships.
The numbers are eye-watering. IBM CPO Bob Murphy looks after a $70 billion spend – $25 billion internally and $45 billion 3rd-party. The company has around 150,000 contracts across 17,000 suppliers, with its flagship cognitive technology, Watson, reading 900 million pages in multiple languages per second.
As we prepared for our interview with Murphy, it’s understandable, then, that we expected to find him entirely focused on data analytics, automation, AI and the other tech that’s rapidly impacting so many professions. We were wrong – what comes across loud and clear is that this is a charismatic, engaging leader where people and relationships matter.
Think 40 and other professional development
Talking to Bob, it becomes immediately clear that his personal commitment to professional development is enormous. “If you want to be a leader, you have to stay current and replenish your IQ through learning and new knowledge. Ultimately, talent development is about making sure you have excellent people to replace outgoing leadership – it’s also vital for driving innovation.”
IBM’s Think 40 program mandates a minimum of 40 hours per year of self-initiated professional development. For the procurement team, this means having the option to select from a range of internal and external courses (often online), including offerings from Six Sigma, Procurement Leaders and ISM. For Bob, it comes down to inquisitiveness and a love of continual learning.
“We look for logical, friendly, humble, smart and inquisitive people. Anyone with a rudimentary knowledge of supply management can be trained to become outstanding procurement leaders. Making people aware of what is possible is absolutely critical – most successful people around the world put aside time to regularly read and educate themselves. They’re inquisitive; they enquire after things.”
Two critical skills for future leaders in procurement
“Data”, says Murphy, “is omnipresent and omnipotent.” He stresses that leaders who want to thrive in the procurement profession need to develop an understanding of:
Data analytics – we can gather data but how do you use that data to gain insights?
Robotic processes – how can you automate tactical processes so human capital is used to the greatest effect?
Cognitive computing – understanding how to digitise a process end-to-end so it is interconnected and insightful.
Murphy tells Procurious that while leaders need to be able to use technology to get the insights and knowledge they need, their main focus should be on developing their emotional intelligence (EQ) rather than their IQ. “You need to have the ability to talk to clients in a consultative manner. We have one mouth and two ears, and that’s how we ought to apportion our time in any discussion. When we’re talking, we’re not learning.”
How can you train someone to be adept at building relationships? “It’s about attitude, not aptitude”, says Murphy. Whether leadership is innate or taught, the results are the same. You need to be able to work collaboratively with your suppliers, show them what’s important to you and understand what’s important to them. “Your relationship-building skills will ultimately enable your suppliers to drive innovation. For example, we have 17,000 suppliers at IBM. I want each one to wake up every morning and think: ‘How can I make IBM better’?”
Have you got a cognitive journey map?
Where is your organisation headed with cognitive procurement technology? Where do you want to be? How will you use people, processes and technology to get there? What can we automate?
Murphy recommends that every procurement team should have a roadmap that lays out the strategy for its data, analytics and cognitive journey. “All CEOs need a vision for their cognitive journey, and every function needs one too.”
According to The Hackett Group’s 2017 Procurement Key Issues research, only 32 percent of procurement organisations currently have a formal digital strategy in place, and only 25 percent have the needed resources and competencies in place today.
In reality, we can’t all be first-movers. But even if your company isn’t yet ready to act on cognitive technology, CPOs will be rewarded for raising the question, thinking through the issues and putting the challenge on the Board’s agenda. Most importantly, there needs to be milestones and deliverables, as Murphy warns: “Strategy without execution is a daydream”.
To end on a gem of a quote from Murphy, he spoke about how the constantly evolving nature of technology means a never-ending journey. “’Journey’ is a good description, because it is never finished. Anyone who thinks it is finished, is finished.”
Technology will help procurement pros to do their jobs faster and more efficiently, lessening their workload. What are the key AI trends we can expect to see in the coming months?
Nearly every day we encounter stories and predictions about how artificial intelligence (AI) will fundamentally change a variety of industries. The challenge is explaining what this type of technology could do to improve certain functions and jobs. Let’s take a look at the trends we can expect over the coming months.
Artificial intelligence will expand in analytics, intelligence gathering and visualisation
We’ve already seen speculation about the industries who will benefit the most from AI, and we’ll continue to see improvements as more and more companies adopt the technology. We will further see the expansion of the way humans in the workforce interact with AI-based solutions.
When it comes to the analysis of data, especially unstructured data, AI can be taught the nature of words and sentences and string together concepts and gists within the text. This goes far beyond the basic keyword search functions most people are familiar with. AI can then present the information to business users, and not just highly trained data scientists, in a format suitable for them. In understanding the contents of extremely large numbers of documents, AI can take a huge workload off human reviewers and help them do their jobs faster and more efficiently.
Through the use of AI, companies will have an advantage on a competitive global stage, without sacrificing the well-being of their employees, and these applications alone will be the first area of widespread use this year.
