Tag Archives: procurement technology

What Procurement Needs to Know About Robotic Process Automation

Just what is Robotic Process Automation? And what should procurement know about it before putting anything in place?

Robotic Process Automation

Robotic Process Automation (RPA) vendors emphasise their product’s capacity to replace human operators, using phrases like “digital workforce.” In simple terms, RPA is a software application that runs on an end user’s computer, laptop or other device, emulating tasks executed by human operators.

Its purpose is to integrate or automate the execution of repetitive, rule-based tasks or activities. RPA does not require development of code, nor does it necessitate direct access to the code or database of the applications.

Current Robotic Process Automation Use

Most current RPA implementations are in industry-specific processes such as claims processing in insurance, and risk management in financial services. These processes, and their associated tasks, are usually high-volume, structured, repetitive and implemented on old technology.

Normally, the processes are extremely stable. There is no technology migration or modernisation roadmap involved, and IT-led integration would be difficult and expensive.

At present, the leading non-industry-specific RPA application is the financial close and consolidation process. According to our purchase-to-pay research, 23 per cent of companies are at the earliest stages of adoption, i.e., either in a pilot or with the technology partially rolled out (Fig. 1).

Robotic Process Automation
Fig. 1 – Robotic Process Automation Trends in Purchase-to-Pay

The remaining 77 per cent have no immediate plans for Robotic Process Automation adoption. Despite the low take-up level today, 45 per cent of purchase-to-pay organisations believe RPA will be one of the areas with the greatest impact on the way their work gets done in the next decade.

The Best Processes for RPA

It is not the type of business process that makes for a good candidate for RPA, but rather the characteristics of the process, such as the need for data extraction, enrichment and validation.

Activities requiring integration of multiple screens, as well as self-service inquiry resolution, are also ripe for RPA. The key is that RPA is best deployed in a stable environment where no changes to the systems are on the horizon.

Other possible choices include processes requiring multiple software applications to execute different, but repeatable, activities and tasks.

RPA Pricing Trends

The pricing model for RPA is still evolving. Today, vendors are pricing RPA based on the cost of the full time equivalent (FTE) staff member it is replacing. For example, an RPA vendor may quote a price per robot that is one-third the cost of an offshore resource doing the work.

Onshore FTE pricing is being quoted closer to one-ninth, or 11 per cent, of the cost. This pricing model, developed to compare the cost of outsourcing a process versus automating it with RPA, essentially positions Robotic Process Automation as a service, not a software solution.

In our view, this model is inconsistent with industry standards governing the way software is typically priced. Therefore, we encourage buyers to seek an alternative gainsharing model where possible. This will both mitigate the risks of early adoption, and provide a strong incentive to the supplier to deliver results.

Patrick Connaughton is the Senior Research Director, Procurement Executive Advisory Programme at the Hackett Group. He has published groundbreaking research in areas like spend analysis, contract life cycle management, supplier risk assessments and services procurement. You can contact him via email or on Procurious.

You can also learn more about Hackett’s Procurement Executive Advisory Program here.

Welcome to the Uncanny Valley

Why are we happy to watch movies with AI and robots, but feel disturbed by near-identical humanoid robots in real-life? Welcome to the Uncanny Valley.

Uncanny Valley

Considering the robot theme of my last two posts, I was somewhat pleased last week to have picked up a radio show from the BBC in their series ‘The Why Factor’ called “Fear of Robots” in which they make some of the same points concerning our assumptions that robots will always be benign.

The presenter found himself somewhat disquieted by a robotic seal pup, and completely disturbed by an almost-human android.

He had, so the saying goes, entered the uncanny valley. Although we humans react (and sometimes over-react) very positively to human-like features – cartoon characters, dolls and the like – we have a generally very bad response to simulations which are very, very nearly, but not completely, life-identical.

The Uncanny Valley

Despite the extraordinary advances in CGI, many filmgoers find greater satisfaction and easier suspension of disbelief in watching old-style animation, than movies which seek to recreate the real world.

The characters just don’t move right, or look right, or something.  The difference is so slight and subtle, yet rings huge alarm bells in our heads.

One contributor to the radio show described very-near-human robots as giving us the same heebie-jeebies as walking corpses might. After all, they are cold, their skin tone is wrong, they don’t move naturally. Of course they freak us out.

Away from the uncanny valley, though, we love the broader approximations to human behaviour.  As we turn away in discomfort from the close-to-real, we delight in the more grotesque caricature.

