AI, AI, Oh? What is the Real-World Impact of the Digital Age on Procurement?
While not new, words such as cybersecurity, talent acquisition, and artificial intelligence have, with the emergence of the digital age, taken on a less conceptual and more real-world significance.
For example, when you think of cybersecurity, what immediately comes to mind??
Like most, in days past, you would probably consider anything with the word “cyber” in it to be an automatic default to the IT department. That is no longer the case in the here and now.?Beyond the impact of a more significant number of people working remotely, breaches by third-party partners and suppliers have increased exponentially.
According to a May 7, 2021, Security Magazine article, “51% of organizations have experienced a data breach caused by a third-party vendor.” Other reports put the number even higher. Add into the equation the results of a Bomgar survey reporting that 74% of people polled believe that third-party vendor selection overlooks potential key risks, and you can see that cybersecurity is not solely an IT issue. It would even be reasonable to suggest that given the points of vulnerability, procurement, and not IT, should take the lead in addressing security issues in the supply chain.
A “Hire” Calling
While cybersecurity challenges are squarely on keeping unwanted intruders out of the company, the challenge regarding procurement talent is all about keeping the best people in the organization.
Before the pandemic, 50% of CPOs did not have confidence in their existing team’s ability to deliver on their strategic objectives. This high percentage wasn’t an anomaly or a blip on the radar screen. In the years leading up to this latest finding, the lack of confidence CPOs had in their current procurement team’s abilities was as high as 62%.
Exacerbating the situation further was another disturbing trend: more than 50% of all new hires fail within the first 18-months after joining the company.
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What does this have to do with technology or AI in the digital age?
According to Iain Campbell-McKenna, whose company created the Procurement Analyser to assess a procurement team’s individual and collective capabilities, automation is a two-edged sword.
While AI recruiting systems were initially promising, they have limitations when you take out the human factor. It is hard to argue with McKenna on this last point given the above statistics.
Human AND Machine
There is an often-quoted tweet about the importance of building solutions for how the world should work versus improving the way it does work.
From our standpoint, the former reflects a technology adapting to the way humans work versus humans adapting to the way technology works. In this context, while there is little doubt that new technologies for security and hiring have created opportunities for improvement and performance breakthroughs, CPOs continue to report disappointment with their digital transformation initiatives and personnel capabilities.
Our answer to this last point is simple: organizations must adopt a human AND machine versus a human or machine approach to succeed in the digital age. What are your thoughts?
Founder, CEO of FactorySpec
3 年Has to considered from the beginning when you are building your solution especially when you handling sensitive data we are building a SaaS solution and building in security in the cloud. Michael Cadieux
Procurement is in an EXCELLENT position to lean/lead forward in holistic supplier risk management. Security and privacy teams have a limited view of the supplier portfolio - and business stakeholders will always look to procurement teams to facilitate their purchase/renewal through various internal processes. We're always looking for opportunities to add value beyond 'traditional cost savings metrics.' This is a perfect opportunity to lift procurement visibility and value to the enterprise. And, let's face it... if we don't lead and the processes the perception of procurement being a roadblock (requesters think the overall process is ours anyway), then the negative impact to our reputation will further limit our ability to get a seat at the table in other areas. LEAD FORWARD!
Great point Michael Cadieux about human AND machine versus a human or machine approach. Considering that AI and augmented reality will soon become "normal" in our world, it's vital we focus on human-machine interaction.
Chief Procurement Officer at Michigan Department of Technology, Management and Budget
3 年It should be a partnership between Procurement and IT, procurement needs to understand the risks and pull in IT to review technical alternatives/requirement when necessary Your data risk classification should drive how often it is monitored or reviewed. .
Procurement leader with a passion for delivering value, building teams, and evolving the function.
3 年This should be a key topic of future supplier risk mitigation plans, and almost certainly something the different platforms for monitoring such things looks to add as a module.