Tag Archives: data-driven procurement

Three Data And Analytics Considerations Every Organisation Should Make In The Pursuit Of Digital Transformation

The tools exist – and are affordable – to utilise Procurement data throughout the organisation for actionable intelligence. So how do you make that transformation? IBM Procurement’s Laura Beth Hirt-Sharpe writes the definitive guide to clearing the myriad hurdles.


A Procurement organisation’s success relies on transformation from standard spend visualisation tools to a comprehensive strategy to monitor, maintain and utilise Procurement data throughout the organisation. With the advent of inexpensive, efficient and reliable data collection and curation capabilities, many Procurement executives have the opportunity to efficiently create actionable intelligence from their data. Though a myriad of tools, methods and services are available to support this work, a significant hurdle remains for organisations: leaders must determine the best tools and services and curate an appropriate data strategy and data-driven culture to drive the change necessary to remain competitive.  All this, while cutting costs and reducing complexity.

As leaders embark on their Procurement analytics transformation, they face three major considerations: data and data governance strategy, data cleansing and curation, and skill gaps in core analytics and data science skills. In this blog, I will provide suggestions for each consideration based on my experience with global clients at various levels of maturity.

1. Data and data governance strategy 

Many Procurement organisations begin their digital transformation by thinking that data strategy and technology strategy are one and the same, when in reality these are two distinct, codependent pillars. A best-in-class approach to data strategy is to begin with the outcomes you are looking to drive from your Procurement data.  These outcomes can range across various domains beginning with traditional spend analytics, risk and compliance monitoring, to AI-based trending of key metric behavior within your environment, and many more in between. Once you have a clear view of the outcomes you want to drive, begin thinking through important questions like: 

·   What data needs to be captured and what level of structure is required within those elements? 

·   Is this data captured today, and if so, how?

·   What data gaps are present against target outcomes?

·   Does reasonably consistent master data exist across various source systems?

·   How can data completeness, accuracy, and meaningfulness be assured over time?

·   What is the best way to collect and curate data over time?  (This is not a “one and done” event!)

·   How can Procurement processes be optimised to ensure efficient and effective data capture?

These types of questions will help shape your data and data governance strategy. It is important to understand that there will always be a trade-off between speed of execution and granularity of data capture. Finding the right balance is key, and ensuring you have the right technology and innovation partners in place is crucial to optimising this balance. 

2. Data cleansing and curation 

There are two primary factors to consider with regard to data cleansing and curation: determining who from your organisation should be involved and maintaining value drivers in your dataset. 

Who should be involved?

Procurement data teams within an organisation typically lean toward one of two strengths: data science or Procurement. Some organisations focus on pulling data experts from other parts of the organisation to Procurement to help curate an accurate merge of their datasets into a “source of truth” dataset. However, through this method, Procurement subject matter experts (SMEs) have a limited stake in the data cleansing activities.  Knowledge of Procurement is essential to rapidly increase the data return on investment, such as supplier name normalisation and logic flagging.  If those knowledge assets are not brought into the process early, the path to monetisation will be slow and spotty. 

Alternatively, some organisations choose to assemble a team of Procurement professionals who can educate themselves on data techniques and procedures and curate the source of truth data. For these organisations, technical issues and lack of repeatability of process steps ensure the source of truth dataset will require a similar pruning process again in the future. This also has drawbacks in that data architecture is best left to data professionals – especially data that will be used for AI and Cognitive algorithms.  Merging Procurement SME talent with data design in a Procurement environment is tricky. Couple that with the reality that top data and Procurement talent have “day jobs” makes this investment in talent critical, complex and expensive. 

What are the key value drivers?

Organisations that pull their data into a central repository and want to utilise it to its fullest should maintain two value drivers within their dataset: 1) Procurement-specific categorisation and 2) knowledge-infusion based on outside information. 

Cleansing data to support a Procurement taxonomy cannot rely alone on a set of off-the-shelf tools built for classification of natural language – sentences and paragraphs – but will need to be curated for terms and phrases specific to Procurement’s categories. Furthermore, high-accuracy categorisation of spend data hinges on multiple fields such as supplier name, GL classification and rich line-item text fields. 

Utilising these Procurement-specific fields in classification requires more advanced algorithms to decide between potentially disagreeing field content.  To further complicate categorisation and curation, data experts are regularly tasked with combining non-structured information into the source of truth dataset. This work requires technical knowledge and industry acumen to execute as well as regular refreshes of data and terminology.  For example, these data points could include diversity supplier type, occupancy and building information as well as market intelligence purchased from third party providers. This work requires an in-depth knowledge of the source of truth dataset and supporting datasets which may be unstructured. These fields must be updated and verified with Procurement stakeholders. Categorisation work and additional field inclusion require a significant investment by Procurement organisations to create and maintain.

Determining the right team and the value drivers within Procurement-specific data is a task that takes dedicated individuals, time, and effort. However, the size and forethought of this effort will determine the return on data initiatives.

3. Core analytics and data science skills 

A pervasive issue I see with organisations that hire data scientists from top schools at high salaries is that they struggle to extract value from the data that already exists in their systems due to lack of Procurement acumen.