It seems we’re more comfortable with the messy, chaotic, imperfect real-world, than a more sterile near-perfection.  Perhaps that speaks to a deep aspect of human nature, something that we software developers might do well to pay heed to.

Emotional Reactions

There are clear cases of this emotional reaction to human-like behaviour in the use of software, especially at work.

The response that many, if not all of us, had to that [expletive deleted] animated paper clip when it popped up and said, “I see you’re trying to write a letter, would you like some help with that?” was no different to the reaction we’d have to the co-worker who would keep dropping by to say, “You don’t want to do it like that. Do you?”.

Approximating the real world, including human behaviour, when developing the software that we need to interact with, is thus a complex matter.

Get it right and the user experience is one of delight and sustained engagement. But go too far and users are actively put-off by the feeling that the software itself is somehow working against us.

At GEP we’ve been working on user experience technology that puts the human at the heart of process.  We are, of course, some way from software that has a human personality. And although the possibilities are immense, they are not without risk.

Imagine sitting down at your desk each day to find that overnight everything has been rearranged to make it slightly more convenient for you.  Perhaps so you don’t have to reach so far for the telephone, or your chair is aligned more ergonomically to the monitor.

Such things could dramatically improve our day…or screw it up entirely, leaving us feeling irritated or even violated.  As creatures of habit we naturally reach for the place where the telephone is, which is not always ideal.  It just is.

A Real-Life, Virtual Assistant

But there is another, more subtle, set of possibilities that we might permit to assist us without, to be frank, freaking us out.

You might imagine an assistant who begins by learning how you work, where the shortcuts are that you naturally take, and how other might be offered to speed things along.   Then when the time is right, you assistant might suggest you have some choices, all in good time, no rush.  The assistant makes notes of how they can improve your life and recommends rather than enforces changes.

In time you might start noticing that there is less clutter around and you’re completing tasks faster without having been trained, directed or instructed.  User consent to small changes that help keep things tidy could be far more effective than wholesale re-ordering of menus and icons.

It’s something we have to keep in mind when developing software that should be designed to help you work.  There is a fine but definite line between being helpful and just downright irritating.

It reminds me of the wonderful scene in Father Ted where a sales assistant tries to tempt Mrs. Doyle with an automatic tea-maker.   “It will take the misery out of making tea.”  Her response?  “Maybe I like the misery!”

Cloudy Future for ERP Based Procurement

Traditional ERP systems just don’t do the job for procurement. However, an integrated, Cloud-based approach could be the answer the profession is looking for.

Cloud & ERP

This article was written by Daniel Ball, director at eProcurement specialist, Wax Digital.

The benefits offered by best-of-breed eProcurement technology are well documented. Procurement professionals don’t need much convincing of the advantages of using them.

However, for some organisations, stepping away from using their Enterprise Resource Planning (ERP) system’s in-built purchasing tools isn’t always an easy option.

Modern ERP systems offer organisations a way to manage, collect and interpret data from a variety of business activities across seemingly all business functions, from purchasing and finance to HR and customer service. They also integrate all internal data-collection systems so that all business functions rely on one single database.

This one source of real-time data can help businesses to make decisions based on facts rather than assumptions. To coin a well-used phrase, they could be considered something of a panacea capable of eradicating all business process ills.

There is another way…                                                                                                             

However, for all of the many benefits ERP offers to the organisation as a whole, it’s not uncommon for procurement teams, amongst others, to be frustrated by its rigidity and functional limitations. While core functions such as Finance, Manufacturing and HR are well supported by ERP systems, Procurement, it would seem, is often less so.

Procurement teams will therefore inevitably face the choice between continuing to use ERP, or move to an alternative best-of-bread solution. Today this almost invariably means a cloud-based system that needs to integrate seamlessly with ERP.

The Integration Challenge

But how can procurement convince the rest of the business, and especially the IT department, that the existing functionality on offer to them is no longer adequate for their needs and that moving to a cloud-based system that can be integrated with ERP can be done easily and securely?

We’ve seen many of our customers seek to replace the procurement modules offered to them by their ERP systems but who have been stopped by the integration challenge. They have faced concern from IT managers that integrating with a remotely-hosted, third-party system may pose a risk to the organisation, especially when business-critical master data and finance systems are concerned.

However, the tide is now turning. Some cloud-based eProcurement solutions can securely integrate with ERP and their finance systems. This offers users freedom of choice and the ability to automate, improve, and better manage many of their day-to-day procurement processes.