M&A activity in 2017 will rebound with a record year
Last year was a disappointing year for mergers and acquisitions. Between the broken deals with Allergan and Pfizer, Halliburton and Baker Hughes, and many more, investors and companies alike were starting to panic about the future of the economy. This year things will quickly change and we’ll be on the rebound with a record M&A year.
According to a new Deloitte report, 86 per cent of private equity and 71 per cent of corporate dealmakers are expecting to close more deals in the next twelve months. While many people feared the uncertainty of major events like Brexit, it will present a whole new opportunity for M&A deals in 2017.
Contract intelligence solutions can help to alleviate some of the challenges M&A brings. By gaining a much stronger insight into the contract portfolios of companies they are targeting for acquisition in the due diligence phase, they dramatically reduce the risk and liabilities they may be acquiring. This insight is fast and efficient, and provides significant transparency in to contract obligations while keeping the deals on track.
Contract Management – CLM will need to change
Contract lifecycle management (CLM) vendors manage contract processing through technologies such as document repositories, workflow, and authoring. It has been recognised that the utilisation and ROI provided by these CLM technologies is not where it needs to be, and they are lacking in the management of contract data. These systems provide user defined fields, and users must manually input this data to manage obligations and run analytics on key fields such as term, renewals, counterparty information, pricing and incentives. The data manage with CLM is generally inconsistent, error prone, and inefficient, and organisations with CLM systems will clearly struggle with understanding the data in their existing contacts as they go into the CLM, but also new contracts.
This year, organisations will realise CLM only solves part of the problem they are working to solve, and complement CLM with contract discovery and analytics tools — based in AI technologies. The combined solutions will create the needed efficiencies in the contract lifecycle, but also allow them to dynamically extract the data they need from contracts, when they need it, allowing for deeper analytics and increased insight into critical business relationships. The old way of data management with contracts will be considered obsolete this year, and richer analytics will become the norm.
Contracts – the “new source of Business Intelligence”
Right now, businesses spend a lot of money and time extracting insight from structured data. The current “big data” solutions process sales data, manufacturing data, financial data, social data, etc., but not the data buried in unstructured documents. Solutions exist now to analyse data from large quantities of documents and provide very valuable insight that can be used for effective decision making.
This is especially important when it comes to contracts. Instead of legal teams reviewing contracts to ensure an organisation is complying with the law or with new or changing regulations, contracts will be seen as a valuable new source of business intelligence.
Dashboards are now being created that bring together structured and unstructured data to provide new views into the business that were not possible before. Contracts will be appreciated as a new, and untapped source of business intelligence that a new generation of technology can now mine in a very intuitive and cost effective way.
This article was guest-written by Seal Software, a leading provider of contract discovery. Seal Software uses artificial intelligence and natural language processing to help companies efficiently uncover what’s in their contracts.
They say there ain’t no party like a Procurious party. Thank goodness you’re all invited to The Big Ideas Summit!
Want to follow all of the action today? Register as an online delegate for the London Big Ideas Summit 2017 here.
It’s not every day you invite more than 50,000 people to join you online for a procurement event. It’s going to be a whopper of a party and we’re so glad that you’re able to join us.
The Big Ideas Summit
Today, Procurious is gathering fifty of the world’s most influential Procurement & Supply Chain leaders in London. For the third year running we present The Big Ideas Summit – the world’s first digitally led procurement think-tank.
Procurious’ Big Ideas Summit now has a global reputation as the most innovative leadership event for the procurement profession.
Today we need your involvement. Together we are going to spark vigorous discussions, light up social media across the globe and crowd-source ideas for the future of procurement.
What’s the aim of the game?
Our aim is to inspire a new generation of business intrapreneurs, people who can think outside the box. These forward thinkers will drive innovation and lead change into the future.
Now with 20,000 members from 140+ countries, Procurious is well on the way to becoming a United Nations, in kind, of procurement professionals.
We’ve made it possible for you to attend one of the best procurement conferences in the world. It doesn’t matter if you’re siting at your desk, lounging on the sofa or on the go. There’s a lot of ways to get involved throughout the day and have your say.
Get involved, get ahead
If there’s anything you’re burning to ask one of our procurement thought leaders, why not put them to the test? Ask them the toughest questions you can possibly muster.
Or, if you’re looking for a way to build your personal brand and market yourself as a global procurement superstar, send us your Big Idea. It might not be Hollywood, but putting your video up in lights on Procurious offers an unprecedented chance to grow your profile as a thought-leader and a true influencer in procurement.
You can submit your questions, comments or your Big Idea videos via the Procurious twitter account, @Procurious_ using the hashtag #bigdeas2017 or on the Procurious Big Ideas Summit group.
What are the Big Ideas that will disrupt and transform the procurement profession in 2017?
