Digital Transformation in Procurement

Digital Transformation in Procurement – A Thorny Rose!
In the recent past, there is a lot of buzz around new digital technologies like Artificial Intelligence (AI), Robotic Process Automation (RPA), Machine Learning, Big Data, Natural Language Programming (NLP) and Block Chain etc. There seems to be a generic opinion that these are going to (de)struct(ure) the way businesses have run over the past few decades. Through this article, I would like to share my thoughts on digital transformation specific to procurement.
Procurement’s digital transformation accelerated over the past few years with the adoption of cloud computing technologies and unified Source to Pay (S2P) platforms. By changing business dynamics and offering ease of implementation, these technologies have taken the front seat in leading the digital transformation. But on the flip side of this, cybersecurity will become more complex and business-critical as technology-enabled services become more ubiquitous.
Companies will move to an agile operations journey due to increased market complexities while leveraging new technologies. All this has become inevitable, not to become market leader, but to just even survive the kind of disruptions happening in every industry. The success of this journey in meeting customer demands will solely rely on procurement function whether it is product or service industry. With the advent of new technologies, it will either automate or eliminate the processes while defining new capabilities within an organization. Consider how UBER and Amazon have transformed the customer expectations in user experience and personalization -this path can be followed by embracing new technologies within the organization to build a stronger procurement process.
Now, some views, on which technology is more relevant to what phases/steps in procurement-
Highly transactional and rules-based conventional procurement will immensely benefit from the implementation of Robotic Process Automation (RPA). From document management to mismatch identification to payment process and account reconciliation, RPA could streamline the entire Procure to Pay (P2P) process while driving massive improvements in productivity, efficiency, reduced TAT, with added benefits like minimizing costs and risks.
NLP enabled voice and chatbots will enhance user experience either in the form of guided procurement & value engineering or in deriving the right price of the product. It can be a single point of contact between buyer & seller or buyer & user.
Big Data analytics allows procurement to make more predictive and proactive decisions and not reactive. This is along with improving planning efficiency and facilitating more detailed performance measurement.
With the growing power of computers and availability of huge transactional data in procurement, Artificial Intelligence (AI) can lead to better procurement decisions to build value while reducing costs, improving accuracy and saving time. It will also help in mitigating the risk of wrong decisions.
For contracting and contract management, the block chain technology could verify & certify the existing documents, track modifications and versions for a secure procurement. It will also expedite the procurement & bring in transparency to the entire P2P cycle where multiple parties are involved and demands for accuracy are very high.

There is no denying that these technologies are still at a nascent stage, there is a long way to go for organizations to make it a mainstream reality. Having said that, adoption rate is a key challenge for these latest technologies in the field of procurement. Simply implementing technology without business changes is very likely to fail. Even though it took two decades for organizations to adopt enterprise resource planning (ERP) software, effective usage is still a challenge. Most successful organizations will look at a big picture, develop a strategy and then implement these technologies. In spite of that, getting employees and others to want to use it and then adopt it, is much harder.
Technology drives creative solutions to problems, but ultimately, the real digital transformation & the success it brings is driven by people. Assessment of organizational and people skills are the first steps in moving towards a successful digital transformation journey. Taking time to master these technologies, engaging the team in the successful implementation and focusing on value will help make sure the procurement team is a key part of business success either today or in the digital transformation. Organizational transformation must always come from the top to the bottom tiers in the organization. It is the top management and leaders, who have to drive the effective & efficient implementation of these technologies and amplifying people.
One last thing that I would like to touch upon is about impact of digitization on employment. The fundamentals of any function cannot be automated or eliminated but it can only be enhanced through continuous learning & reskilling. However, this is too early to comment anything on the employment as adaptability is the key for success of this digitization journey.
Finally, I would like to conclude with one famous saying of Charles Darwin “It is not the strongest of the species that survives, or the most intelligent. It is the one that is most adaptable to change”

This article has been published by the Silicon India magazine in the month of April 2019.