Feasibility of Integrated Systems

A platform which comes with its own ready configured Integration Platform as a Service (iPaaS) is certainly a major step forward in convincing the finance and IT departments and using a separate but integrated system is not just possible, but advantageous.

We’ve worked with many procurement teams in leading organisations who’ve decided to reject the functionality on offer to them from ERP, and integrate cloud-based eProcurement.

One of our customers uses JD Edwards’ (JDE) ERP system for finance, and had used its procurement module for over ten years to raise purchase orders and approve invoices.

The system wasn’t very efficient or easy-to-use so certain departments chose to bypass it all together, preferring instead to manually process their orders.

However, the complexity and limited functionality of the existing system was preventing the organisation from making wide-scale purchasing efficiencies and not giving a clear view on organisational-wide spend.

Deciding to integrate a new eProcurement system with the JDE finance system that would enable a number of efficiencies including better spend control, more efficient order processing and payments, the organisation decided on a hybrid cloud approach allowing us to host our cloud-based service from within its data centres.

Wide Reaching Benefits

At another of our customers the procurement team was keen to make efficiencies to the management of its indirect spend across Europe.

Multiple systems were being used across the region for indirect purchasing, and these were largely manual, paper-based processes that did not provide full visibility and control over expenditure.

As a result, collaboration between the purchasing teams and finance, as well as with suppliers, was not integrated and could have lead to duplication on spend, or even the business purchasing goods or services it didn’t need.

In order to improve indirect purchasing across Europe, the organisation chose to move its entire European operations to a single, cloud-based eProcurement system to integrate with SAP.

Best-of-breed cloud-based, eProcurement solutions offer a host of benefits across the business, that are far reaching and extend beyond the walls of the procurement department.

Taking the Global Pulse of Procurement

How do you take the global  pulse of procurement and understand key current trends? Here’s a survey that helps do just that.

Global Pulse of Procurement

Zycus recently published their 2016 Pulse of Procurement report, an annual survey and report that highlights key procurement trends around the world.

The report draws on the thoughts and inputs of 650 procurement leaders worldwide, helping to draw valid, statistical conclusions across a number of topics.

The key areas of discussion in the 2016 report include:

  • The present state of procurement
  • The role of procurement technology
  • Hot current trends of procurement
  • The future of procurement

With participation in the survey increasing year on year, and the consumption of the report also increasing, it’s becoming one of the key information sources for procurement leaders. Procurious caught up with Richard Waugh, VP Corporate Development at Zycus, to talk through some of the key messages in 2016.

Procurement Technology 
Adoption vs. Satisfaction

One of the key findings Richard highlighted in this year’s report was the disparity between the high adoption of, but low satisfaction with, procurement technology.

In European countries all of the components of procurement technology have more than 50 per cent adoption. Core technologies such as P2P, eSourcing, Contract Management and Spend Analysis above 70 per cent.

However, only 1 in 5 survey respondents believed their technology solution was best in class or state of the art. One of the key reasons behind this, is that procurement are often left with a version of a legacy system, leading to low satisfaction.

Richard stated that, “These ‘best of breed’ procurement systems do exist, but it’s really only in the e-Sourcing area that state of the art tools are more prevalent.

“There is still a pent up demand for these best in class tools. These would help organisations make a step-change in performance, but many organisations are forced to make do with what they have.”

Supplier Performance Management

Richard believes that having the tools and technology available to enable closer collaboration with suppliers, will in turn drive innovation. These tools can help to measure the value of contributions that suppliers can bring to the table.

Richard stated that the more advanced procurement teams are already using technology to get closer to their supply base, and bring forward the best ideas for profit enhancement.

In addition to this, automation and procurement technology can help to significantly reduce manual, transactional activities, helping procurement get more from their resources, and at the same time enable the profession to be more strategic.

Spend, Perception & Risk
Spend Under Management

The Pulse of Procurement report also highlighted encouraging signs in the management of enterprise spend by procurement. In 2016, 26 per cent of the respondents have achieved an average of 80 per cent of spend under management.

These best in class performers have gone down the path of better stakeholder management and involvement. This allows them to access traditional ‘sacred cows’ of marketing, legal and IT spend.

However, according to Richard, there is still room for improvement. “The weighted average is only 57 per cent spend under management. If you’re average, you’re barely getting over 50 per cent of your spend managed.”