This year’s conference is primarily focused on uncovering the mysteries of Procurement 4.0. We don’t want you to feel intimidated if you haven’t yet got robots running your production floor and Watson doing your negotiations!
In fact, one of our key goals for Big Ideas is to determine exactly where the profession should be in the journey to Procurement 4.0. We want to help the profession get calibrated.
Procurement 4.0 is something we are consistently discussing on Procurious but confusion remains about the term’s definition. Procurement 4.0 simply describes what the profession will look like in Industry 4.0. From the creation of digital networks, to the increasing use of technology and digitalisation in all facets of business – it represents a transformation in how businesses will run.
The Big Ideas of Big Ideas 2017
What are the top themes and discussion points for this year’s event?
Courage is the number one attribute required for procurement pros wanting to succeed in the future world of Industry 4.0. We’ll be giving you a wake up call to be brave and embrace the future.
We’ll also be narrowing our focus as we learn about the unexpected shifts in the geopolitical landscape. How will this will affect your supply chains and global trade? Last year we talked a lot about Thinking the Unthinkable. We considered how procurement must stay agile to respond to unexpected macro and micro economic changes. Well! Our advice couldn’t have been better timed given the series of political events in 2016.
It wouldn’t be a procurement event without discussing cognitive technology. How things have changed in the past year! Last week more than 600 people registered for our webinar, Man and Machine, with IBM. This is testament to the global interest in this critical topic. We want to help procurement understand how artificial intelligence, such as IBM’s Cognitive Technology solution Watson, is going to help make more informed decisions, with deeper insight and greater certainty.
In the face of all this uncertainty, companies’ ability to anticipate and swiftly respond to change is more important than ever. To tackle Industry 4.0 head-on, we will need to build agile, creative and diverse teams.
Another new term you will hear today is “neuro diversity”. Britain’s intelligence agency today employs more than 100 dyslexic and dyspraxic spies. They say many of their most talented code-breakers have trouble reading or interpreting words, but this can help them crack codes because they see things others do not.
Taking procurement out to the abyss
We’ll also be talking about unleashing our inner creativity in the workplace, sustainability, reinventing the public sector procurement wheel and how procurement teams can shape their workforce in preparation for workplace 4.0.
And, once we have taken you out to the abyss, to the brink of what is possible in the coming 50 years, we will bring our conversation back to the here and now. We’ll discuss why procurement teams should be focused on ‘doing the do’ and getting the basics right whilst still keeping their eyes on the horizon.
Mark is an entrepreneur, author, broadcaster, musician and expert on global trends and innovation. Mark would describe his role as helping people and organisations to ask the right questions about the future.
Mark’s Big Idea
Be brave or be dead! Wherever you work and wherever you end up in the next 15-20 years, remember that it’s going to be a very turbulent time. Ask yourself: what’s my best effort for myself, my family and for society (and remember they’re all related). If you don’t, you can prepare to be very irrelevant and very unhappy!
Trumpism In the Supply Chain – Linda Yueh, Fellow at Oxford University & Adjunct Professor at London Business School
Uncertainty, uncertainty, uncertainty is how Linda explains 2017. At the moment, it’s over President Trump, European politics: elections and Brexit, and the slowdown in growth of China and other major economies. Thankfully Linda’s message to CPOs is one of caution but reassures that it’s not time to panic.
Linda’s Big Idea
Keep calm but be sure to keep an eye on what’s happening around the world as the globalisation landscape is shifting significantly. Global trade won’t end tomorrow but it is going to look rather different in the coming years.
Barry has drawn a parallel between the cognitive technology journey of Watson and the space programme and moon landing journeys of the last century. For IBM, developing and deploying Watson is something like the moonshot in the 1960s where IBM technology helped NASA make the lunar landings possible.
Barry’s Big Idea
Cognitive technology is merely in its infancy in terms of where it can go. This journey will mostly likely take 50 years or more to be fully realised. Millennials have the chance to be there at the outset. They will see cognitive technology evolving and developing throughout their entire careers. But first we need to know how to get on them on board and enjoying the journey.
Chris has nearly 20 years of experience in supply management, working directly with Fortune 500 and mid-sized companies around the globe. He believes that agility is the defining trait of the procurement team of today and the future. He reminds us that many of the problems procurement will face in the coming years have not even been thought of yet!
Chris’ Big Idea
The future is an ‘Unknown Unknown’, but with a match fit, agile procurement team, at least you’ll be prepared for what comes next.
Reinventing The Public Sector Wheel – Paul Smith, Executive Director YPO & Board Member SOPO
Paul has been the driving force behind Procurious’ first private, “corporate” version of the platform, which launched in January 2017. SOPO are using social media to reinvent the way in which public sector procurement professionals work , network and collaborate.
Paul’s Big Idea:
Bring together local government via social media to collaborate and network
Part Three Reboot – Building Your Workforce
Unlocking The Creative Genius In Your Procurement Team
– James Bannerman, Creative Change Agent.
