Tag Archives: IBM procurement

Cognitive Technology Is A Bicycle Built For Two

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:

  1. Putting the person at the centre of the technology
  2. Delivering a more personalised experience of how employees interact with or run procurement
  3. 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
  • Collaborative working
  • Project Management and Change Management

Learn More

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.

Watch the full webinar here. 

Procurement Will Be ‘Cognitive’

It’s time to redesign the function to be ‘Cognitive’. Procurement once again faces revolution, and this time it is beyond ‘only’ a transformation. The function we know today will cease to be.

Cognitive Technology

The first turning point saw the profession move to an industrialised model, including centralisation and strategic sourcing. Later on, transformation reached another key step, enabling Category Management, and increasing focus on automation for higher efficiency, better compliance, and outstanding cost savings.

Taking the function to the next level, CPOs then focused on supplier innovation and risk mitigation, to provide more value to their stakeholders on top of day-to-day savings.

Today, equipped with the right technology, CPOs have the opportunity of accessing, and acting upon, huge volumes of relevant data in order to truly impact supplier innovation and mitigate risk, two major mandates in today’s procurement environment. Deriving insight from this data provides the modern CPO with an incredible opportunity to execute procurement strategy on an entirely new level.

New, Data-Driven Era

As the buying function continues to automate, CPOs can plan and prepare for a new data-driven, ‘Cognitive’ era.

Let’s firstly clarify what cognitive technology is, before we explore its implications. Cognitive technologies are products of the field of artificial intelligence. They are able to ingest data and continuously learn as humans would, but with data on an enormous scale. They can perform tasks that only humans could, thereby allowing the workforce to concentrate on more innovative work streams.

Cognitive technology now brings the capability to ingest all (even unstructured) data, and can understand its meaning, reason and context to generate hypotheses, arguments and recommendations from which procurement professionals can make more informed decisions.

How is This Relevant to Procurement?

It means that we can now apply technology to automate and execute tasks that were initially performed manually. Many companies have now implemented catalogues, and automated PO creation, invoicing and reporting, all being ‘operational’ or administrative tasks.

What Procurement cognitive technologies bring to the table is the ability to take over strategic sourcing tasks, such as RFx creation, analysis and even scoring, including a level of complexity and data analysis that can’t be handled by ‘human’ on the same scale.

Even market research or negotiation can be improved, to reach a point when the technology will perform these tasks in a better, more efficient and secure manner.

What Does That Mean for our Procurement Function?

It means that the opportunity for Procurement is huge. However, the function needs to be ready and start considering how technology will indeed transform their very role and skill-set in their organisations.

1. Changing CPO Focus: Today, focus is placed on the front end of the procurement lifecycle, mostly on steps until the contract signature with suppliers. Introducing Cognitive technology to this part of the process will allow procurement to concentrate more on the post-contract signature activities. Vendor management will become critical, improving supplier collaboration, innovation and value-add.

2. Organisational Structure: Is the relevance of organisation by spend category diminishing? The model was relevant to procurement objectives which were to industrialise operations, consolidate, standardise and leverage volumes to generate savings. But today we know that we are reaching the limits of this model, and we are changing our success factors towards outcomes and values, so organisational changes to reflect this will pave the way to a function that is successful and efficient.

3. Measuring Procurement Success: One of our key measures is savings, but because KPIs such as revenue growth, value add, innovations, customer satisfaction, and risk management are also becoming increasingly important, we need to be able to implement a reliable calculation model to quantify progress.

4. Technology Assessment: Are CPOs equipped with the right tools to fully enable this collaborative approach with stakeholders and suppliers, as well as being well to manage risk and protect their brand?

5. Skills and Training: CPOs will need to define what new skills their team will need to develop to be successful in a new strategic model of cognitive procurement. Key competencies such as a collaborative ability to manage complex vendor and stakeholder relationships, leveraging technology, influential communication skills, problem solving, and changing agent attitude, will become even more critical.

In fact, failing to acknowledge the need to evolve will put the procurement function in a position of road blocker rather than a growth enabler, threatening competitive advantage. Embracing a cognitive approach encapsulating procurement data represents a key stepping stone for procurement organisations to remain relevant to the business and successfully differentiate themselves.

With the right strategy, structure, skill-set and cognitive technology, the procurement function is best placed to thrive and evidence its value to the organisation.

IBM are one of the sponsors of the Big Ideas Summit, being held in London on April 21st. 

If you’re interested in finding out more, visit www.bigideassummit.com, join our Procurious group, and Tweet your thoughts and Big Ideas to us using #BigIdeas2016.

Don’t miss out on this truly excellent event and the chance to participate in discussions that will shape the future of the procurement profession. Get Involved, register today.