Procurement digital system landscape and AI: a high level view

Introduction

In this article I would like to share my personal view on the most relevant Procurement digital systems currently in the market, with a particular focus on which AI solutions are integrated in them.

Desclaimer: the comparison is based on my personal experience of more than 20 years in the procurement field. It is a high level picture, and, as such, does not intend to provide a detailed and exhaustive view of all features these great tools can offer. Also, this post does not aim to recommend one system in particular, but simply highlight the most used and relevant features

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Why is it so important to have the “right” Procurement System?

In today's business landscape, procurement has evolved from a transactional process to a strategic function that can significantly impact an organization's bottom line and competitive advantage. The right procurement system empowers companies to achieve several key objectives:

• Efficiency and Streamlined Processes: Procurement systems automate manual tasks, streamline workflows, and eliminate bottlenecks, leading to improved efficiency and reduced cycle times.
• Data-Driven Decision-Making: Advanced analytics and reporting capabilities within these systems provide real-time insights into spending patterns, supplier performance, and market trends, enabling organizations to make informed decisions.
• Supplier Collaboration: Modern procurement systems facilitate seamless collaboration between buyers and suppliers, fostering stronger relationships, better communication, and increased transparency.
• Risk Management: These systems enable organizations to assess and manage supplier risks, ensuring business continuity and mitigating potential disruptions in the supply chain.
• Cost Savings: By optimizing procurement processes, organizations can identify cost-saving opportunities, negotiate better terms with suppliers, and reduce overall procurement expenses.
• Strategic Sourcing: Procurement systems support strategic sourcing initiatives by helping organizations identify the right suppliers, negotiate favorable terms, and drive innovation in their supply base.
• Regulatory Compliance: With increasing regulations and compliance requirements, procurement systems provide tools to ensure adherence to legal and regulatory standards in supplier relationships.

It is quite evident the increasing strategic relevance that the right procurement system can play in the future.

The Procurement System landscape

The Procurement system landscape is quite crowded, with multiple effective solutions supporting procurement function in each main step of process, from demand forecasting to relationship management, including sourcing, negotiations, contracting, ordering, payments, etc. In this article I will focus on those platforms able to cover the end-to-end procurement process, from demand forecasting to relationship management. As already mentioned, the aim is not to be exhaustive and detailed but to offer a high level picture of a strategic technical landscape.

As we explore the top procurement systems, key is to examine their main features, advantages, and disadvantages:

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SAP Ariba

SAP Ariba offers a comprehensive suite of procurement solutions, including source-to-contract, procure-to-pay, and supplier collaboration tools. It provides spend analysis, contract management, supplier performance evaluation, and integrated sourcing capabilities.

Pros: SAP Ariba boasts an extensive supplier network, facilitating easy supplier onboarding and collaboration. The system's end-to-end procurement capabilities streamline processes and enhance visibility into spend data. Its integration capabilities enable seamless connectivity with existing ERP systems.

Cons: The complexity of implementation can be a challenge, particularly for smaller businesses with limited IT resources. The cost of licensing, implementation, and maintenance can also be high, which may deter smaller organizations.

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Coupa

Coupa is known for its user-friendly procure-to-pay platform that covers requisitioning, approval workflows, purchasing, invoicing, and expense management. It also offers supplier management, contract management, and procurement analytics.

Pros: Coupa's cloud-based deployment ensures accessibility from anywhere, promoting remote work and collaboration. Its intuitive interface enhances user adoption. The system's emphasis on spend visibility enables organizations to identify cost-saving opportunities.

Cons: Integrating Coupa with existing systems can sometimes be complex, especially in larger organizations with multiple legacy systems. While Coupa offers customization options, some advanced customizations may require technical expertise.

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Oracle Procurement Cloud

Oracle Procurement Cloud offers a suite of procurement applications, including procurement contracts, purchasing, self-service procurement, and supplier portal. It covers source-to-settle processes, supplier qualification, and procurement analytics.

Pros: Integration with other Oracle applications provides a seamless user experience and enhances data accuracy. The system's scalability supports organizations of various sizes. Its procurement analytics capabilities offer insights into spending patterns and supplier performance.

Cons: The learning curve can be steep, especially for users who are not familiar with Oracle's ecosystem. Organizations may incur higher total cost of ownership due to licensing, implementation, and maintenance expenses.

