Right off the bat, I would like to clear up the confusion, if any. Procurement does not need to become a value center. It is already a value center. In addition to optimizing cost, exceptional procurement teams deliver innovation, enhance supplier performance, moderate risk, and ensure the highest standards of compliance. And to do this, they need the necessary tools in their arsenal that enable them to meet growing expectations.

In a highly competitive market, an efficient and well-oiled procurement function, and its ability to contribute towards business strategy, is essential to enterprise success. In a dynamic environment, however, the ecosystem needed to cope with these rising expectations is becoming increasingly complex.


Before commencing the process of selecting a platform, it is prudent to assess the organization’s readiness and set a clear agenda for procurement transformation

The Times Are Changing. Procurement Isn’t.

Procurement organizations must navigate both operational and strategic hurdles in playing a value center role. These include, but not limited to:

  • Stagnant Ecosystem : Expectations continue to rise while team size, technology stack, and company philosophy remain the same. Organizations focus their transformation initiatives on customer experience, operations, and marketing while leaving procurement transformation to piecemeal improvements without a clear objective.
  • Multiple Systems of Record : The presence of various ERPs or numerous instances of the same ERP system across business units can make it difficult to clean, harmonize, classify, and normalize data.
  • Skewed Insights : Even if analytics systems are in place, they are often relying on disparate data sources, multiple systems of record, disconnected data elements – basically the absence of a single source of truth.
  • Limited Visibility : The lack of spend visibility across categories does not offer a clear picture and also hampers the creation of category- specific strategy. Generic approaches may be sound in principle but do not translate into impactful outcomes.
  • Manual Effort : Opportunity identification is based on narrow insights and remains a manual effort, increasing inefficiency, cost, and the possibility of inaccuracy.
  • Information over Intelligence : Category managers need to deal with immense complexity without access to high-quality data-driven insights. This limitation places significant pressure to drive business results without the benefit of a complete understanding, much less foresight.
  • One-size-fits-all Approach to Analytics : With vertical-specific strategies starting to be the norm, procurement roles are becoming more specialized. The KPIs of various functions — CPO, category manager, analyst, and others — are connected, but vastly different in practice. At the same time, data and insights provided by existing systems tend to be the same.
  • Missed Opportunities : Existing tools may offer some insights but not enough substance to take advantage of opportunities like negotiating discounts for higher volume contracts or consolidating supplier relationships to increase an enterprise’s spend under management.

Data – Insights – Opportunities – Actions: So close, but so far

In light of the above challenges, organizations must take a step-by-step approach, starting with effective data management, generating actionable insights from this data, identifying improvement opportunities, finally leading towards moves that put these opportunities into action.

Clean, consistent, consumable, and enriched data is crucial in this regard. Intelligence engines will do the heavy lifting, but what you get is only as good as what you put in. Irrespective of the make of car you drive, ignore the fuel at your peril. So, what should enterprises do then?

    • First, there is a need to build and operationalize a single source of truth. Unify information across systems, make it consumable, and then make it accessible.
    • Enrich existing intelligence systems with external data to provide category managers with actionable insights on supplier performance, category performance, and market dynamics.
    • Draw on all available intelligence to generate opportunities complete with a comprehensive cost-benefit analysis for faster decision-making.
    • Add analytical capabilities like what-if scenarios and forecasting, essential to move procurement from a reactive support function to a proactive growth engine.

There are products in the market that demonstrate some promise in this regard. That said, several solutions attempting to tackle the procurement challenge fall agonizingly short of expectations. They:

  • Address only a part of the problem, like in the case of analytics or reports that provide information but do not suggest any actions to address their findings.
  • Do not draw on interconnected factors such as internal data and external factors such as supplier risk profiling, market information, macroeconomic trends, or even the news.
  • Use analytics to deliver findings but not insights, intelligence, opportunities, and actions.

The evolution of intelligent solutions powered by AI and ML is offering enterprises an answer to some of these problems.

AI-powered platforms will drive the future, but existing iterations are not user-friendly. These tools need to be molded according to the needs of the enterprise and KPIs of individual users, ensuring that adoption is not a chore, but the key to sustained success. Further, the solution should sit seamlessly on top of their existing systems and offer stability, even if there are changes to the underlying platforms. They should deliver value beyond the barebones requirement.

Tools shouldn’t just monitor performance, but also detect and solve performance issues while providing ways to improve. This value addition can be the difference between a failed pilot and a successful implementation that directly augments savings, visibility, and decision- making speed. Recommendations made by the platform need to inspire trust, which is substantiated by a high degree of explainability and interpretability.

The fact that a solution is useful in one scenario doesn’t mean that it works for every organization. Enterprises must implement a platform that scales with their business and their changing needs.

Look Before You Implement

Before commencing the process of selecting a platform, it is prudent to assess the organization’s readiness and set a clear agenda for procurement transformation. Those questions could include the following:

  • Do you have a platform that enables procurement teams to draw on near real-time actionable insights?
  • Is the platform suitable for users with no technical expertise?
  • Are the insights generated by your existing systems easily consumable?
  • Does the platform identify opportunities in contracting, payment terms, or supplier relations?
  • Is the platform capable of offering ML-driven data management, integrating, cleansing, validating, and harmonizing data?
  • Are insights derived from a combination of internal and external data? Can these insights be customized to individual users?
  • Would it be possible to implement a new platform without overhauling the existing architecture?

Once these questions are answered, enterprises can make an informed decision about the process of selecting a solution and a partner, but that’s just the first step. The second and even more significant challenge is ensuring adoption at scale, instead of an investment in an exciting but redundant and rarely used technology, an all too frequent occurrence in enterprise transformation projects.

How can EdgeVerve help?

EdgeVerve has created a built-for-purpose, enterprise-grade, AI-powered intelligence system — ProcureEdge, designed to augment the performance of procurement teams. The system sits on top of existing systems of record, eliminating the need for any rip-and-replace. It generates value for procurement leaders through deep insights and execution support and opportunity identification across spend data, market data, category data, supplier data, and contract data.

The future of procurement and enterprise growth will be driven by real-time, contextual, and on- demand intelligence. It is this intelligence and the ability to harness it that will be the defining factor in enterprise success, demarcating the difference between those who thrive and those who survive.

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