CPOstrategy explores the issue’s Big Question and uncovers what the biggest challenges are in the way of AI integration in procurement.

From accelerating processes to delivering exponential cost savings, AI is quickly becoming a Chief Procurement Officer’s best friend.

And it is easy to see why. In a world where everyone wants things yesterday, a tool that delivers unprecedented productivity and frees humans up to spend more time on the things that matter can only be a good thing. In truth, old-school procurement had quite the number of antiquated tasks. These included things like the preparation of contracts, requests for proposals, spend analysis and tracking of vendor management to name just a few. These things needed to be done correctly, thus requiring a significant proportion of time dedicated to undertaking them correctly. But AI, and in particular, generative AI is changing the game.

But new innovations are not without their downsides. In the past, procurement had grown used to operating in a very linear way. It wasn’t a function that often changed, and its success largely came from its traditional approach. However, despite AI potential, challenges such as data accuracy, achieving scalability and privacy issues remain hot topics of contention among procurement practitioners.

In this exclusive article, we hear insights from leaders who give us their view of what the biggest challenges on the agenda are when it comes to incorporating AI integration in procurement.

Vishal Patel, VP of Product at Ivalua

Embracing GenAI

Vishal Patel, VP of Product at Ivalua, believes that procurement leaders must accept that GenAI solutions are only as good as the data that it has access to. “One of the biggest challenges is poor quality data,” he explains. “The success of any AI implementation will rely on having a solid data foundation. This reduces the risk of ‘garbage in, garbage out’. Poor quality data will hinder the value organisations can reap from GenAI.”

Patel urges procurement practitioners to take a smarter approach to their data strategy to ensure they are interconnected, and data is accessible from anywhere. “Having a clean single source of truth for supplier and spend data is paramount,” adds Patel. “With the right data foundation, organisations must then ensure GenAI solutions are embedded seamlessly within existing procurement technologies and are able to combine LLM(s), enterprise knowledge/data and internet data in order to best respond to a user request.” 

According to a recent Ivalua study, 35% of procurement leaders are concerned that their role will be replaced by GenAI. Patel believes that it is this fear that AI will steal their jobs which is another hesitation for its deployment. “The reality is that procurement professionals that have been augmented with GenAI will be more efficient than ever,” explains Patel. “The key will be effective change management and communication to articulate how GenAI will improve their roles and allow them to focus on strategic, high-level tasks. At Ivalua, we strongly feel that procurement teams must embrace GenAI and get very comfortable with it, just like what was needed with Excel or analytics tools. Getting comfortable, knowing how GenAI works and creating new use cases to meet specific business needs is going to be the next frontier of procurement value creation.”

Olivier Berrouiguet, CEO of Synertrade

Navigating advanced technology challenges

Olivier Berrouiguet, CEO of Synertrade, affirms that because AI is in the early stages of development, most vendors are deploying technology on top of existing software – ultimately meaning the full benefits can’t be achieved. “The biggest challenge is when the Source to Contract (S2C) platform becomes fully integrated with AI, and provides an abundance of data,” discusses Berrouiguet. “Businesses must ensure they have the correct infrastructure in place to manage this information, either through effective data management and analysis tools to generate actionable insights or by investing in training and development, ensuring procurement teams know how to utilise the insights gathered from AI. As a result, businesses can get the best value out of the technology, as opposed to treating it as an adjunctive tool.”

Jack Macfarlane, Founder and CEO at DeepStream

Adopting AI successfully

While Jack Macfarlane, Founder and CEO at DeepStream, reveals that a common challenge among his clients is an internal resistance to the adoption of new AI tools and technologies, fuelled by fears of interoperability issues and the potential inability to manage AI tools. “For example, internal IT departments often favours existing ERP extensions for procurement processes or select outdated yet familiar platforms rather than new and innovative procurement-focused digital solutions,” he says. “Engaging stakeholders through educational workshops and demos can help address these concerns and showcase the real-world benefits of AI tools in procurement, making a case for its adoption.  

“Furthermore, building cross-departmental teams and initiating pilot programs can foster collaboration and demonstrate effectiveness. Providing training and continuous support ensures IT departments feel competent to manage the new tools too.  

“In terms of interoperability issues, gradual integration and the creation of continuous feedback loops will allow for a smoother transition, keeping departments engaged and allowing for the adoption of the best solutions that cater to all needs and skill sets.” 

Joe Gibson, Director and Head of Digital Innovation at 4C Associates

Procurement’s AI journey

And Joe Gibson, Director and Head of Digital Innovation at 4C Associates, explains that there are two main challenges to rapid AI adoption in procurement. “Firstly, it’s less about integrating AI into the technology stack and more about integrating it into the functional culture. It’s fundamentally about people,” says Gibson. “Successful navigation of this challenge requires a well-defined use-case, a coherent, cross-functional team, and a functional culture willing to try new approaches, even if they might not work initially.

“Secondly, there is an unproductive fixation on AI solving every procurement problem. Often, data quality is immature—unstructured, uncleaned, and ungoverned. This is paradoxical because advanced AI can enrich and manage incomplete or false datasets. However, we must acknowledge that we are still in the early stages of AI adoption.”

Procurement’s future

Gibson adds that in order to move forward successfully, the strategy should be about starting small and being flexible in order to maintain a quick pace. “Learn from past failed digitalisation projects in procurement to reimagine and rewrite the function’s future,” he reveals. “AI should industrialise the speed at which we solve problems, ensuring the architecture and wider solution are robustly designed to address specific issues.

“Most importantly, place the procurement stakeholder at the core. Human intelligence, not artificial intelligence, will ultimately determine the project’s success.”

It is fair to say that AI isn’t going away anytime soon. However, the real winners will be the ones to mitigate against problems and are switched on to overcome issues before they happen. Having the correct infrastructure in place is vital to ensure that AI solutions can be embedded seamlessly within existing procurement technology stacks. As technology matures and new solutions pop up on the market, it is important to be flexible and agile as well as adopting a welcoming approach in order to retain a competitive advantage. No one wants to be a laggard but on the other side of the coin, no one wants to fail first either. This means keeping a finger on the pulse and not neglecting what is happening on a broader scale could hold the key. Watch this space.

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