Accessing next level technology with better procurement
It wasn’t long ago when businesses started to offshore their IT services and other operations to faraway locations such as India in a quest for cost-savings and more favourable market conditions. While our love affair with offshoring may have curdled, developments in automation technology may be among the latest business trends to deliver further cost-efficient, effective solutions, at the potential risk of threatening in-house jobs and even the resource pool-dependent business model of the larger outsourcing giants.
The rise of technological developments such as artificial intelligence, robotics and big data is changing the landscape of procurement, with many companies having already started to pilot or implement these technologies including global banks and insurers. So, what are the three key ways in which procurement can keep pace with this fast-moving world and capitalize on the considerable opportunities available?
The rise of technological developments such as artificial intelligence, robotics and big data is changing the landscape of procurement, with many companies having already started to pilot or implement these technologies including global banks and insurers.
1. Stay close to the market
To capture the new opportunities being developed for specific functions or processes it’s crucial to engage with the market more frequently. Speak to incumbent and prospective suppliers in artificial intelligence, robotics, automation and the cloud services space to understand the additional value they can deliver for you, perform pilot studies and keep an eye on what your competitors and other industries are doing. Make sure these opportunities in the marketplace are periodically reflected in your business, IT and procurement strategies.
Developing strategic alliances with incumbent or prospective suppliers with a view to innovating and developing leading technology can also provide your business with a competitive advantage
As a first step, consider whether you might be able to benefit from the off-the-shelf products available; they can deliver fast, cost-effective solutions but only if they can meet your business requirements, which it’s critical to determine in order to maximize value. Otherwise, developing strategic alliances with incumbent or prospective suppliers with a view to innovating and developing leading technology can also provide your business with a competitive advantage. Don’t just focus on your own industry, monitor other innovative industry best practices and see if solutions can be made applicable.
2. More agile contracts
Your contracts – like your business strategies – should be agile to capture the technological opportunities being developed in the market. Therefore, make sure you include flexible termination terms and scalability features in your contracts – particularly those with outsourcing partners. Significant, long-term contractual commitments might limit your ability to access new solutions in the market or you might end up paying twice for similar services. Train your legal department to manage these changes as they arise, which might result in a higher number of contracts in the short term.
Tools such as eSourcing, contract management and repository will enable procurement to run tenders more efficiently, and to manage contracts more effectively.
3. Leverage tools
The number and complexity of supplier contracts are likely to grow if you start engaging a variety of software or automation suppliers in specific processes or functions compared to outsourcing everything to a single service provider. Procurement needs to be geared up for this, with the required tools and technology to manage an increasing number of contracts and fast-changing requirements. Tools such as eSourcing, contract management and repository will enable procurement to run tenders more efficiently, and to manage contracts more effectively.
An effective procurement department will be able to incorporate the strategic benefits of these new technological solutions into your business. Alternatively, if you’re not ready for this brave new world, procurement might become a barrier to accessing the benefits that are continually developing in the technology space.