Procurement Contracts and the Role of AI: ProcureCon Indirect

Four Take-A-Ways on The Role of AI in Procurement: A View from ProcureCon Indirect East

ProcureCon East 2018 at Amelia Island, Florida was a great gathering of some of the best procurement professionals in the country. As a vendor representative, I attend a lot of conferences and I know the difference between substance and fluff; today I heard a lot of substance and had the opportunity to talk with a number of passionate practitioners. Here are some of my take-a-ways from the first day and a half of ProcureCon East.

First, Walter Charles, Chief Procurement Officer at BioGen is one of the best keynote presenters I’ve seen in years. Walter’s presentation focused on embracing Technology 4.0 and using cutting-edge AI and machine learning based analytical tools to “stop doing stupid”. His vision for disruptive process captured the audience’s attention as he walked through what it really takes to digitally transform procurement processes to obtain 150% savings.

Learn more about leveraging AI and machine learning for Procurement teams.

Clearly, Mr. Charles has the confidence to sway CEOs, CFOs, COOs, and Boards to embrace the latest technology, and his track record has proved him right over and over again with 150% cost savings at three separate companies. The question then is why are other CPOs not embracing this model? We heard the answer from another presenter; she said that procurement teams must have “a sense of intellectual curiosity” regarding the possibilities, and she astutely observed that “somethings are in reach, but others are too far”. She was referring to the degree of change and risk associated with that change that companies were willing to accept. As a result, we see the typical bell curve adoption of technology – early adopters who take the biggest risk and potentially achieve the largest ROI, the “Best Practice” majority, and the increasingly non-competitive laggards.

Second observation, the idea of using analytics to improve processes and cost savings was present throughout virtually every session I attended. It is clear that the days of spreadsheets are limited. The need to slice and dice data from every angle using sophisticated Big Data models that can look at 700 vendors as easily as 3 is now an accepted best practice.

My third observation is that most procurement people do not see contracts as a source of data that can be sliced and diced right alongside their transactional data. One presentation went so far as to set contracts outside the process entirely. When the presenter made the comment that legal was separate from procurement, the woman next to me just laughed in agreement. Why is this acceptable? Why should the data locked in static PDF files, and the processes used to create them be immune from the intellectual curiosity that drives improvement?

Some will say the contract lifecycle management solutions solved this problem a decade ago. But did it? Ask yourself where are my contracts located? Can I search them? Is the metadata accurate? Is the data in the contracts or metadata in the CLM being used to measure vendor compliance and performance? Ten years ago, CLM was transformative, not today.

My final observation, there are “early adopters” looking for the disruptive technology that can help them gain the same advantage from analyzing contractual data as they have gained from analyzing transactional data. I had the pleasure of talking with a number of them about their challenges and ideas for transformative processes. They were interested in learning about Seal’s solutions, how to help them better manage their working capital, and drive cost savings. These are the Walter Charles of their respective organizations, they are the visionaries that are going to reach for and seize the advantages of Technology 4.0.

I’m already thinking about Ariba Live and what intellectual curiosity I will find there. If you have a challenge or interesting idea stop by booth 506 and talk with me or one of my colleagues. We love to hear your story and to tell you more about how Seal is helping procurement teams gain analytic mastery over the data locked in their contracts. Until then, join us for our upcoming webinar series: Procurement’s Path from Backroom to Boardroom.