Digital Transformation and Procurement: Hype vs. Reality
REV It Up: A Procurement Podcast Series with Procurious
In this blog series, powered by Procurious, Philip Ideson sits down with speakers from JAGGAER’s REV2018 conference to discuss the latest trends in procurement and what the future holds.
A conversation with Amen Reghimi
Defining Digital Transformation
Q: Thanks for joining us, Amen. Can you start by helping us demystify the term “digital transformation?”
Digital transformation is a buzz word on everyone’s lips these days, and it is closely associated with words like blockchain, internet of things, artificial intelligence, machine learning, big data. But digital transformation is about having a clear vision. It is designing new ways of doing things that will generate new sources of value. It’s for all the company and not just for a specific process or function.
Since the industrial revolution, humans have created tools to augment human capabilities. AI is just another tool of digital transformation that’s here to help us and our customers.
Q: We know that a lot of technology has existed for a long time, but it’s not necessarily been used. Has there been a tipping point in the development of the technology that suggests now is the time to really start investing in digitization?
Yes. Why now? Because, for example, artificial intelligence is already transforming our customers’ expectations. Think of the consumer who lives by Uber, Google, and Amazon. The cost of data processing has become more affordable and AI has already significantly improved consumer apps. Now customers are expecting companies to provide the same improvements across all their experiences.
Digitizing Your Business
Q: For procurement professionals listening and thinking, yes, this is something I really want to start exploring, how do you see organizations make the business case for an investment in digitization?
Procurement is simple. If you spend one dollar, you need to ensure that you get more than that in terms of value. At the end of the day, everyone wants to bring intelligence to the business application.
Let’s take three technologies in digital transformation and give use cases for each one, and let’s focus on procurement. The first is AI, or artificial intelligence. AI will allow procurement teams to take all the data coming from thousands of transactions, we will apply machine learning and natural language processing, and tighten all that together to automate the process. The technology will help to offer advice, enable new analysis, and facilitate the user’s journey.
The second technology is blockchain. For contracting and contract management, the technology would verify and certify the existing documents, history of modifications, and versions that will allow procurement and legal departments to have what we call secure contracts.
Take the third example, IOT. The internet of things is a worldwide phenomenon that procurement professionals cannot ignore. Procurement and supply chain could benefit significantly from IOT-enabled devices to manage monitoring and re-ordering of stock.
Q: I just have one last question. Now more than ever before, you can invest in something today and six months later, you can look at that and think, that’s obsolete. I just wondered if you could share some advice of how you coach and advise procurement professionals who you hear that kind of sentiment from.
Yes, that’s a good question. I’ll start by giving you some advice, and then sharing some recommendations. Digital transformation it is not technology; it is a journey based on your strategies. My advice here is that you are the procurement professional. You should be aware that technology doesn’t innovate, people do. Technology isn’t disrupting any industry, people are. It is important to realize that what technology is doing is enabling and amplifying people.
Real transformation begins with the right questions, and by building the culture of transformation. Digital transformation changes your corporate strategy, it changes your business processes, it changes your marketing capabilities, and it changes roles and responsibilities. We are at the beginning of this revolution, and it’s time to take it.
It has to come from the top down, and if you don’t have a CEO and top managers who understand the importance of digital transformation, and how this should work in your context, it is not going to work. It should be really for your context.
This will allow you today to be part of building the future of procurement. The procurement professionals today have the chance to not only prepare for the future, but also to influence it. If you jump in today, the technology that you will use will not become obsolete in a couple of years, because you would be part of defining that future.
Amen Reghimi is a product manager for digital transformation and category management at JAGGAER.