CFOs, who are taking an ever-closer interest in the workings of their procurement functions, say cost control and cash accumulation are their top balance sheet priorities over the coming 12 months while, on a three-year timeframe, their focus is on technology, digital transformation and skill (Deloitte CFO Survey: 2022 Q4).
These imperatives mean companies should adopt truly autonomous procurement technology in contrast to the traditional sourcing suites, which lack automated workflows, leading to repetitive, manual work, while business stakeholders often work around procurement (unmanaged spend) with the subsequent lack of supplier competition leaving substantial cost savings on the table.
CFOs and other key decision makers should aggressively sponsor this digital transformation that will enable business stakeholders to self-serve quickly and easily, not only driving bottom-line improvements but also allowing procurement to focus on the more strategic aspects of sourcing to add wider business value.
The problem: Traditional sourcing tools do not meet present-day customer needs
Traditional sourcing tools are not utilizing AI in sourcing processes like the new breed of bespoke AI-centric players are and their generic approach with manual-driven legacy systems delivers low ROI and fails to maximize savings due to clunky UX, which limits the incentive for any budget owner to use them.
The Solution: AI-driven autonomous procurement
Modern sourcing solutions leverage generative AI technology to significantly drive productivity. A great example is Glo, a generative AI-powered bot that embeds intelligence into every step of the buying process and automatically helps define project requirements by having an interactive dialogue with the user, finds best-fit suppliers, provides negotiation insights, enables collaboration between buyers and suppliers, and more – driving significant business outcomes.
Leading global companies such as British Telecom and Santander Bank are ahead of the game as they have adopted the power of AI, using Globality’s technology to maximize returns on more than £3 billion annual spend each on the platform.
Cyril Pourrat, BT’s Chief Procurement Officer (CPO) and Chief Executive of BT Sourced said: “We want our people to have a consumer-grade user interface, which means you reduce the level of training. None of us have to take any training for the apps that we have on our phones – and the idea here is exactly the same. If there’s a user interface that makes sense, my team will have to spend less time being trained – and that’s a big win for me.”
The benefits: Savings, efficiencies and improved business outcomes
AI-driven platforms facilitate digital transformation of the sourcing process which enables businesses to benefit from faster speed to market, increase in ROI, TCO and the ability to maximize savings at every stage of the sourcing journey:
1. Increased sourcing efficiencies
Previously, sourcing tools could process and carry out 1-2 RFxs at one time but with AI/ML and NLP driving a truly autonomous procurement model there is no limit.
2. Improvement in ROI/TCO
Ensuring that all company spend is managed fairly and transparently will help solve the issue of maverick spend that plagues many organizations. Competition is especially important for indirect services, which are sourced differently from direct goods and typically do not undergo the same competitive bidding process. With business users now able to fully self-serve, autonomous sourcing enables procurement teams to spend more time on strategic, value-adding tasks or to increase their productivity levels, even with fewer people.
3. Ability to maximize cost savings
CFOs can work with CPOs to introduce AI-powered sourcing quickly and realize immediate results, including cost savings of 10-20%, to meet the challenges of today’s uncertain global economy. Leading enterprise companies are already realizing substantial savings across the indirect spend using advanced technology like Globality. As a whole, traditional sourcing vendors lack advanced automation, and AI/ML is completely absent in many tools.
Future of sourcing: “True” autonomous procurement via AI/ML
Company spend management is becoming more complex as the current market evolves; there is an urgent need for procurement and finance to work together and implement AI-driven strategic sourcing practices to combat continuing economic volatility. Democratization of the S2C process enables business stakeholders to truly self-serve while complying with guardrails put in place by procurement teams. True autonomous sourcing will enable procurement to add real value to the business as not only does it deliver immediate improvements to the bottom line but its people are no longer constrained by repetitive, manual processes and can focus on more strategic tasks that will help enable growth and foster competitive advantage. It is time for CFOs and CPOs to take the leap, think seriously about how their company is spending its money and create the urgency to automate its procurement model.
Check out how our Generative AI-powered bot, Glo, delivers 70% efficiency gains, 10-20% cost savings and 20X ROI.