Does procurement’s future lie in the cloud?
"Procurement is essentially an activity where most of its key processes happen with agents who are outside your company and so it has a high affinity for cloud computing (‘the cloud’)," says James Marland, Vice President: Network Growth for Ariba, an SAP Company, tells SmartProcurement.
"Imagine it’s the year 2020.
Procurement has evolved so much over the past decade, you barely recognize it. Its functions have been decentralized – or outsourced! – leaving leadership to focus on very different things. Job descriptions have changed dramatically. What’s more, suppliers seem to have infiltrated the organisation! New technologies such as in-memory computing, the Collaboration Economy and the Internet of Things have had a significant influence on the procurement function.
Companies will still care about managing their spending in 2020; they just won’t have large, discrete, enterprise-level organisations dedicated to doing it.
Today’s focus on cost savings will give way to a broader, more balanced emphasis on profitability, leaving open the question of whether supply management concentrates on cost savings or revenue growth to get there.
The new supply management emerges…
Many current procurement and sourcing activities — the ones that do not get redistributed to internal end users of goods and services — will be outsourced by the year 2020. Cloud will make this transition much easier, as no IT shift will be needed as outsourcing occurs. With fast-growing demand for procurement outsourcing, both the quantity and quality of third-party procurement services will increase dramatically by 2020. Their performance in many spend categories will surpass what can be done in-house. Again, cloud will be the catalyst in allowing 3rd-party services to be easily incorporated into existing processes.
Skill sets change
A significant characteristic of the new supply professional in 2020 is the extent and depth of his or her knowledge. They will know everything, from the science, to the economics, to the laws and politics of their supply markets on a global scale. The outcome will be intense competition to attract the best and brightest on their terms.
Instantaneous intelligence arrives
Prices go transparent: pricing for goods and services will become so transparent — owed to "cloud sourcing", business networks, online communities and massive in-memory data analysis — that negotiation will be a lost art. We have spent the last decade looking backward in time — at money spent last year, supplier performance in the past week, month or quarter. The future will bring information and models that look forward. Full visibility — into spend, risk and performance — will be a given in 2020. Ready access to accurate, timely, structured internal and external business intelligence will create unprecedented abilities to synthesize info in support of decision making.
Innovation comes from the cloud: enter the extended enterprise. Instead of enterprises charting their own courses in innovation, a transition from ‘buyers and suppliers’ to ‘integrated supplier networks’ will enable greater co-ordination of innovation roadmaps across connected businesses and industries.
Cloud drives innovation and simplification
Everything is automated. Cloud-based Procure-to-pay (P2P), sourcing, contract management and other automation engines will be de rigueur in 2020; they will be integrated up and down supply chains, fully adopted, providing full transparency and real-time insight. Smart phones, tablets, embedded chips and the Internet of Things will create a massively mobile work environment for procurement and suppliers by 2020. Forget jumping on planes and sitting at conference tables. Buyers and sellers will increasingly rely upon business networks and cloud-based communities that allow them to quickly and easily discover each other, connect and collaborate," concludes Marland.