Perception

The report supports the idea that procurement is more of a strategic partner for the business now in many regions. This positive perception, and better visibility with stakeholders is more important, particularly in light of budget pressures.

In Europe, 9 out 10 leaders highlighted a positive perception of procurement by the C-suite. However, this region also has the greatest budget pressure. The majority of European respondents said that procurement budgets for 2016 were either flat or declining. This has led to teams being asked to do more with the same, or more with less.

In Asia-Pacific, the strategic role of procurement is still developing. Richard said, “There is an opportunity for Asia-Pacific to catch up this lag. As you start to manage the spend, the possibilities for savings are better. In fact, the savings goals for procurement are actually highest in this region as they address these categories for the first time.”

Risk

For the first time, supplier risk management fell out of the top 5 priorities for procurement in North America, although it remained in the top 5 in Europe. While this is probably reflective of the current macro-economic conditions in Europe (Brexit; political instability), it does show a potentially short-sighted approach in North America.

In better economic conditions, it’s easy to let risk fall down the ladder. And with less volatility in America, even with a Presidential election coming up, organisations may have changed their focus. However, as Richard states, now is not the time to take your eye off the ball on risk.

“The more mature procurement organisations are doing a better job of managing supply risk. They realise the cyclical nature of risk and the potential for a downturn, and understand the need to be more prepared. However, there is still a significant component who are tactically focused, and dealing with the current reality, rather than looking ahead.”

Pulse of Procurement

Finally, we asked Richard why procurement professionals should download the Pulse of Procurement report. For Richard, it was as simple as saving yourself time with data analysis, and getting a better view of the world outside your organisation.

“For most organisations, everyone is stretched, doing more with less. People tend to have a myopic view of what’s going on in their organisation, without seeing the bigger picture. They can’t readily benchmark themselves against the wider function.

“The Pulse of Procurement report gives you the chance to have data synthesised for you, and to gain some context as to how you compare to the function overall. This then allows you to see where you are leading and lagging in comparison.”

You can download the Pulse of Procurement report on the Zycus website. For more information on how to be involved with the next Pulse of Procurement survey, contact Zycus.

Big Ideas Summit 2016: Big Idea #4 – Effective Technology Utilisation

Justin Sadler-Smith believes that procurement must improve its technology utilisation, or risk being left behind by the organisation.

At the Big Ideas Summit 2016, we challenged our thought leaders to share their Big Ideas for the future of procurement.

From ideas that have the potential to change the very nature of the procurement profession, to ones that got the assembled minds thinking about the profession’s impact outside of the organisation, the response we received was amazing.

Justin Sadler-Smith, Worldwide Sales Leader at IBM, believes that, in the past, procurement’s technology utilisation hasn’t been effective or efficient enough for the profession to access its full value.

Justin also believes that too many procurement professionals and leaders believe they still have time to build capability. However, many don’t realise that technology change, such as cognitive technology, is already upon them, and their technology utilisation needs to improve fast in order to keep pace in the marketplace.

Catch up with all the thought leadership and ours delegates’ Big Ideas from the 2016 Summit at the Procurious Learning Hub.

If you want to find out more about Big Ideas 2016, and what we have planned for 2017, you can visit our dedicated website!

If you like this (and you haven’t done so already) join Procurious for free today, and connect with over 15,500 like-minded procurement professionals from across the world.

The Three Laws of Robotics Aren’t. So What Now?

The Three Laws of Robotics, as created by Asimov, don’t exist. But, as we move to a more automated world, should robots and AI fall under greater oversight?

Automation Robotics

Download the latest GEP white paper on the drive to an automated world here

In my previous post on the subject of the coming era of robotic process automation, I mentioned Asimov’s seminal sci-fi work The Caves of Steel. In it Asimov wrote of The City as the dominant force in human lives of the future:

“The City was the acme of efficiency, but it made demands of its inhabitants. It asked them to live in a tight routine and order their lives under a strict and scientific control.”

Asimov’s suggestion that there is a cost to progress might be seen as prophetic, but I think he was just one of a long line of writers who have warned that the future might be a bit ropey if we just pursue change in the name of progress, for its own sake.

But for all his attempts to conjure a dystopian image, Asimov was fundamentally a “technoptimist” with a repeating theme in his stories that progress would ultimately always be positive. In fact, his philosophy of robotics – and his “three laws” – have been so tightly woven into modern culture that it seems we hardly give a thought to the potential threats to our way of life, and perhaps to our lives from the advent of a totally automated future.