Another common issue is that an organisation’s current team cannot afford incremental budget for the aforementioned data resources, and therefore leans on its existing Procurement and IT staff to monitor, maintain, and report utilising spreadsheets and visualisation tools.

Cross-collaboration

Both approaches leave a significant amount of value unrealised for the business. Instead, I recommend cross-collaboration across the organisation, designating analytics champions and emphasising grassroots training.  Without these, the value of your data will remain untapped and will require a significant amount of future investment to digitally transform your business.

A successful data-focused organisation is one that is fully integrated within your Procurement function. The data team cannot be a siloed organisation, building point solutions for the loudest stakeholder’s pain point. There needs to be an agile approach to daily activities, with a robust backlog and tasks prioritised for highest return to the business.

Analytics champions

Analytics champions are an important, yet often overlooked, position. Data Translators are another name for this role, as organisations need to treat data as another language with certain speakers of the database and statistics “dialects.” 

For example: if an executive has a short turnaround project that is important for continuing operations, they need to meet with their function’s analytics champion before they meet with the data team. The intent of this role and meeting is to vet, assess and format answers to the rudimentary questions that often derail otherwise productive data initiatives. Potential topics to cover include data availability, awareness of the project backlog, agreement on fair timelines and investment, and blockers. 

Organisational growth

Analytics champions need to be cultivated internally first as functional experts and grow as the organization evolves. There are positives to hiring versus training, but as discussed earlier, without the proper functional understanding you will likely see a lack of results without the proper structure in place. 

Your current functional team knows your business, processes, industry, and supply base best, so enable them to make decisions and give structured guidance to the data experts, even if a data translator is required.

Meaningful transformation through modern Procurement

Analytics is at the forefront of high-impact Procurement organisations as a trusted business advisor role, as a supplier relationship reference source, and as the foundation of effective compliance management. Through analytics, modern Procurement can be predictive in their actions and trusted throughout the broader business. To produce the granular level data required for actionable intelligence, source data has to expand beyond basic accounts payable and purchase order elements.  New sources of information, such as demand, consumption and compliance data from a variety of internal and external sources must be linked. This process appears daunting, but we have seen meaningful transformation happen over small, structured, prioritised steps with a focus on data as the foundation for meaningful transformation.

To solve for this complex need, Procurement Business Process Outsourcing services are innovating through AI-based technology infused with an influx of new and re-purposed Procurement talent skilled in data science, mathematics, statistics and computer science. Ensuring the correct mix of skilled data resources with Procurement experts has proven to be an expensive challenge for CPOs, and an opportunity for market-leading specialists such as IBM Procurement Services. These services assist Procurement organisations to meet their analytics demands while empowering their sourcing practitioners to focus on taking action based on the analytically discovered opportunities. Incorporating knowledge built across clients and industries, these services allow Procurement to adjust focus around high yield data and statistically verified opportunities.

How To Create A Procurement Service Desk

How can you centralise disparate tools and requests to receive, triage and manage work across the source-to-pay process without replacing your applications? It’s not as impossible as it sounds.


Are your stakeholders frustrated with finding their way through the procurement maze? As a procurement practitioner are you overwhelmed with navigating your way through a variety of disparate tools and requests, such as procurement, accounting and reporting, to get your work done?

Many organisations are increasingly improving the efficiency of the procurement process by implementing a “Procurement Service Desk,” which is a single, centralised user portal for stakeholder requests, routing, communication and PR/PO status reporting.

One-stop shop for “all things procurement”

By using one portal instead of multiple systems, the Procurement Service Desk provides seamless engagement for procurement and its stakeholders, which helps procurement organisations receive, triage and manage work across the source-to-pay (S2P) process. The single portal improves the overall user experience and outcomes with procurement for stakeholders, including requestors, legal, finance and operations.

With a Procurement Service Desk, stakeholders no longer have to spend days trying to figure out where to go, who to call, and what information is required to engage procurement. The platform provides procurement stakeholders with a simple user experience to submit procurement requests. A dashboard provides full visibility to requests and statuses throughout the end-to-end procurement process. Stakeholders and procurement now collaborate directly in the centralised portal instead of through numerous emails, files and phone calls.

Procurement organisations typically realise these value-based outcomes after implementing a Procurement Service Desk:

  • Automated triage of work to appropriate practitioners through intelligent routing
  • Improved user experience for clients, supplier and S2P practitioners
  • Workflow data captured in a structured manner for utilisation to improve processes, deliver efficiencies and provide an improved experience
  • Enablement of metrics that matter
  • Intuitive, easy-to-use platform
  • E2E flow supported by a single platform

Shortening the process through intelligent triage

Through the Procurement Service Desk, stakeholders submit requests covering the full S2P process, including sourcing, contracts, supplier onboarding, purchase orders and invoices. By using standardised processes and forms, the Procurement Service Desk ensures compliance and gathers required data from stakeholders.

Requests are based on standardised processes and forms, ensuring compliance and that required data is received upfront from the stakeholders. Because procurement professionals don’t have to chase down additional information from stakeholders, the Procurement Service Desk enables a more efficient process and quick turnaround times.

