Digital transformation business: Procurement ripe for revitalization

The digital transformation business often focuses on the front end of the enterprise: customer-facing applications and, in general, initiatives geared to improving the customer experience.

But behind the scenes, enterprises rely on a number of back-office systems that may need their own bit of transformation. Those systems represent an opportunity for IT consultants and integrators. And among those typically unsung applications, procurement systems stand out as a technology category the digital era has largely neglected.

Kristin Ruehle, managing director at Accenture, said the level of investment and focus organizations have placed on the front office has left procurement systems behind. A recently released Accenture report, however, points the way toward a future of digital procurement.

Virtual buying agents

With digital procurement, bots will automate and simplify procurement chores and virtual buying agents will help corporate buyers make purchasing decisions. The result, according to Accenture, will be greater efficiency, reduced costs and better buying judgement.

The Accenture report lists a number of factors critical for achieving this aspect of the digital transformation business. For starters, organizations will need plenty of data. That is, data on what was purchased, the price and the context — why was the item purchased? In addition, digital procurement requires a “technology toolbox” featuring AI, natural language processing, analytics and bots, according to the consulting firm.

In addition, back-office managers must pay attention to user experience. The most advanced digital buying tools will do little good if users reject the new technology.

“It’s not an easy transition for procurement,” Ruehle said. “They really need to start thinking about how they can approach an experience that is quite different than they have today,” she said.

Employees, accustomed to making purchases at home via Amazon and other consumer-oriented services, are looking for something similar at work. But the consumer purchasing experience “is not translated into corporate procurement today,” Ruehle said.

Technology available

In the procurement brand of digital transformation, business executives don’t lack for technology. Ruehle said quite a few products and tools can now support the creation of bots and virtual agents. She cited offerings from robotic process automation vendors and IBM Watson as examples. The challenge, however, is that enterprises must teach each bot the language of the organization and its particular procurement dialect.

The digital procurement trend, when it arrives, will actually mark a further evolution of automation steps that took place 20 years ago. In that earlier phase, enterprises began using ERP modules or standalone e-procurement systems to automate formerly manual procurement tasks. Users were able to search online catalogs and create digital purchase orders that could be transmitted to suppliers, for example.

The next wave of procurement technology is poised to create an entirely different user experience for organizations amenable to adoption.

“It is a pivotal moment right now in the transformation of those enterprises,” Ruehle said.