Gartner: CPOs 'Must Embrace AI Procurement Tech'

Gartner report warns chief procurement officers they face a 'cost and agility deficit' if they fail to embrace AI technology to drive improvements

Chief procurement officers (CPOs) need to prepare for the massive impact that digitalisation will have on procurement operations and staffing, a new report from Gartner says.

The study shows that AI-based solutions are increasingly able to handle tasks traditionally taken on by sourcing professionals. This, it says, is allowing organisations to ‘consumerise’ sourcing tasks. It adds that this means non-professionals can now scope sourcing requirements and identify suppliers – in effect, turning sourcing into a skill rather than a stand-alone function

The paper warns that procurement organisations that fail to embrace AI will suffer a “cost and agility deficit”. It says this is because automating repetitive tasks allows procurement teams to focus on value-add initiatives that drive better business outcomes.

As for GenAI, the study predicts use cases will “proliferate across the full procurement process”, improving the speed and efficiency of procurement departments.

It also points out although immensely powerful, GenAi still leaves procurement professionals as “the central decision-makers”, adding: “GenAI generates new content, fills in missing information, and even creates sample outcomes or scenarios for situations that support strategic decision-making”.

The report details how interest in AI for procurement use cases increased by a factor of 17 in 2023 compared to 2022. This, says Gartner, will result in a high number of AI pilots in 2024, making the acceptance and use of AI “more pervasive in procurement in the coming years’.

Gartner: Procurement tech 'rapidly evolving'

It adds: “Procurement technology is rapidly evolving and changing how procurement will be executed in the future. 

“This research helps CPOs understand how technology is impacting the future of procurement and how to address the predicted impact on process, staffing and execution."

At the forefront of the AI revolution in procurement is SAP, and at the heart of SAP’s AI offerings is Joule, its natural-language, generative AI ‘co-pilot’. 

Joule is based on an understanding of customer processes, and can provide organisations not only with intelligent insight, but can also make recommendations designed to deliver outcomes faster.

It will be embedded throughout SAP’s cloud enterprise portfolio, and is aimed at the estimated 300 million enterprise users around the world who work with SAP cloud solutions. 

Joule is set to make SAP one of the world’s largest AI enterprises.

Microsoft & IBM expand AI partnership

For their part, Microsoft and IBM are also expanding their AI collaboration programme, including a procurement and source to pay (S2P) solution

The partnership is helping the companies’ joint clients accelerate the deployment of generative AI, and also provide a new offering of expertise and technology to innovate their business processes and also scale generative AI effectively.

The focus of the project is to help clients implement and then scale the Azure Open AI service.

Azure OpenAI Service runs on the Azure global infrastructure to meet organisations’ production needs, including enterprise security, compliance, and regional capacity. 

The S2P solution combines Microsoft Power Platform and Azure OpenAI Service to help automate repetitive, manual and fragmented sourcing and procurement processes. The technology also offers supply chain insights.

The partnership is helping businesses who are looking for ways to adopt and integrate multi-model generative AI solutions that augment their work in areas such as creative content and code creation, content summarisation and search. 

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