Insights
from Gartner’s latest ‘Predicts’ report – entitled “Predicts 2018: Procurement
and sourcing technology will benefit from advances in AI, data visualization
and B2B marketplaces” – show how procurement and supply chain are well
positioned to reap the benefits of major technological advances.
Released late last year, the report details how the technology associated with
the procurement and sourcing fields is fast-moving and ushering in huge
changes, and it argues that “IT application leaders modernizing procurement
technology need to plan for the impact of virtual assistants, cloud-based
business intelligence tools and B2B marketplaces”.
The year ahead
According
to the Gartner report, the major expectation for this year, for chief
procurement officers (CPOs) who are prepared to aggressively experiment and
learn from advances in procurement software, is greater ‘ease of use’ of both
procurement and sourcing technology. This is enabled by major advances in
artificial intelligence (AI), cloud-based business intelligence (BI) solutions,
virtual employee assistants (VEA), and chatbots.
The report authors break this down further, into three major predictions: First,
legacy software will (and indeed ought to) be scrapped or updated to keep pace
with the advancements made in AI. Second, online platforms like Amazon Business
and Alibaba will dominant the business-to-business (B2B) market. Finally,
third, chatbots and VEAs will become standard in peer-to-peer (P2P) software,
providing real benefit to both business and user.
The case for
scrapping legacy software
Ideally
procurement software allows the user to source what he/she is looking for at
the best available price. However, as the Gartner report notes, “legacy spend
analysis software has failed to deliver on its promise” , arguing that it is
“time-consuming and error-prone” which limits sourcing’s ability to respond
quickly to “changing market conditions”.
The report notes continues: “Legacy solutions are also characterized by what
Gartner calls ‘narrow AI’. Narrow AI consists of highly scoped machine-learning
solutions that target a specific task, such as classifying spend … The
algorithms chosen are optimized for that task. These solutions are limited.
They are designed to answer a predefined set of questions, but do not unearth
insights the end user didn’t know to ask about … [In addition,] some legacy
spend analysis vendors have opted to build the data visualization layer
themselves. And these proprietary visualization and reporting engines embedded
in the spend software have fallen vastly behind what’s available in today’s
cloud-based BI solutions.”
The bottom-line is that existing legacy software is too rigid, and often too
complex to fulfil its aim.
A predicted
solution and its consequences
Thankfully,
the Gartner report argues, from this year onwards, advances in technology,
especially in AI, will ease these concerns.
“The next generation of tools will build on this foundation with general AI.
This refers to the use of machine learning to handle a broad range of use
cases. These systems will be able to successfully perform any intellectual task
that a human could perform …”
This AI will simplify the user experience by guiding the user through a
transaction, asking a series of simple questions which help the user find what
he/she is looking for at the best possible price by running comparison checks.
In addition, “natural-language processing can automatically find, visualize and
narrate important findings … the solution will be able to not only classify the
data but also interpret it to draw out trends and recommend actions”.
The predicted
dominance of Amazon Business and Ablibaba
The
Gartner report also predicts that the rise of cloud-based business intelligence
(BI) means that by “2022, 75% of all B2B tail spend goods will be purchased in
an online marketplace like Amazon Business or Alibaba's 1688.com”. This is due
to the rapid growth of these platforms over the last few years, which increases
their visibility; the ease of access to these platforms; and the “intuitive
nature of purchasing” on these platforms.
Chatbots and VEAs,
the predicted benefits
Online
interactions will also be greatly improved through the integration of
technologies like chatbots and VEAs. These will simplify and guide the user
“through the buying process”. As the report notes:
“The advantage is that the complexity of business rules determining the best
buying channel and payment method are hidden from the end user. This results in
a more streamlined and compliant process. By interacting with the end user and
also predicting needs, the VEA can create the requisition with the right
supplier(s) and in the right system.”
Recommendations
To
maximise the benefits of this technological advancement, Gartner suggests the
following three interventions:
- The first step is to determine “which spend analysis tool your company’s
sourcing organization uses today”. Having done so, ask the following
question: “Has it kept pace with market advancements in data
visualization, AI, natural-language processing for spend classification and
pattern recognition? If not, [your] IT application leaders should begin
exploring other options.”
- The second, is to “determine how much of your company’s money is already
being spent in B2B marketplaces like Amazon Business and Alibaba”. The report
suggests that: “[i]f the amount is significant (i.e., greater than 5% of total
spend), look to consolidate the spend under an enterprise account. Start with
the most common spend categories like office supplies, IT and maintenance,
repair and operations (MRO). In parallel, run a project looking at three to six
months of spend.”
- Finally, the report suggests getting “educated on the short-term uses of
chatbots and the mid- to longer-term applications of virtual assistants”. In
terms of this, they write that “IT application leaders can then help educate
CPOs on the possibilities of the technology”, and recommend that teams “run a
pilot … to showcase how procurement is rising to the challenge of creating a
digital business”.
For more on Gartner and the report, Visit www.gartner.com/technology/research/predicts
Contributed by: Nikolai
Viedge, an academic and regular writer for Bespoke Bulletin
Article
first appeared in: 
http://bespoke.co.za/index.php/articles/269385-gartner-tech-predictions-for-2018-by-nikolai-viedge
