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Procurement Transformation - Future Trends
Magnus Bergfors, Research Director, Procurement Technology, Gartner Inc.
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Accelerating Procurement’s Digital Transformation
Magnus Bergfors
Research Director, Gartner
June 12, 2018
3 © 2018 Gartner, Inc. and/or its affiliates. All rights reserved.
The Journey Onward to Digital Business
Web
2000
E-Business
2005
Digital
Business
2025
Digital
Marketing
2017 Algorithmic /
Autonomous
Business
Procurement’s Digital
Transformation
The Peak of Inflated Expectations
How can we help procurement
accelerate through the next phase?
The Trough of Disillusionment
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"All of our innovation initiatives are six months late due to sourcing and procurement
processes." — Global CPG Chief Technology Officer
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Traditional end-user
From Suits and Ties to Jeans and T-Shirts
The new user expects speed, simplicity and efficiency in business software
Modern end-user
Image Credit: United States Navy
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Streamlined user experience
promotes greater adoption,
resulting in higher value
realization.
Embedded analytics links
strategic goals to operational
metrics, supporting continuous
improvement.
Tighter end-to-end integration
enables fully automated
processes, lower operating
costs.
Mesh and service
architectures pave the way for
deeper functionality, vertical-
and work stream-specific
support
The Ideal Future State Embraces Four Key Concepts
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The Ideal Future State Embraces Four Key Concepts
Streamlined user experience
promotes greater adoption,
resulting in higher value
realization.
Embedded analytics links
strategic goals to operational
metrics, supporting continuous
improvement.
Tighter end-to-end integration
enables fully automated
processes, lower operating
costs.
Mesh and service
architectures pave the way for
deeper functionality, vertical-
and work stream-specific
support
By 2022, all major procure-to-pay software vendors
will embed virtual assistants and chatbots for
guided buying and self-service requests.
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Examples of Vendor Innovation to Improve Usability
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The Future State
Streamlined user experience
promotes greater adoption,
resulting in higher value
realization.
Embedded analytics links
strategic goals to operational
metrics, supporting continuous
improvement.
Tighter end-to-end integration
enables fully automated
processes, lower operating
costs.
Mesh and service
architectures pave the way for
deeper functionality, vertical-
and work stream-specific
support
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Yesterday's "Analytics"
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Low
High
Semantic
Layer- Based
Platforms
Visual-Based Data
Discovery
Platforms
Modern BI and Analytics Platforms 3 to 5 Years
IT-Led
Descriptive
Business-Led
Descriptive/ Diagnostic
Pervasive
Autodescriptive
Diagnostic
Predictive, Prescriptive
Months Days/Hours Instant/In-Line
Time to Advanced Insight
Pe
rva
siv
en
es
s o
f M
L-E
na
ble
d
Ad
va
nc
ed
In
sig
ht
on
All
Data
Smart Data
Discovery
Platforms
Today
What That Means in Terms of Analysis
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The Future State: Embedded Analytics Links Strategic Goals to Operational Metrics, Supporting Continuous Improvement
The future state of P2P analytics is characterized by:
– Real-time operational metrics to quickly identify bottlenecks and take action ─ Comparing key benchmarks like average cycle times against other (anonymized) companies using the P2P software.
– Embedded (and sometime invisible) analytics to close the gap between strategy and execution.
Data Decision Predictive:
What Will Happen?
Diagnostic:
Why Did It Happen?
Descriptive:
What Happened?
Prescriptive:
What Should I Do?
Action
Decision Automation
Decision Support
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The Future State
Streamlined user experience
promotes greater adoption,
resulting
in higher value realization.
Embedded analytics links
strategic goals to operational
metrics, supporting continuous
improvement.
Tighter end-to-end integration
enables fully automated
processes,
lower operating costs.
Mesh and service
architectures pave the way for
deeper functionality, vertical-
and work stream-specific
support
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The Future State: Tighter End-to-End Integration Enables Fully Automated Processes, Lower Operating Costs
• For example, P2P vendors offer prebuilt interfaces to:
Contract life cycle management solutions to ensure compliance.
E-sourcing solutions to track realized savings against negotiated savings.
Spend analysis to provide end-to-end procurement analytics.
By 2022, 50% of all legacy spend
analysis software will be retired; replaced by
artificial intelligence (AI)-powered, cloud ‒
based solutions.
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Sourcing Tools Will Also Make Great Strides Forward Using Machine Learning
High-level Benefits of Sourcing Optimization Solutions
Sourcing
Optimization
Solutions
Advanced Analysis
Reduced Sourcing Cycle Time
Leverage Spending Across Business Units
Identification of Costly Business Constraints
Capitalization on Vendor-Proposed Discounting
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Sample Outsourcing Contract 87%
RISK LEVEL
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The Future State
Streamlined user experience
promotes greater adoption,
resulting
in higher value realization.
Embedded analytics links
strategic goals to operational
metrics, supporting continuous
improvement.
Tighter end-to-end integration
enables fully automated
processes,
lower operating costs.
Mesh and service
architectures pave the way for
deeper functionality, vertical-
and work stream-specific
support
By 2022, the major P2P providers
will provide extensive APIs, positioning themselves as a unifying "platform"
rather than a one-size-fits-all solution.
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The Future State: Mesh App and Service Architectures Pave the Way for Deeper Levels of Functionality
• A mesh app and service architecture (MASA) is characterized by:
Making APIs available that partners (or customers) can leverage to create a more
comprehensive solution. For example, providing access to and certifying a library of customer-
created apps.
Using cloud-native application architectures like microservices – Here, P2P vendors can
develop and deploy individual application features and can scale just those parts of an
application that cause bottlenecks. For example, to meet industry- or workstream specific
requirements.
Sharing data across broader trading partner communities to provide B2B network intelligence
— The digital consumer experience is a bellwether for what is likely to become an accepted
practice in B2B.
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Closing Thoughts
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Streamlined user experience
promotes greater adoption,
resulting
in higher value realization.
Embedded analytics links
strategic goals to operational
metrics, supporting continuous
improvement.
Tighter end-to-end integration
enables fully automated
processes,
lower operating costs.
Mesh and service
architectures pave the way for
deeper functionality, vertical-
and work stream-specific
support
Artificial Intelligence
The Future State
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Artificial Intelligence — In the Exploration Phase
59%
25%
6% 6%
0%
10%
20%
30%
40%
50%
60%
70%
Knowledge gathering/investigating/
developing strategy
Piloting Implementing Deployed/in use today
A further 4% have
plans to deploy by 2018
Q. What is the current stage of artificial intelligence (AI) solutions adoption within your organization?
Base: n = 83 Gartner Research Circle Members
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Now is the time for experimentation and proofs of concept
There are no best practices, only emerging practices
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Thank You!
Magnus Bergfors
Research Director, Gartner
