ProcureTech has come a long way over the past half-century – especially considering that “procurement technology” consisted of rudimentary tools like pens and paper in the ‘80s. Now, the industry has embraced a modern stack of digital solutions that enable strategic decisions at every touchpoint of the procurement lifecycle, from spend visibility to real-time analytics.
A significant proportion of that progress has been made possible by advancements in AI, including machine learning (ML) and robotic process automation (RPA). But these functionalities have yet to reach critical mass in the industry. In fact, just one-fourth of procurement leaders identified using an AI/cognitive solution in 2019. However, the same percentage (25%) identified interest in implementing AI over the next year. This dichotomy suggests that many industry leaders view AI solutions with equal parts excitement and trepidation.
But we expect this sentiment to change, and soon. The global AI market is expected to top $1 trillion by 2029, up from $87.04 billion in 2021. Across all industries, increasing demands for cost reduction and risk mitigation are steering the conversation toward solutions that drive competitive advantage and business flexibility. We anticipate this conversation will snowball during the new year as we approach a tipping point. Ultimately, those who adopt AI-based solutions now will find themselves ahead of their competition this time next year.
Let’s take a closer look at the trends we expect to see in 2023 as a result of the renewed conversation into AI- and ML-based ProcureTech.
The AI procurement market will thin out soon
AI is advancing at pace with rapid market growth. For evidence of this, look no further than Google Translate’s impressive evolution over the past five to ten years. Google Translate’s improved natural language processing (NLP) abilities now allow the tool to predict which language a user needs translation from (and to). Meanwhile, visual processing enhancements enable users to scan items that require translation. These developments are a far cry from Google Translate 1.0, which provided grammatically subpar translations and required users to manually input a text’s original language.
Likewise, AI and ML solutions will evolve as the volume of raw data significantly increases. Growing device usage is already expanding the internet of things (IoT) far beyond its initial capabilities, opening the door for new AI and advanced analytics applications. And as new AI configurations become available, early adopters and investors will establish a decisive lead in their respective industries. Companies that cannot prove themselves in the AI space – or those that don’t solidify a market position soon – will ultimately fall behind. As a result, a well-qualified group of ProcureTech leaders delivering top-tier solutions will dominate the market.
Poor supplier data will create mission-critical misses
Broken or siloed data architectures have always presented problems for procurement professionals. But as supply chain difficulties persist and minor delays lead to project-wide problems, those issues will exacerbate further. Half of senior decision-makers in procurement still identify reduced access to raw materials as the top challenge the supply chain will face in 2023. If this proves true, supply chain agility – including creating stock contingency plans via second- and third-tier supplier relationships – will become more crucial than ever.
Prolonged supply chain disruptions will change how procurement leaders approach accurate, robust data. No longer a “nice to have” but instead a mission-critical necessity, comprehensive data platforms that prioritize clean data will become a critical piece of a team’s ProcureTech stack next year. Teams that neglect these solutions or opt for manually updated data platforms will become mired in supply chain blockages sooner rather than later. In fact, we anticipate data-related delays and missteps will become a prominent mark against entire operations in the new year.
Successful suppliers will prioritize precise SEO
As AI-based data platforms become more common in the procurement industry, SEO will shift in kind. We’ve seen this occur with numerous other solutions over the years. Take Google Maps, for example. Many years ago, officials at Google contacted transit authorities individually to confirm details for the app. Now, transportation websites format data so that Google can quickly ingest transportation data and seamlessly integrate it within Google Maps. In other words, once Google Maps became popular, transportation authorities were incentivized to pre-format data for the app to improve user experience (UX) and drive more traffic to their services.
Similarly, we’ll soon see top suppliers formatting their data in a standardized, SEO-friendly, machine-readable format that enables leading data platforms to automatically ingest, extract and distribute essential vendor information to procurement professionals. This change – coupled with other AI-related movements anticipated in the procurement space over the next year – will accelerate the industry toward greater transparency and mobility, even in the face of uncertain geopolitical events and supply chain disruption.