An Automated Future

Without labouring the point too much, the Three Laws of Robotics essentially mean that, in Asimov’s world, robots are inherently safe, trustworthy and beneficial. In fact, it is simply impossible to build a robot that does not comply with the three laws, the very architecture of the robotic AI being hard-wired around them.

It is purest fiction, of course, although to speak to some enthusiasts for the subject, Asimov’s Laws really do exist.  But they really don’t, and that could spell trouble.

Life imitating art is all very well, but there is nothing whatsoever to dictate that an automated future can be assured as a “good thing.”

On the same day as I’m writing this piece, there are two news stories on the BBC website. In one, it is announced that robots will be working in two Belgian hospitals as receptionists, guiding visitors to the correct locations.

In the other, we’re told, a researcher at a university in the USA has built a robot that autonomously decides whether to inflict pain and bodily harm on a live human subject.

That the microcode for the two systems could be somehow swapped, or cross-fertilised, is the stuff of real dystopian sci-fi and, whilst highly implausible, it does raise questions about whether some progress is happening without sufficient oversight.

Robotics & Automation in Procurement

There is disquiet in many circles about the use of drones in warfare, and the step from human-operated to robotic drone is really only a matter of systems integration.

There are no Three Laws to guarantee that AI, robots and automation will be to our benefit.  Yet they may very well be.

There are grounds to be hugely optimistic about what technology can do for us, from carbon capture and storage, to non-polluting safe transportation, to dramatically improved health and longevity in the poorest parts of the world.

Even in our little corner of the world we call Procurement, the sky’s the limit if we want to pursue automation. The potential to dramatically transform how we operate is very great indeed, and only a matter of investment and a few person-years of effort out of our reach.

But in all of this, it seems to me, it is we who should direct and dictate how that progress is delivered and what it actually does.   Instead of being passive consumers and falling in line with the next developments, which may substantially change our working lives, the procurement industry has an opportunity to map out what the future could and should look like, and how we want the machines to work. For us.

GEP Banner

Robotics are the future, and the sky’s the limit for automation in Procurement, say GEP. For more on this, download the latest white paper research.

For more information on high-performing procurement software, visit the Smart by GEP website.

The Fear of Technology in Hospitality

Legacy systems and poor past user experiences are creating a fear around technology in the hospitality industry.

Technology Fear Hospitality

“I think it’s difficult for technology to get to the top of the list of things to do next” said Jane Pendlebury, CEO of HOSPA, in our recent roundtable on the topic of technology in hospitality. And with that, she nailed what I had been dealing with ever since InstaSupply started.

There is always something more pressing that needs attention before looking at a tech solution. Even if that tech solution will save you, or make you the money to pay for that other pressing something.

There’s this fear of the unknown that’s keeping a lot of hospitality businesses stuck in the past and relying on tools and systems that for a lot of other industries became obsolete years ago.

Hospitality Lacking Information

Lack of information and education is a key factor here. Peter Hancock, CEO of Pride of Britain Hotels, rightly pointed out that most people involved in the running of a hospitality business aren’t necessarily the “tech-iest” of individuals.

Experience with older systems and their tendency to create rather than solve problems has left a bitter taste in a lot of mouths. Couple that with expensive upgrades that weren’t made clear at the start of the contract and we have an added layer of mistrust.

The result of all this is an industry that’s still heavily reliant on paper, lacking transparency on spending and full of overworked staff. Front of house staff not only have to ensure their guests enjoy a great experience but in many cases handle a lot of finance and procurement tasks that are absolutely outside their job description.

Lightening the Workload

Technology is created to help lighten the workload and improve productivity, not to take away jobs or swindle businesses out of money because they don’t understand what it does.

Just as a washing machine will handle a lot more clothes and get them done a lot better and a lot quicker than you would by hand, so too will the right technology remove manual data entry, managing 145,789 spreadsheets and let you know exactly what you are spending and on what in real time.

Watch our full discussion on the fear of tech here:

InstaSupply is all about working smarter and simplifying business through technology.

InstaTalks are about bringing great minds together and uncovering where the fear of tech comes from when it comes to business operations.

Finding out what the pain points are and then educating people in plain language. No jargon, no small print. It’s time to understand that technology is a revenue generator, not a budget sinkhole. 