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JAGGAER

JAGGAER offers spend management, supplier management, sourcing, and procurement analytics modules. It covers the entire procurement lifecycle and provides features such as e-sourcing, contract management, and supplier collaboration.

Pros: JAGGAER's modular approach allows organizations to select and implement the specific modules that align with their needs. The system's customization options enable tailoring to unique business processes. Its advanced procurement analytics provide insights for strategic decision-making.

Cons: The pricing structure can be complex, and organizations should carefully evaluate the costs associated with implementing multiple modules. Some users report variations in user experiences across different modules.

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Ivalua

Ivalua's suite includes source-to-pay, procurement performance management, and supplier collaboration tools. It covers spend analysis, e-sourcing, supplier qualification, and contract management.

Pros: Ivalua's configurability allows organizations to adapt the system to their specific workflows and processes. The supplier collaboration tools facilitate communication and enhance supplier relationships. The system's comprehensive suite covers various aspects of procurement.

Cons: Implementation timelines can be longer due to the customization involved in configuring the system according to the organization's needs. Integration challenges might arise when connecting Ivalua with other systems.

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GEP SMART

GEP SMART covers procure-to-pay, spend analysis, savings tracking, and supplier management. It offers features such as purchase requisitions, purchase orders, invoice processing, and procurement analytics.

Pros: GEP SMART's user-friendly interface enhances user adoption and reduces training time. The system's AI-powered insights provide actionable recommendations for procurement optimization. Its end-to-end procurement functionality streamlines processes.

Cons: Advanced features, such as AI-powered insights, may require additional modules or licensing. Customization options might be limited for organizations seeking highly tailored solutions.

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Tradeshift

Tradeshift assists organizations in the various stages of procurement, including sourcing, ordering, and purchasing goods and services

Pros: E-procurement streamlines these processes by allowing organizations to request, order, and buy items online through a closed system with suppliers, increasing efficiency and transparency in procurement operations.

Cons: While the platform is extensible, this could also mean increased complexity in terms of setup, customization, and maintenance

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How does AI impact these platforms?

Like many other industries, AI is changing this landscape as well. All these big players started investing in AI solutions years ago. Some of them are integrating AI solutions in their platforms, some with greater speed than others. Here below you will see a snapshot of key AI solutions adopted by each platform and the related benefits:

The extent of AI adoption and its impact on each procurement system can vary based on factors such as the specific modules or features utilized, organizational goals, and technological advancements.

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Conclusions

Selecting the right procurement system is a strategic decision that can significantly impact an organization's efficiency, cost savings, and competitive advantage. Each system offers a unique set of features, pros, and cons, and organizations should carefully evaluate their needs, budget, and long-term goals before making a decision. It's important to consider factors such as system complexity, integration capabilities, user experience, customization options, and the overall fit with the organization's procurement strategy.

Even more important in the future will be the AI impact ?on these platforms. As already described in a previous article (link here above), the AI-empowered procurement platform of the future should help in the following areas:

• Efficiency Boost: AI automates repetitive tasks, speeding up processes such as spend analysis, supplier selection, and contract management, freeing up procurement professionals to focus on strategic activities
• Data-Driven Decision-Making: AI processes vast volumes of data rapidly and accurately, enabling more informed decisions based on real-time insights
• Cost Savings: AI optimizes spend by identifying cost-saving opportunities, reducing excess inventory, and negotiating better terms with suppliers
• Risk Management: AI assesses supplier risks and monitors compliance, minimizing disruptions and legal complications
• Predictive Analytics: AI-driven demand forecasting and market trend analysis enhance inventory planning and response to market changes
• Improved Supplier Relationships: AI aids in evaluating supplier performance, enhancing collaboration and transparency
• Accuracy and Error Reduction: AI reduces manual errors in tasks like invoice processing, leading to improved accuracy and operational efficiency
• Strategic Focus: By handling routine tasks, AI enables procurement professionals to focus on strategic initiatives and value-added activities
• Competitive Advantage: Organizations leveraging AI gain a competitive edge by making quicker, data-driven decisions that align with market trends
• Innovation: AI fosters innovation in procurement processes, encouraging organizations to adapt to changing technologies and market dynamics

Incorporating AI empowers procurement systems to be more agile, efficient, and responsive, ultimately driving better outcomes and contributing to the organization's success.

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