Digitalisation is empowering organisations to take a smarter approach to procurement, removing the burden of manual processes and allowing procurement leaders to act strategically, making quick and informed decisions. Yet while the benefits of digitalisation are clear, it’s not all smooth sailing. A recent survey from Forrester found that despite 67 percent of procurement leaders undertaking digital transformations – and 80 percent planning investments in artificial intelligence before May 2020 – a number of data-related obstacles are preventing firms from realising the expected ROI.
According to the procurement leaders surveyed, organisations have a willingness to digitalise but are currently struggling to integrate technology, gather relevant insights from data, and implement streamlined digital procurement processes. Put simply, in order to benefit from digital transformation organisations need to walk before they can run when it comes to data management, which is the foundation upon which other systems rely upon.
Laying the right foundation
The first step is breaking down the barriers between siloed data sources, bringing data together to gain a complete view of what’s going on across the supply chain. However, 50 percent of respondents cited insufficient integration between software tools as a major obstacle, as organisations struggle to bring together data from multiple solutions. This results in incomplete data sets that will not give organisations accurate insights when making purchasing decisions and managing their supplier base. For example, obtaining 360 degree visibility of a supplier is impossible when supplier information resides across multiple systems without any integration, both within the source-to-pay process and back-end ERP tables.
Instead of operating on siloed data from across the enterprise, organisations need to utilise smart procurement platforms to bring together data sets from multiple sources: providing a starting point from which they can begin to generate insights.
Clean up data to give actionable insights
Even once data has been integrated from multiple locations, there can still be issues. 40% of respondents cited poor data quality as a key obstacle. Simple inconsistencies, from duplicated data to incompatible formatting, can gum up the works and prevent organisations from benefitting from proper data analytics, as well as from gaining insights through new applications leveraging Artificial Intelligence. In the supplier visibility example, system integration is of little use if supplier records are not normalized or linked across data tables.
In order to clear up duplicates and create a consistent format, organisations should use their smart procurement tools to convert their integrated data from multiple environments into one master data set. Fixing existing data issues plus leveraging integrated suites where new data generated is clean will support the data quality needed to leverage AI to derive better insights. This will help organisations to make smarter procurement decisions – whether it’s through identifying new opportunities for innovation with suppliers or flagging potential areas of risk such as supply disruption following natural disasters or vendor bankruptcies.
Automate to innovate
Once data quality is addressed, employees still need the skills and time to leverage it. Freeing up capacity through automation is key. Respondents cited a lack of data available at the right time (40 percent) and capacity being consumed by manual activities (40 percent) as major obstacles to more strategic decision-making. A recent IDC study found that procurement professionals spend an average of 2.5 hours every day looking for information. Such inefficiency is a costly tax on productivity.
To overcome these obstacles and improve efficiency companies need to automate menial tasks, such as matching invoices to receipts and converting requisitions into orders. They also need to automate access to insights so employees are spending time conducting analysis rather than looking for the inputs. New technologies such as AI-powered digital assistants are now maturing to where they can deliver real value here. And integrated suites are now offering best-of-breed capabilities combined with the seamless flow of information key to achieving high levels of automation.
Now or never
All too often procurement has been reliant on paper-based processes and inefficient data sources, but armed with data, insights and integrated technology, procurement can become more than just a set of menial tasks and instead step into the future. The road ahead isn’t easy and there are many wrong turns possible on a digital transformation journey. The key is to look holistically at the requirements, addressing data quality in parallel with deployment of new technologies such as AI to automate processes and improve decision-making. With such an approach, organisations will find the path to procurement utopia far easier to traverse.
By Alex Saric, smart procurement expert at Ivalua