Why Requisitioning Must Be Part of ERP Conversations

Requisitioning (or asking for what you need) is a key part of the procurement process. So why is it frequently sidelined in ERP discussions?

ERP Requisitioning

This article was first published on the Coupa Blog.

Having either implemented or worked with some of the major ERP systems on the market, I think I’m on safe ground when I say, nobody chooses to do requisitioning through their ERP system. They settle for it.

ERP systems are largely built for finance and the controllership. End users are often not taken into account. Their requisitioning modules are notoriously difficult to use, which is too bad because requisitioning is how most non-finance users — aka. everyone else in the company — will interact with the ERP system.

In fact, people putting in requisitions to get what they need to do their jobs represent a large segment of non-finance users feeding data into the ERP. If you burden them with a system they won’t use, or that they’ll use in a sloppy way, your ERP will have data quality issues. To avoid having to settle for ERP requisitioning, it’s to everyone’s benefit for procurement to be part of the ERP discussion, as a strong advocate for the end user.

Advocating for Procurement

I’m not saying that will be easy. As I’ve written previously, organisations need to think more broadly about their whole finance system, which comprises multiple interconnected processes, from sourcing to the point where something is paid for and entered into the record.

The ERP system addresses the back end, and it’s designed for finance to be able to do what they need to do regardless of how the data gets in there.

So, the discussion doesn’t usually extend to the front end—sourcing, contracts, approvals, requisitioning—which is where a lot of that data comes from, because the thinking doesn’t extend that far. It’s not easy to break down these silos.

In situations where I’ve been the advocate for the needs of procurement, I’ve had to fight pretty hard to get that perspective considered and I’ve often been the lone dissenter in the room.

  • Get Real

You need to be a realist. There are always resource constraints, and there’s a hierarchy of needs within finance, and user-friendly requisitioning is never going to be at the top of the list. But when requisitioning is ranked seventh out of six fundable implementation projects, the potential for settling becomes very real. Hello, heavy ERP requisitioning module.

  • Map it out

One way to avoid that mistake is to map out the whole process, because it’s not completely linear. Data flows from one process into one, or several, others. A lot of times an ERP decision is made before these processes are mapped out. But, when you map it all out, it becomes obvious that quality and consistency of requisitioning is critical for getting finance all the data they need to make the ERP system a single source of truth. 

  • Learn the language

The main requirement for a better-than-ERP experience is that the requisitioning system be user friendly. You can’t push a heavy ERP requisitioning system on a marketing associate fresh out of college, or on a seasonal retail worker.

But usability is one of those subjective, soft terms that may not always resonate with the finance audience. To advocate effectively, understand the needs of finance and speak their language. For example, if you’re talking to a controller who is a worldwide tax authority, framing it in terms of compliance and data quality is a much better approach.

  • Not Amazon-like

You also need to break down what you mean by user friendly. Every ERP vendor is going to say their requisitioning module is user friendly. If no one is looking out for non-finance users, that box just gets checked.

How user friendly does it need to be? You’re probably expecting me to say, “It should be as easy to use as Amazon.” I would personally love it if it could be so, but there are different requirements for business buying that for consumer buying. But, it can be much easier than most ERP requisitioning modules make it.

A good system approaches requisitioning broadly. It’s not just asking people to fill out purchase orders. It should really be a way for an employee to get anything they need to do their job. In fact, I’d rather they didn’t have to even use the words ‘purchase order’ or ‘requisition.’  We’re simply helping them buy things.

Ideally, they should be able to click a bookmark, get to a portal and then get in through a single sign-in. They land on a homepage where they see relevant buying policies and have visibility into all of their transactions

There should be smart search capabilities, tailored towards a user who is probably somewhat resistant to using the system. They can’t get irrelevant results, or come up empty. They have to be able to quickly find what they want, or find out how to get it.

If it’s a catalogue item, the actual policy pops up, which will guide them how to buy it. If they need a new computer monitor, maybe it comes back and says, “OK, you have to log a ticket for IT because they do provisioning.” Or if nothing is there, it will guide them towards making a free form request. But they don’t even need to know these terms. All they need to know is what they want.

Heavy and Cluttered

In contrast, the requisitioning modules of the major ERP systems are often heavy. The home page may be cluttered with lots of finance information that’s not relevant. The email notifications can be complex and confusing.

There are a lot of fields to fill in so finance can get all the codes and data it needs – provided the would-be requisitioner doesn’t take one look at it, decide it would be faster just to run down to their local Staples store, and expense the darn thing. That’s the kind of thing that happens when you settle.