James Bannerman is author of non-Fiction best-seller Genius: Deceptively Simple Ways to Become Instantly Smarter. He believes the maxim that organisations must innovate or die has never been more true thanks to rapid technology developments and fierce competition. In procurement, CPOs need to foster their intrapreneurs and work to achieve what James calls a ‘return on inspiration’.
James’ Big Idea
Miraculous and fully-formed ideas won’t simply land at your feet. Procurement pros must attempt, what James calls, “deliberate creativity.”
Unlocking The Case For Neuro Diversity – John Floyd, Headmaster at Bruern Abbey
John wants to dispel the negative connotations that are so often associated with conditions such as dyslexia and ADHD. He explains that neuro-diverse profiles are actually a bonus for employers because of their different approaches to solving problems and finding answers.
John’s Big Idea
One in every ten team members should be someone with a neuro-diverse profile.
What are the best Procurement Teams already doing to set up for success? What are the trends in creating more innovative and engaging Procurement workplaces?
Graham believes that for procurement to survive in the digital age, it might not even be called procurement! Those who try to resist the coming changes, are more likely to be part of the redundancy.
Graham will be joined on the panel by Gautam Singh, The Smart Cube and Juliet Sotnick, Babcoc.
Digital Procurement Transformation – Paul Blake, Senior Manager, GEP
Paul Blake leads the technology product marketing team at GEP. He’ll be addressing the topic of digital procurement transformation. Paul believes that if procurement continues to accept the technological status quo as some kind of given, it’ll continue to be fed the same poor diet. Procurement must start to challenge the hard-and-fast rules we’ve adopted for so long without question.
Paul’s Big Idea
There is no point continuing to do things as we have always done, just because that is the accepted status quo. Instead we should be embracing change and adapting to future possibilities.
Procurement Talent 4.0: Future Skillsets to Build Your Procurement Organisation – Deb Stanton, Executive MD, CAPS Research
Following conversations earlier in the day about what will evolve in the next 50 years, Deb will bring us back to the here and now. Procurement teams should be focused on ‘doing the do’ and getting the basics right whilst keeping their eyes on the horizon
Deb’s Big Idea
“Be bold, but nice” is my favorite motto and advice that I give all supply chain professionals. We need to be bold enough to challenge, ask the right questions, and bring new ideas forward; yet do it in a way that people still want to work with us.
Leadership, Tough Love and Long-Term Partnerships – John McFarlane, Chairman, Barclays PLC
With a background that includes being Chairman of Aviva and CEO of Australia & New Zealand Banking Group, leadership is an area in which John has become an expert. But guess what? He has also worked in procurement! In 1969 he joined Ford as a buyer!
John’s Big Idea
I would encourage longer-term partnerships with supply chains and encourage procurement to approach this with a win-win mentality. It’s win-win or no gain. Aim to be the customer of choice so suppliers approach you with best products.
Are you a starter or a finisher? According to IBM’s Barry Ward, you’d better be both! Barry discusses the key skills most critical to procurement in the coming years.
Barry Ward, Procurement Brand Manager, Global Business Services at IBM is a keynote speaker at Big Ideas Summit 2017. He’ll be explaining the big ideas behind Watson and the opportunities that cognitive tech presents to procurement. When we spoke to Barry ahead of the event he was keen to remind us that, despite rapid tech developments, traditional procurement skills are far from being made redundant.
How do you stay productive and current in a world of fast-paced innovation?
Collaborating with colleagues
Networking with others – using social media and other channels
Building and nurturing an ecosystem of organisations that are leading or developing solutions that may have or will have an impact in your function
What key skills are critical for procurement in the next 5 years?
We will always need traditional procurement skills such as the ability to be a strong negotiator, to communicate well internally and externally, to be a starter and a finisher. But, on top of this I think the importance of an open mind and curiosity in terms of the role that technology can play in the future is going to be more important than ever.
There will be an increasing need for project management skills, change management, relationship management skills. This is on top of the usual and still critical traditional procurement skills such as category expertise or negotiation skills. I can also say that there is a growing importance in soft skills: communication, teamwork and collaboration and problem solving.
How has technology, the Internet of Things and e-Procurement affected IBM?
Technology has placed a key role in IBM’s transformation over the past 20 years or so. Its importance is perhaps more critical in the the current phase of our procurement transformation. Understanding how digital technology can transform the supply chain and our source to pay activities is critical in terms both driving our efficiency and effectiveness but also to showcase how procurement can drive value throughout our organisation.
This positions Procurement in a much more strategic role than ever before. Procurement data is much more visible than ever before. Insights through combining unstructured and structured information augment our knowledge, with alerts being posted to mobile devices instantaneously means that buyers can have much better assurance of supply continuity, of being able to understand price opportunities and to focus their time and energies on higher value activities than ever before. Lower value work will become automated or systems-driven. This is all good news for Procurement.
