Bill Huber, Managing Director, Alsbridge
In today’s dynamic environment of cognitive tools and “SMAC” technologies of social, mobility, analytics and big data, the nature of the procurement profession is being fundamentally redefined. Traditional competencies of contractual oversight and fiduciary discipline are no longer sufficient. To remain relevant, procurement executives must acquire new skills related to strategy, analysis and business-oriented governance.
Among emerging technologies, Robotic Process Automation (RPA) and cognitive computing are exerting perhaps the most profound impacts on the procurement function. For example, the ability of intelligent software to search disparate data sources to identify patterns, assign probability and in effect replicate the activities of sourcing professionals will drive the automation of traditionally time-intensive sourcing functions such as spend analysis, vendor identification and matching, and RFX generation, proposal analysis and solution scoring.
RPA technology can already perform many procurement activities on commonly used tools from providers such as as Ariba/SAP, Basware, Coupa, GEP or Oracle. RPA technology can execute key repetitive and certain analytical processes with fewer errors and higher productivity than a person. These include any process that involves work steps to gather/edit data for entry into an automated system (e.g., spend parameters, proposal instructions, specifications, need dates, GL accounts, etc.) as well as the QA and update processes as that data is refined and finalized.
RPA tools also provide visibility into escalation resolution and cycle time, and automate activities such as manual error resolution, spreadsheet manipulation and invoice matching. While RPA solutions are managed by IT, they are implemented by users. This represents a critical distinction from earlier generations of automation that required IT implementation, often with imperfect translation of business objectives into implementation design. Direct user implementation provides an immediacy of impact that is driving rapid adoption with a corresponding reduction in the number of FTEs focused on transactional activities.
Other technologies are also having a profound impact on the procurement role. Big Data/Analytics create significant opportunities to integrate captured data and insights into more sophisticated, adaptive sourcing processes to drive greater levels of innovation.
Cloud Computing continues to change the sourcing game and the way hardware and software is purchased. With providers offering “out-of-the-box” bundling and Everything-as-a-Service options, procurement executives must build effective contracts that align succinctly with these quickly evolving hybrid models.
Social media raises intriguing possibilities for enterprises seeking to facilitate collaboration and knowledge sharing, and procurement has a role to play both as a user of these tools and in defining sourcing and vendor management processes to assist with integration.
Mobile devices have changed the way people think, interact and work. Contracts must continue to address security and privacy issues. In addition, as the user base continues to shift in favor of millennials, effectively integrated mobility services will increasingly become table stakes and will need to be explicitly contemplated in sourcing strategies.
These trends will ultimately result in fewer traditional jobs in the procurement profession. Those that remain will require higher competencies that deliver business enablement rather than pure cost savings and boiler plate risk mitigation. Commensurate with the increased sophistication required, these roles will garner higher compensation.
Specific skill sets and capabilities that will become increasingly important as procurement continues to evolve towards a strategic and value-added focus include risk modelling and analysis, technical skill, and realization and performance management.
In a value-based sourcing market, procurement professionals will face increasing pressure from the C-suite to leverage provider capabilities and to deliver value far beyond efficient pricing and improved processes.
Alsbridge is a global sourcing advisory, consulting and benchmarking firm that helps Fortune 1000 organizations optimize their IT and business operations and service provider partnerships.