When a request is submitted through the Procurement Service Desk, the platform triages the request through intelligent routing rules to the appropriate procurement practitioner for no-touch handling.

Triage rules based on commodity, request value, country and supplier match the request with the most appropriate procurement practitioner. This automated triage ensures work gets to the right team quicker and more accurately, improving stakeholder customer satisfaction.

The Procurement Service Desk provides procurement with full visibility to the types of requests coming into the organisation through an executive dashboard, helping managers measure and address workload balance and required skills. The platform also provides improved data-driven insights based on the volume and types of requests received from stakeholders.

Integrating processes and systems

Because the Procurement Service Desk sits on top of an integration layer, the intake request process connects with the back-end disparate tools and micro services. Procurement manages their full workload in a single platform regardless of the back-end transactional systems. By sharing data from the intake process bi-directionally with the back-end transactional applications, the Procurement Service Desk eliminates data re-entry, improving process efficiencies and analytics.

The Procurement Service Desk also easily connects to other services, such as Marketplace and Analytics, making them easily accessible. Previously disparate tools and services, they now easily scale and function as a fully integrated platform.

After making the decision to move to a services desk, procurement organisations should begin looking for a system platform to manage the Procurement Service Desk and integrate their key systems. By working with a company with specific procurement experience, organisations reduce business disruptions and speed up implementation.

Learn how IBM Procurement Services can help to reduce business costs and meet the challenges of complex global enterprises through effective data-driven source-to-pay operations by visiting www.ibm.com/services/procurement

The Efficiency Value of a Marketplace Approach

Procurement talks a good game when it comes to efficiency. However, few are walking the walking when it comes to taking real action.

This is the second in a three-part series of posts. If you missed my first, ‘Instant Access to Supplier Information a Step Change for Procurement Productivity’, click here to read it.

In that post, I presented a challenge to anyone who assumes that having technology guarantees progress. Make sure your technology is earning its keep and not just putting your inefficient, manual methods online.

In this post, I’m going to take the same approach to efficiency.

What is Real Efficiency?

We talk a lot about efficiency in procurement, but we take very few steps to actually improve it. Real efficiency is more than doing more with less. It is also about timing. Sometimes, doing the same task at a different time increases the impact potential of the effort behind that task.

Take risk management or risk mitigation as an example. Addressing risk should be an active part of the sourcing process, not something to be managed afterwards. While risk information is readily available, sometimes what procurement really needs to know what their peers think of a supplier.

That is why tealbook combined internal supplier knowledge, data from Dun & Bradstreet, and aggregate intelligence from your industry peers into each supplier profile. Adding a peer view to the supplier discovery process not only makes it more robust, it significantly increases the trust factor for everything procurement learns.

Addressing risk early is critical. Two of the first opportunities procurement gets to mitigate risk arise during the supplier discovery process:

1. Inviting more qualified suppliers to participate in the sourcing process improves the final award decision.

You’re always going to lose some suppliers to disqualification or elimination. Investing in the discovery process up front decreases the fall-off rate, and ideally presents the team with a larger number of more qualified suppliers to negotiate with and consider for contracts.

2. Looking at supplier-related risk factors before the sourcing process begins makes it possible for procurement to push back on requirements if they are too confining.

Procurement tries to be good about collecting risk information in RFx’s, but many times it is too late to change the direction of a project based on what the team learns from suppliers.

By doing an early assessment of the available pool of suppliers and their relative risk before going to market, procurement creates an opportunity to widen the pool of prospective suppliers.

Making Efficiency Proactive

In addition to thinking about the timing of tasks and what impact that has on efficiency, procurement needs to look for opportunities to combine activities.

If you are going to conduct a supplier discovery exercise anyway, why not search a platform that incorporates third party risk data in addition to supplier information and buyer knowledge? tealbook incorporates D&B information into supplier profiles so procurement see which suppliers offer the product or service they are looking for in one place.

Taking efficiency to a more proactive level, why not pre-vet hundreds (or thousands!) of suppliers across a wide range of categories? With the right technology and information, procurement could, in essence, create a custom virtual marketplace of suppliers that are ready to bid at any given time.

A broad approach drives efficiency because the suppliers are already vetted and risk is moved up in the process without adding a step or a delay. This is an ideal application of technology because it enables something procurement can’t do on their own on the same scale.

Value creation goals notwithstanding, good procurement teams want competition as well. Without the supplier discovery pre-work being done, procurement is stuck with the same old suppliers time and time again.

And there is nothing efficient or strategic about that. Marketplaces are certainly not a new idea, but they are a path to efficiency that we should look for ways to improve.

Now that I’ve shared my point of view on scalable technology and marketplace efficiency, I’m going to wrap this series of posts with an optimistic view of procurement’s forward looking potential.

Gregg Brandyberry is a recognised pioneer in procurement and sourcing technology. He has over 40 years experience in industries such as automotive, textile, manufactured goods, electronics and healthcare.
He is the former Vice President of Procurement – Global Systems and Operations for GlaxoSmithKline, and a Senior Advisor for A.T. Kearney’s Procurement and Analytic Solutions organisation.

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.

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.