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The top three procurement technology predictions for 2018

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James Tucker

Procurement and sourcing processes have become increasingly digitised in recent times and next generation technology is set to transform the sector. In fact, consultancy firm The Hackett Group’s 2017 Key Issues Study found that 84% of procurement organisations believe digital transformation will fundamentally change the way their services are delivered over the next three to five years. Analyst firm Gartner’s report, Predicts: 2018 Procurement and Sourcing Technology, forecasts three key areas where procurement departments can expect major changes by 2022: they anticipate the greatest shifts will take place within tail spend, spend-analysis software and P2P solutions.  

The future of tail spend management

In the past, tail spend was largely ignored by procurement departments because trying to reduce cost in that area took disproportionate time and investment. Over the past two years, however, B2B e-marketplaces such as Amazon Business have been growing rapidly and are changing the way that these purchases are handled. The platforms allow procurement professionals to look for tail spend category purchases and get a competitive price very quickly, meaning transactions can be processed easily and efficiently. Gartner predict that by 2022, 75% of all B2B tail spend will be purchased in these online marketplaces.

Spend analysis

According to Gartner, most procurement managers are collecting and analysing data with outmoded spend-analysis software which is prone to errors and time-consuming. However, technology is evolving and the new generation of software will make processes easier, improve efficiency, reduce costs and help monitor compliance.  Gartner predict that by 2022, 50% of all legacy spend-analysis software will be retired and procurement professionals will switch over to more efficient options. The new tools will be cloud-based and powered by artificial intelligence (AI) which will have the ability to process human language. There is a note of warning, however: Gartner believe that more than half of traditional providers will fail to adapt to the new ways of analysing unstructured data using AI, and instead will become obsolete.

Introduction of new P2P technology

Gartner predicts that the biggest change to P2P software over the next five years will be that all major online P2P marketplaces will have embedded virtual employee assistants (VEAs) and chatbots.  These artificial intelligence features will simulate a conversation with a human being in order to help guide users though manual or routine procurement tasks such as buying process or self-service requests. VEAs will ask a series of simple questions to help determine the best buying channel and payment method for the user. Initially, these interactions will take place via on-screen text communication, but Gartner predict that voice responses will be enabled in the near future. Chatbots are more specialised and will handle common requests such as answering questions about the status of a payment or helping to resolve discrepancies on invoices.

So, what do these upcoming trends in digital purchasing mean for talent? As procurement departments begin to streamline and automate purchases, there will be a shift in demand for skills. There will be an increased need for people who are technologically savvy, or people who have the potential to learn the requisite technical skills and then keep abreast of the changes. Candidates will certainly need good analytical prowess in order to use the new tech platforms and interpret the data that they generate. Firms should certainly be planning ahead now to ensure that they don’t get left behind as the digital revolution takes hold.

 

If your company is looking for the procurement talent of tomorrow today, get in touch on 08432 163030 or enquiry@1st-executive.com to find out how 1st Executive can help.