One clear impact of this transformation is that our key stakeholders now have very high expectations of high performance from Procurement personnel, perhaps more so than ever before, but the rewards are clearly evident in terms of the value that individuals can bring as well as the procurement organisation as a whole.
How valuable have mentors been in your career?
Mentoring is a highly personal thing. Some people need to have guidance and direction particularly in an organisation that may be widely spread and fast-moving, and if you are looking to move around different functions. Similarly for those who are in a smaller organization, mentors can bring an external, broader perspective.
Others are confident of their own abilities in charting a course for their own development and progression. I have had mentors in the past, particularly when I was in the early stages of my career. The more confident you are of your attributes and ambitions the less I have found that I needed mentoring. I spend time mentoring others mainly from within IBM and mainly from other geographies.
How did you first become interested in procurement?
I didn’t know very much about Procurement in my time as an undergraduate. It was not a profession that had much coverage when I was at University, unlike Finance or Engineering.
My first job as a business graduate was as a Purchasing Analyst running Bill of Material queries in a MRP system for a large manufacturer. This brought me into contact with many parts of the organisation including procurement. The procurement manager at the time was quite an intellectual and gave me a broad view of the role that procurement can play in an organisation.
Clearly he influenced me as I have spent my subsequent career in procurement and supply chain roles!
How will cognitive technology impact procurement professionals?
Cognitive technology will transform the role of the procurement professional and the impact that he or she can make for their organisation. It will be able to remove some of the more prosaic parts of the procurement role, such as data gathering and analysis, together with augmenting a buyer’s knowledge thus enabling them to spend more time on higher value tasks and ultimately make better decisions and be more effective.
Procurement professionals will need to understand how cognitive technology works – so they can be alert to potential mistakes that can happen from cognitive solutions, so that data input from these solutions is relevant and accurate. It will eventually help, and force, them with their career progression as well as developing their expertise.
By 2020, every important decision will be made with the assistance of cognitive technology but that doesn’t mean the procurement function will be replaced altogether. instead, Man and Machine will work in tandem.
Watch our free webinar, “Man and Machine: Redefining Procurement’s Role in the Digital Age”, here.
When someone like Ginni Rometty, the current CEO at IBM, says this, it’s worth paying close attention. As we have explored in the past, artificial intelligence and infinite data means endless opportunities, both personally and professionally.
Rometty also speaks from a position of authority and experience. IBM’s Cognitive Technology solution, Watson, is already transforming fields like health care, finance, entertainment and retail.
The system has the potential to understand, learn and think through any procurement issue or question presented, offering detailed answers, analysis, or solutions, just as human can. But the difference is that Watson can do this on a scale and speed that outstrips the human brain.
Man and Machine – What’s Procurement’s Role?
This presents great opportunities for procurement, helping make faster, more informed decisions, with deeper insight and greater certainty.
However, as with any new technology, opportunities also come with uncertainty and challenges. Does procurement truly have the agility, and desire, to embrace this new technology and remain relevant?
And what is the role left for procurement professionals, when the smartest guy in the room is Watson?
Procurious teamed up with experts in the cognitive field to help procurement professionals get to grips with this tricky topic. Joining us for the webinar were:
Nathalie Fekete – Worldwide Cognitive Procurement Subject Matter Expert at IBM
Manoj Saxena – Founding General Partner at The Entrepreneur’s Fund
Pascal d’Arc – General Manager at Cognitive Scale
Cognitive – Big Ideas and Significant Shifts
“This is one of the most significant shifts in human history.”
So what’s the Big Idea behind Watson? Well you may not be aware of it, but Watson has probably already touched your life, and the lives of hundreds of millions of people.
According to Nathalie Fekete the core concept driving Watson is its ability to interpret vast quantities of data, and think and reason like a human being. The machine is built to mirror the same cognitive learning process that humans have, even following the same “Observe; Interpret; Evaluate; Decide” process we use for decision making.
And it’s this adaptive nature, including the ability to augment human intelligence that makes Cognitive so important. Manoj Saxena believes that it’s the fourth biggest shift in human history, behind only the discovery of alphabets, and the inventions of the printing press and the Internet.
The Sky’s The Limit
“A little bit of AI can go a long way.”
According to Saxena, not only is AI already all around us, but we’ve also only just scratched the surface. What’s different now, and will be huge over the next 3-5 years, is the impact of AI on the enterprise.
AI and cognitive systems have already produced successful results in leading global companies across the financial services, retail, and healthcare sectors. And this innovation will only develop in years to come as we progress to super-intelligent computers.
However, Saxena was also quick to point out that the hype surrounding the topic might be unhelpful. To him, it’s about separating super-intelligence in computing from awareness and consciousness.
Hollywood and the media might have their own thoughts on this, but humans are yet to fully understand awareness and consciousness in themselves, let alone give this power to computers.