There are good reasons why requisitioning is not the top priority in the ERP discussion, but neither is it right for it to have no presence or priority. The real impact of user-friendly requisitioning is better data and better compliance.

To make sure your company doesn’t settle, somebody needs to advocate for all the people who aren’t in the room, but are going to have to use the system, and convince finance to give it the proper priority.

The ideal situation is that requisitioners don’t have to think about finance at all—or procurement for that matter. The irony is that to accomplish that, the folks in finance have to get together with procurement and think hard about requisitioning.

Resistance is Futile…Or is it?

Is resistance to automation of procurement processes futile? Or are we missing the benefits that automation will ultimately bring to the profession?

AI Resistance

You can download the latest GEP white paper on the drive to an automated world, and why resistance is unnecessary, here.

The cannon of science fiction is full of tales of the battle between liberty, exemplified by human free will (including the freedom to screw everything up royally) and tyranny, portrayed as submission to an overwhelming force.

In many cases the “assimilation into the collective” or whatever, is not an unconditionally negative prospect. The promise of an end to suffering and provision of all human needs is often conveyed as the ‘upside’ of the deal to subjugate humanity to forces beyond our understanding.

Automation – The Dark Side?

From Childhood’s End to The Matrix, there’s a definite cost-benefit analysis to be carried out by the protagonists during their struggles to overcome the supposedly overwhelming power of the dark side of the story.

In fact, in the latter, the movie’s clichéd traitor – they even named the character “Cypher” – sells out the heroes on the promise of a return to the simulated ‘real’ world with the words, “Ignorance is bliss.”  And when asked by the agent of evil, “Then we have a deal?”, he replies, “I don’t wanna remember nothing.  Nothing! You understand?”

There is even a branch of anthropic philosophy than contends that our reality is likely to be a simulation run by an advanced post-human intelligence. As coherent and convincing as some of that reasoning appears to be, the fact remains that there is no possible way this hypothesis can be proved or disproved.

Like all matters of faith, this notion is utterly irrelevant when we attempt to construct a set of rules that will let us predict what will happen in (what certainly appears to be) the real world.

Rise of the Machines?

Recently it has been suggested at some of the procurement industry’s leading conferences that business is beginning to enter a phase that will be dominated by artificial intelligence and robotic process automation, and lead to the eventual replacement of the humans in the process.

Dissenting voices are heard to cry “nonsense,” or more colloquial versions of the same, but the arguments are nonetheless compelling. Only this time, they have a certain amount of evidence to back them up.

It is true. The technology exists today, in varying states of maturity, which – if synthesised into a single entity – could effectively do away with human involvement in the supply chain. From AI-run decision making, to automated manufacture and delivery, to fuzzy logic-based distribution of spend across a supply base, the characteristics of today’s procurement activity could, quite readily, be encoded and turned over to a software overlord.

Other sci-fi classics, the likes of the movie ‘Logan’s Run’, and the book ‘The Caves of Steel’, deal with the machine-run production of goods and services in equal measure to the imposing of external force on human freedom. And as life imitates art, there will naturally be greater degrees of this emerging.  Today’s 3D printer is surely tomorrow’s Star Trek Replicator.

The End for Procurement?

But, whatever the generations of the future will accept as everyday technology, the idea that we’re approaching a defining moment, beyond which procurement professionals will be irrelevant, must be viewed with a good degree of scepticism.

There’s no doubt automation works really, really well when it comes to replacing easily mapped and understood processes, from assembling a car from a standard kit of parts, to processing a contract-compliant purchase order through to invoice payment.

But the simple fact is we just don’t understand enough about the world, human behaviour, the markets, the climate, indeed any part of the future, to be able to encapsulate all our business rules into a single algorithm that the machine can follow to manage supply and demand for the rest of time.

The landscape in which our largest corporations operate is truly chaotic, in a mathematical sense, and deriving a simple set of rules to automate demand and supply across such organisations is, I think, beyond us today.

One of the very drivers of modern prosperity is the ability to “make a buck” and any kind of completely automated process necessarily eliminates margin at source. Negotiation between buyer and supplier AIs will not only be mind-bogglingly rapid, but likely to end in stalemate – and the same stalemate as the last time.

If we lose negotiation, then it seems to me that we will lose innovation, motivation and the result will be stagnation.

