The future of procurement is here and it isn’t hanging about.
In a world with so much complexity, traditional operating models are quickly becoming displaced due to a lack of flexibility to cope with the demands of the modern world.
As procurement functions grapple with an ever-increasing list of issues such as the likes of cost pressures, market volatility and supply chain disruptions, businesses are desperate for ways to achieve sustainable, profitable growth in the market.
Understanding the urgency of the situation is dynamic trio Pierre Laprée, Chief Product Officer at SpendHQ, Kathryn Thompson, EMEA Sourcing and Procurement Market Offering Lead at Deloitte, and Michael van Keulen, Chief Procurement Officer at Coupa. In a joint conversation at DPW Amsterdam 2024, they reveal the power of working together to unleash 10X thinking quicker.
“Practitioners should start embracing this ecosystem mindset because alone, you cannot succeed,” reveals Laprée. “It’s important to be aware that you can’t know everything. It’s about learning how to surround yourself with the right voices, don’t stay on your own or you will never achieve 10X. Find the people who can help you move the needle. No one will do everything on their own, but when we come together we have a better chance of succeeding.”
The notion of 10X was apt as that was this year’s theme at DPW Amsterdam. The meaning of 10X is how AI and a moonshot mindset can transform a company from incremental to exponential impact. 10X showcases the necessity for organisations to think and act 10 times bigger than their current capacity.
SpendHQ is a leading best-in-class provider of enterprise spend intelligence and procurement performance management solutions. SpendHQ’s Strategic Procurement Platform empower procurement to generate and demonstrate better financial and non-financial outcomes. Laprée references the battle between integrated suites and best-of-breed solutions and stresses the importance of collaboration to reach the promised land. “You need proper foundational data, but then you also require more agile solutions that can help you overcome the problem of the day,” he says. “It is the power of all of us that makes the difference.”
Procurement transformation
As someone who is no stranger to driving procurement transformations, van Keulen is well aware of the ingredients needed to succeed in the digital-driven procurement world of today. Van Keulen’s company helps other organisations better manage direct and indirect spend, mitigate third-party risks and address supply chain volatility and resiliency. Through the compounding effect of AI, Coupa has combined its total spend management platform with its community-generated AI to introduce The Margin Multiplier effect. This is real-world AI informed by $6 trillion worth of spend, created over 15 years and across a community of 10 million suppliers.
“What that really means is how can you go from where you’re operating today to where you could and should be operating through the power of people, process and technology,” explains van Keulen.
“What is extremely critical is that you have the right data foundation, but it’s also important that we understand how AI is going to influence your end-to-end process. How is AI trained and what underlying data is used to train your AI? In our case, it’s based on real data, real companies, real suppliers who are all doing real business with each other. And that’s where the AI comes in. When you think about 10X, I think technology is a key enabler. I truly believe that you need to have reliable data to train AI and then it’s the power of all of us together, which we’ve always called the community element, to get the 10X multiplication or the margin multiplier that we can be in procurement.”
10X Vision
In order to make achieving 10X a reality, Laprée stresses in no uncertain terms that people are at the heart of that journey. According to Laprée, SpendHQ helps its clients build their data infrastructure to support acceleration and velocity. “Businesses move fast, the world moves fast and data moves even faster,” explains Laprée. “We help our client make sense of all of that. How does your spend evolve? How do your suppliers evolve? What are the areas of risk that you should be looking at? And that’s a constant monitoring process. Having a strong data foundation is an absolute prerequisite to achieving 10X speed because otherwise you will crumble under your own weight. That’s the key.”
Thompson, who has worked at consultancy giant Deloitte since 2012, believes that one of the biggest barriers in the way of achieving 10X is getting bogged down in the mechanics of reporting instead of value delivery. “Finance directors want you to put numbers to whatever you’ve done but you shouldn’t get too drawn into those conversations,” she says. “I think keeping a focus on value delivery rather than value reporting and measurements is where the magic happens. It can get a bit distracting so you need tools to help.”
According to van Keulen, the importance of trying new things and being proactive is essential. He draws comparisons to his own career and explains that part of the journey is to be comfortable with the uncomfortable.
“I fundamentally believe that if you want to drive transformation, then you have to be bold,” he reveals. “You will potentially make some mistakes along the way, but you have to get started. I’ve been fortunate enough in my career that I’ve had the ability to do procurement transformation a couple of times and support our customers in that journey. The ones that do it at a high level are the ones that are getting out there and talking to people out there in the community and want to share, be vulnerable and are okay with all of that. Those are the ones that are in our community, but also those are the ones that are the highest performers. But you have to get out there and you have to be bold to start with.”
GenAI Drive
Looking at the potential of GenAI in procurement, Thompson admits while the future is exciting the function still has some catching up to do as other sectors are further ahead in terms of GenAI adoption. As part of her role with Deloitte where Thompson also leads life science practice in the firm’s UK operations, her organisation leverages GenAI to accelerate clinical trials and research product development.
“That speed to market and the difference it makes for timing on product launch is more than tenfold value return – it’s huge,” she explains. “Now the difference in procurement, a lot of the case studies we saw early on were like, summarise a contract or an RFP, but while you can save some time, it isn’t touching the sides. Of course, the CEO might say, ‘Show me all your GenAI use cases and this speed to market on R&D or product launches is more interesting than some of what we have done so far’. Now, we are beginning to see some exciting stuff like negotiations and the way that we can triangulate data for spend reporting. Indeed, there are insights we can get that we couldn’t get before. But ultimately, I think procurement is still relatively early on the journey.”
Digital future
Laprée adds that it is important users think carefully about the problem they wish to solve rather than shoehorning a GenAI solution into it. According to Laprée, SpendHQ has spent the past year evaluating what AI means to its clients and how it can help get to the desired outcomes quicker. “What we found is that our clients want faster refreshes where we can make our AI into a touchless entity that is essentially real time,” explains Laprée. “It’s about how we collect risk, financial and past sourcing information to generate insights that actually make sense. It’s about bringing this depth into the insights and stop forcing your user to look at pie charts and dashboards to get an answer. We have to make procurement more conversational and intentional.”
“But GenAI is just one tool in the toolbox. It’s one flavour of AI whereas natural language processing and machine learning have been here for longer than we can remember. Not all tools can solve your problems. When all you have is a hammer, everything looks like a nail. That’s pretty much the GenAI situation today. Understand that GenAI is not the be all and end all of artificial intelligence. Intentionality is key. What are you trying to do and what do you want to do? Define and think in terms of outcomes, not technology.”
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