We also need to better understand the key terminology across this topic too. Saxena helpfully laid it out like this:
AI is the mega-term. It’s the science and engineering of making intelligent machines, particularly intelligent computer programmes.
Machine Learning is a sub-set of AI. This is a science involving the development of self-learning algorithms where the system learns from experience.
Cognitive systems are next-generation IT systems that emulate human cognitive functions and software. Cognitive systems are essentially the practical and applied applications of machine learning and AI into specific industries and business processes.
Got it now? Now you’re in a better position to understand the impact on procurement.
Cognitive and Procurement – Impact and Benefits
“Putting the person front and centre of how we apply this new technology.”
Cognitive systems, as well as AI, stand to overturn the norms for procurement, bringing a huge number of potential benefits. Nathalie Fekete stated that one of the primary benefits relates to the analysis of data.
Using vast amounts of structured and unstructured data will help procurement with supplier evaluation, risk management, and benchmarking. This data, and the systems, will also provide a new gateway for innovation. Procurement will be able to find new routes and ideas for savings and opportunities, using cognitive technology.
Pascal d’Arc built on these themes too, highlighting the growing excitement in procurement around cognitive technologies. d’Arc talked about three key themes developing in this area:
Putting the person at the centre of the technology
Delivering a more personalised experience of how employees interact with or run procurement
How cognitive technology is delivering adaptive and agile processes, as well as reducing the time taken for traditional tasks.
Man and Machine in Tandem
“Start now, because it’s happening very quickly.”
Are you worried you might be replaced by a computer? You shouldn’t be. Cognitive technology can eliminate, automate, reduce and empower jobs roles, says Nathalie Fekete. But the good news is that what it’s removing is the hazardous, dangerous, repetitive and manually intensive parts of the role.
Within procurement, this means that time can be saved on some tasks, and better spent elsewhere. The key for procurement professionals is to ensure that they have the right skills to do the new role. And to understand this and start up-skilling now.
Fekete and Pascal d’Arc expanded on this, highlighting key skill areas future professionals will need:
Traditional procurement skills such as negotiation, Category Management and Supplier Relationship Management
Project Management and Change Management
What we’ve outlined above is just a small fraction of the great knowledge shared in the webinar. To access the full discussion, as well as other key insights from our experts, you can register here.
And the learning doesn’t stop there. If you have any questions, please let us know below, and we’ll make sure it gets passed along to the experts.
Technology has helped to define the human race, from the invention of the car to the moon landings. Cognitive technology is one small step on the journey into the future.
Register as an online delegate for the London Big Ideas Summit 2017 here.
In 1961, US President John F. Kennedy said, “We chose to go to the moon.” People marvelled at the ambition of pushing the boundaries of human capabilities. After all, the technology to do this didn’t exist at the time.
Kennedy never lived to see his prediction come true, and watch as humans took that giant leap forward. Now, in the 21st Century, we come to the next advancement – cognitive technology.
It’s easy to compare the cognitive technology journey to the space programme and moon landing journeys of last century. For IBM, developing and deploying Watson is like the moonshot in the 1960s where IBM technology helped NASA make the lunar landings possible..
Cognitive technology is merely in its infancy in terms of where it can go. This journey will mostly likely take 50 years or more to be fully realised. And at the moment, we’re just in Year 1.
Millennials Will Help Take This Step
Procurement is starting its own cognitive technology journey and Millennials have the chance to be there at the outset. They will see cognitive technology evolving and developing throughout their whole career.
But first they need to know how to get on board and enjoy the journey.
At the same time, procurement professionals, and the wider workforce, are wondering what cognitive technology means for them. What’s left for procurement when cognitive systems like IBM’s Watson is the smartest guy in the room?
Without adapting and preparing adequately, procurement could easily be marginalised. But if CPOs lead from the front, identify the activities that only procurement can do, then procurement’s road will be much less rocky.
Now is not the time to be overwhelmed by cognitive technology, but to be educated. And to do this, we need to understand the key skills procurement professionals need to focus on to start preparing for the cognitive technology revolution.
Barry Ward, Procurement Brand Manager, Global Business Services at IBM, talks about five key skills below.
1. Watson Awareness
First things first, procurement professionals need to be aware of cognitive technology, and Watson, and what it can do for them.
The reality is that technology can change a job in four ways – eliminate, automate, empower, create. Far from being fearful for their jobs, procurement needs to embrace the change, and use it to enable the profession.
Traditional procurement processes such as cost optimisation, spend management and contracts can be empowered by Watson. Things that used to take days will now be done in a matter of minutes.
Watson can enhance these processes by analysing vast quantities of data, helping to improve the decision-making process. Through this, financial benefits can also be realised in this outcome focused structure.
