November 14, 2017 | Written by: Robert Breitel
Categorized: SAP Ariba
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Early in 2017, when IBM announced a partnership with SAP Ariba to build the future of procurement, it was an exciting moment for all involved. In addition to marking the latest chapter in a partnership stretching back more than 40 years, it also represented a new opportunity to drive tremendous value for our clients. By working with a strong partner that has a wide portfolio of procurement solutions, we aimed to redefine what’s possible in procurement. And help our customers accomplish more than they possibly could have before.
At IBM, we believe that procurement should play a leading role in shaping overall corporate strategy. In fact, many experts agree that 65 percent of the total value of a company’s products and services comes directly from its suppliers. When procurement is done right, it can lead to better results throughout the business lifecycle. However, the sad truth is that today’s procurement teams often struggle to demonstrate they deserve a place at the corporate strategy table. That means many organizations wait until the last minute to start thinking about procurement.
Now, we’re working to change this by creating a cognitive approach to procurement. In the months since we first announced our partnership with SAP Ariba, we’ve been working with clients — including a few of our top clients from North America, Europe and Asia Pacific — to develop a roadmap for cognitive transformation in procurement. By putting our ideas into practice, clients are able to drive cost savings, increase employee productivity and help ensure procurement accuracy.
Taking a data-driven approach
To be taken seriously in the boardroom, procurement needs to establish its credibility. There’s no better way to do this than by taking a more data-driven approach, where team members pull insights from structured and unstructured data sources to drive more-informed decision making.
Today’s procurement professionals have more data than ever before to help them meet this goal. While more data creates the potential for deeper procurement insights, the volume of data may also make those insights more difficult to find.
This is where the cognitive computing capabilities of IBM Watson® come into play. Watson™ helps procurement professionals find the insights they need without having to spend hours searching for them manually. As a result, procurement teams can make better decisions, faster.
In this post, we’ll look at two examples of procurement functions that can be improved by applying cognitive systems: contracting and sourcing.
When preparing a contract, procurement must stop to consider all the unique aspects of that particular contract, including where the contract will take effect and in what industry. Only then can procurement specialists accurately determine exactly what terms and conditions should be included.
It can be difficult for a single employee to be aware of all these different factors when writing a contract. Even if they pick up the details over time, they’ll take that knowledge with them when they inevitably leave the organization.
Cognitive systems could help address this issue by developing an institutional knowledge for contracts. Using these systems, employees could quickly create the ideal contract for almost any situation — by automatically identifying which terms and conditions would need to be included, and which ones could safely be left out.
Organizations could use these cognitive insights to develop comprehensive contracts for specific industries and regions which could be reused and improved upon over time. This approach could contribute to shorter contract negotiation cycles, more productive employees and increased savings.
Sourcing made simple
When procurement professionals look to source a new supplier, they’ll be peering into a world that’s constantly changing. It may be extremely difficult for them to identify the appropriate suppliers, and to track market and pricing trends. The only way to get this information using traditional procurement methods is to conduct hours of tedious manual research.
In contrast, the cognitive power of Watson could help create a digital assistant for procurement professionals. Users could ask questions using natural language and get answers about who the suppliers are in a particular area, what prices they typically accept, and which requests for proposal would best reach them. This method would allow the procurement professionals to be more productive, and make more informed decisions. In turn, the organization would be able to keep procurement costs as low as possible.
We’re proud to be helping our clients drive the kind of business value that can really get procurement noticed. To learn more about the partnership between IBM and SAP Ariba, and how we’re driving the future of procurement, check out our white paper “The Road to Intelligent Procurement.”