Resistance is Unnecessary

The future will be radically different to the present.  It always has been and always will be, and all predictions as to what it will look like are inevitably wrong. Including this one.

But with that uncertainty comes opportunity. Automation in procurement will certainly be a big thing in the future, but it will be complex, it will be messy and it will need human brains to make it work, and not just to write the code.

The human brains that work in procurement today are those that will guide the whole world of supply forward into a brave new world. Reports of procurement’s demise have been overstated, naturally, but we can still take control and make the machines work for us.

Resistance isn’t futile. It’s unnecessary.

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Automation doesn’t mean the end for procurement, and the benefits of automating processes vastly outweigh the drawbacks, say GEP. For more on this, download the latest white paper research.

For more information on high-performing procurement software, visit the Smart by GEP website.

Are Procurement Professionals Stuck in the Stone Age? – Part IV

As B2B technology companies are beginning to realise the benefits of being easy to use, what changes do we think will happen? How do we envisage the B2B tech space evolving within the next 5-10 years?

B2B Software

Market Dojo put an article together examining what it would look like in 10 years time, and how it will have to adapt and change to remain ahead of the game.

With a focus on Market Dojo as an eSourcing company, we came up with a few conclusions, most of which can be applied not only to eSourcing, but to B2B technology companies as a whole.

The table below looks at different functions of technology and predictions on how they might change within the B2B landscape.

Function Change
Mobile Technology Whilst consumers are ever increasing their use of mobile tech, are businesses going to become more reliant on this in the workplace? The simple answer is yes. B2B companies need to be aware of becoming even more responsive, searchable and usable across the mobile technology of the future?
Google (power of the web/search) Will this develop enough and become intelligent enough to make other applications obsolete? Such as developing  more intelligent supplier search function and becoming the de-facto supplier database though their categorisation.
APIs The ability to integrate between solutions is already possible, but in the future it is set to become even more simple. We expect it becoming ever easier to integrate with any (software) component through standard connectors, so that best of breed becomes as attractive or even better than ERP solutions.
Amazon/Google/Apple B2B platform Established companies moving into other areas (E.g. developing eMarketplaces) and threatening the smaller providers with their ability to quickly develop technology. This is already happening.

Procserve, for example, have built links with Amazon for B2B purchasing. (See full article here.)

Eradicating the user interface Moving from slick user interface to ‘no user interface’, as per this Coupa article.

A rather controversial idea, but we can see some logic that instead of having to log into a tool every day, instead it fits around your life so you can interact with it outside the tool via Voice Activation such as Google Voice, Siri, Cortana, etc.

True commoditisation The final stage of the technology lifecycle is commoditisation. (See Market Dojo’s video on the four stages of technological growth taken from a TED lecture.)
Integrated market information How global news stories affect various aspects of your business and what technology can do to make companies more aware and faster.
Also how tech can keep companies updated with what’s being said about their brand. (Ref. Owler.)
More focus on AI & Automation/robotics The software could take actions when it ‘thinks’ it is needed. e.g. within eSourcing – delay an auction due to lack of liquidity, or suggest a better lot structure based on the bids received.
Public Sector Procurement A big shake-up in the public sector software market to disrupt the legacy tools with their complex workflows and procedures to be a slick tool that people enjoy using. E.g. Matrix SCM
IT involvement & Security barriers IT’s function is changing from an in-house design/build/implement function to a strategic business partner who guide business stakeholders in the selection of appropriate SaaS systems.
Marketing How will people find us in the future, compared to how they find us now?
How will the power of search change in the future?
At the minute, the focus is on Content Marketing, but what next?
More personalised, more interactive marketing?

As you can see, we expect the Market Dojo platform to become more intuitive and user-friendly over the next few years. Is this true of all business softwares? Will we (realistically) be able to prioritise usability and design over functionality and features?

The authors have pondered long and hard the question of when the B2C approach will catch on in the B2B World. We think it is progressively changing, but will, for the reasons listed in previous articles, take some time to change.

New suppliers with easy to use solutions are coming to the fore, Coupa and Egencia come to mind. But we postulate that it will be a slow change process, with perhaps another 5 years before the whole B2B solution market feels like today’s B2C environment – at which point the B2C landscape will possibly be different again!

To stay at the forefront of technology, can B2B companies look to B2C arena as a gauge of what’s to come?

What are your thoughts?

Market Dojo and Odesma have partnered to combine their intuitive eSourcing software and expertise in offering business advisory services to offer clients a winning procurement solution.