Ward advises that professionals start with the categories that they manage, and understand how AI can be introduced (IBM refer to AI as Augmented Intelligence, using technology to enhance human knowledge and capability). Then it’s a case of learning as you go, and sharing knowledge with others to work collaboratively and to fully exploit the capabilities that the technology can bring
Cognitive technology may make computers super-intelligent, but it doesn’t mean consciousness or awareness. There will always be a need for the human touch in management of stakeholders.
In fact, as technology helps free up time for procurement to focus on strategic tasks, building relationships will become more critical than ever. For example, good supplier relationships will help procurement be more agile, ensuring they stay ahead of stakeholder needs.
Data can only take procurement so far. The rest is down to procurement doing the relationship work we always have done. Only now we’ll have more time to do it, and more information to help enhance the relationship.
As with relationship management, traditional procurement skills such as negotiation will also still be key. Watson can give recommendations for how to proceed, but ultimately it can’t make decisions for you. And you’ll always have the ability to correct it too.
However, Watson can help with providing data to enhance the negotiation itself. The system can give details on the person you are negotiating with, and help cut down the preparation time.
For example, if you were negotiating with Barry Ward, and you had done so in the past, Watson would be able to tell you what these previous experiences were like. Like what Barry does in certain circumstances, for example.
There’s less dancing around, you can get straight to the point, all of which saves you time. Plus, you’ll probably get a better deal out of it too!
4. Understand your organisation’s cognitive technology journey
Find out what your CIO or CTO is doing, and what their plans are for the organisation in terms of cognitive technology. You can ask what the digital transformation will look like, and then think about how to prepare, or even influence, it.
Professionals can assess their own category, and establish what cognitive solutions are available in the market place. The key is learning how cognitive technology might specifically benefit your area.
For example, if you are travelling and your plans change, cognitive technology can assist. All you do is put the details into your phone, and the technology will assess the change, look at your airline and hotel preferences, and then present a plan, complete with cost, for your approval. All without lifting a finger. In truth, these systems are probably a couple of years away yet, but they will fundamentally change the way some categories are managed.
5. Be Data Savvy
Finally, professionals need to be savvy in terms of knowing what cognitive technology can do for them in terms of data. As we have said, Watson is capable of handling structured and unstructured data, photos, contracts, documents, and even audio files.
The system can make sense of the data, and provide solutions based on combinations of data you’ve never even thought of. The quality of decision-making is improved, and previously unattainable insights are freely available.
We are only just discovering the possibilities that technological advances will bring but it is clear that digital transformation will open up huge opportunities for us all. This will be an exciting time to be in Procurement !
Barry will be explaining the big ideas behind Watson and the opportunities that cognitive tech presents to procurement at Big Ideas 2017. Register as a digital delegate.
We’ve entered into a new era of computing: “the cognitive computing era”, which follows the eras of programmable and tabulating systems and represents a massive jump forward that will transform how enterprises operate.
This new era is defined as such because there is a fundamental difference in how these systems are built and how they interact with humans. Traditional programmable systems are fed data, knowledge, and information, and they carry out and return results of processing that is pre-programmed. In this case, humans are doing most of the directing.
Cognitive technology is different; it accelerates, enhances and scales human expertise to solve more complex problems by understanding language and interacting more naturally with humans. It can reason to find patterns and form hypotheses, making considered arguments and scenarios planning. And this is exactly what Watson is about.
Watson is a cognitive technology that can think like a human and is available as SaaS products and a set of open APIs (Applications Programming Interface) such as natural language classifier, speech to text, text to speech, visual recognition, etc.
What Does Watson Mean For Procurement?
This disruptive technology, by creating a new digital ecosystem, is pushing Procurement to create a new business model, moving away from objectives centered on cost take out and taking a new customer centric and revenue growth approach. CPOs must employ the right strategy, structure, skillset and cognitive technology if they want to be in a strong position to demonstrate their relevance and value to the organization.
Procurement organizations and their leaders need to embrace the reality and potential for Artificial Intelligence (AI) and cognitive procurement as readily as they would accept other technologies and developments. AI will bring changes and challenges but it will also bring amazing opportunities for the profession.
As we apply AI to certain procurement tasks and processes, we will begin developing internal capability and expertise.
Applying Cognitive Tech To Procurement
Cognitive technology has already proven to be particularly helpful at helping procurement with a number of specific tasks and programs. These include:
Quickly sorting through very large amounts of structured or unstructured data. This is especially useful for benchmarking and supplier analysis
Providing very detailed supplier assessments of a single supplier, a group of suppliers or the whole supply base
Supporting and validating decision-making during supplier selection
More generically, cognitive computing will undeniably be a key ingredient to innovation, helping to find new ways of operating, providing new insights, uncovering new opportunities and last but not least it will elevate procurement professionals to the well-deserved advisor role by extending their capabilities and growing their experience.
How Can Procurement Prepare For The Changes That Are Coming?
The question that so many procurement organisations are asking is how can they make cognitive tech a reality and where to start?
Adopting and integrating cognitive solutions into an organization is a journey and not a destination.
Firstly, CPOs need to be clear about what matters the most. In order to grow their company’s business and best benefit from the technology, they must set realistic expectations and develop long-term plans with incremental milestones
Secondly, transformation doesn’t happen by itself. It requires the vision and support from the top. As an example, Bob Murphy, IBM’s CPO, is the biggest driver of change in terms of transforming his organization. He saw the potential in cognitive technology and the prospects for Procurement and became an evangelist within the team; encouraging, sponsoring and demanding we embrace this opportunity.
Thirdly, leveraging big data is a key area to take advantage of, especially in data management. This ensures that organisations have the right structure and strategy. At IBM, we have appointed a Procurement Data Officer and also hired data scientists within the procurement team as we understood that procurement needed to take a more active role in extracting and analyzing data to demonstrate its value especially by leveraging the data we are managing and generating. (i.e data in RFP answers, ….)
The Race Is On – Can Procurement Shape Up In Time?
With cognitive technology, procurement teams will be equipped with the tools to navigate the procurement process quickly, easily and more compliantly. This will allow more time for procurement teams to focus on strategic supplier activities after contract signature, such as performance management or supplier collaboration and innovation programs. But is the function ready for this shift?
Embedding such advanced technology requires some serious changes in skills and competencies within our teams. Procurement leaders will have to search for procurement professionals not only focusing on their core competencies, such as category expertise, negotiation skills or market knowledge, but it will be more and more important to hire people with the “right” soft skills. The function must onboard and retain people with excellent relationship management and analytical skills and with a high aptitude to work with advanced technology and financial acumen.
The procurement landscape will have to reshape to a more business leading capability that has to operate in a much more virtual and networked environment where emerging roles of data scientists, business relationship managers and innovation scouts, to mention a few, will be increasingly required.
In short, beyond just being capable of creating visible savings, the role of the procurement organisation will have to shift its focus beyond cost reduction efforts, and move towards a trusted advisor role; accurate, fast and efficient.
There’s no doubt about it, late adopters of the digital transformation or organisations failing to take into consideration the growing exigencies such as speed, value for money, collaboration will be soon perceived as road blockers rather than enablers.
Join Procurious’ free webinar, hosted by Tania Seary with Manoj Saxena, Pascal d’Arc and Nathalie Fekete to make sure you’re ahead of the cognitive technology game.
Artificial Intelligence (AI) is rapidly moving from a mesmeric technology to a powerful teammate and a foundation for enterprise and consumer decision making.
However, AI is a young field full of amazing potential. It’s mystery and lack of understanding is also allowing for hype to grow unchecked. Unrealistic claims by advertising agencies of large technology companies of an “AI nirvana” and portrayals by Hollywood movie producers of an “AI apocalypse” are creating a hype machine that is unparalleled in recent history. The reality is somewhere in between these two extreme scenarios.
Every transformative tool that people have created – from the steam engine to the microprocessor – augment human capabilities and enable people to dream bigger and do more. It also creates massive job dislocation and AI will be no different. Except this time around it will impact not just the blue collar jobs but also white collar jobs such as this Japanese Insurance company replacing insurance workers with AI.
Lost within all of this hype and fear is perhaps the greatest benefit I see as an entrepreneur, a senior technology company executive, and an investor – the potential for AI to do good for business and for society.
Machine intelligence, which is a sub-set of AI, will power and create efficient, real-time adaptive businesses. A “Cognitive Business” that makes sense of all available data and rapidly transforms how it engages it customers at the edge and deploys self-learning, self-assuring business processes at the core.
It will greatly help businesses that are drowning today in Big Data analytics and machine learning science projects but are starving for actionable insights and agility. Despite significant investments in customer big data, business intelligence, machine learning, and cognitive computing, these businesses are struggling with three problems:
Too much data and too little insight
Poor linkage between insights discovery and business action
Scarce learnings from actions taken
Going forward these businesses will deploy AI powered cognitive cloud platforms to augment every user experience and business process. These Augmented Intelligence platforms will pair humans and machines so they can achieve something new and exponentially valuable together: intelligent user engagement and business processes that get smarter and more useful with time.
By emulating human cognitive abilities in software such as memory and sequencing, perception, anticipation, problem solving, and decision making, Augmented Intelligence Platforms will help make sense from messy, disparate first and third party data. They will then use the hidden meaning within all data to engage a human being by providing the right advice, at the right time, with the right evidence across any contact point.
These new class of technologies will create a new range of “new collar jobs” to design, model, build, test and manage these systems – much like the Internet and the world wide web created a new class of jobs in the late 1990s.
Keen to learn more about cognitive technology and the impact it will have on procurement? Join our FREE Webinar, Man & Machine, on the 8th February.