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Think big, start small, act fast

Intelligent spend management and the Kinetic Enterprise™

When it comes to spend management, organizations often struggle with siloed departmental practices, fragmented data, lack of transparency, and difficult-to-execute policies. For procurement executives, the situation can lead to sub-optimal processes and frustrated users. However, intelligent spend management (ISM) capabilities, cloud technologies, and a modern digital core can help reduce technical debt, unleash human potential, and drive new levels of efficiency.

Three Deloitte ISM leaders unpack the results companies are seeing as they address disruption head on, reimagine spend management and enable “built to evolve” Kinetic Enterprise capabilities for the procurement function.

Procurement in Industry 4.0

The connection between digital and physical technology–the essence of Industry 4.0–stands to fundamentally change procurement as we know it. Today, it’s a fairly linear progression of buyers to suppliers or vendors. For Sanjib Mukherjee, managing director at Deloitte Consulting LLP, by leveraging AI, IoT, and other disruptive technology, a smart ecosystem comes into play. “Once there is more knowledge in the ecosystem, there is more transparency, efficiency, collaboration between buyers and suppliers, and reduced cost.”

Dharani Atluri, manager, Deloitte Consulting LLP, extends the borders of the Industry 4.0 procurement ecosystem, offering it goes far beyond the buyer and supplier, reaching into functions like accounts payable and the consumer. “All of that plays into how we're making sure that everything is working seamlessly and delivering the most value at each of those interaction points.”

Indrajit Roy Chowdhury, manager at Deloitte Consulting LLP, notes how procurement ecosystems must be built for speed: “Time-to-market is going to be extremely fast in the future, so we need to build that ecosystem of apps and alliances to meet those needs in a timely fashion.”

People-first procurement transformation

Building capabilities, modernizing the core, and drive transformations are critical pursuits. But it is easy to get lost in the gloss of technology and forget that people are essential to success. Atluri offers leaders of procurement transformations should be prudent and keep organizational readiness at the forefront. “We're making these decisions about the user experience, but we must consider what problems in our employees' day-to-day lives they are solving.”

Seeing the organization as the “heart and soul” of every transformation project, Chowdhury agrees, adding, “It's important to build that right fit of talent and ensure they understand what levers we are trying to pull for optimization, and align our work force to maximize the benefit.”

Driving user adoption

For Mukherjee, the quickest path to drive down user and process adoption is short and clear: Systems that deliver clunky, complex experiences, and need to provide more personalized features, insights, and be more intuitive. He lauds the virtues of a good UX, saying that technology should not be a barrier for the desired outcomes, “that is the foundation of rich, impactful kinetic procurement.”

Overengineering leads to overcomplication and frustration, which impacts adoption–and all of it can be addressed with the new technology driving procurement solutions. To illustrate her point, Atluri references routine and repetitive invoice processing that often takes too long, but could be solved with a machine-learning algorithm, freeing up significant amounts of time.

Exponential benefits of data and tech

There is more data than ever before at our disposal, and we have vast capabilities to store it. That said, trying to gather and manage so much data in one place is neither a realistic nor cost-effective approach. A Kinetic Enterprise, Chowdhury points out, can access data from any source without having to move it into an internal system. It could, for instance, begin with social media and external data, and move on from there, aggregating it along the way to drive meaningful decisions. “Once we can achieve that [decision-making], the benefit of the Kinetic Enterprise will be exponential.”

Mukherjee agrees and offers that exponential benefit can also be found in the ecosystem: the availability of intelligent product data, supplier and market information, which becomes part of the entire ecosystem. Data without boundaries that helps seamlessly provide a better procurement function. “This is what the Kinetic Enterprise–kinetic procurement and intelligent spend management–is all about.”

Think big. Start small. Act fast.

Companies setting out to transform procurement would do well to choose one or two solutions that will drive meaningful value into the procurement function. Mukherjee recommends talking to CFOs, CPOs, CIOs to learn the issues that are impacting revenue, efficiency or cost. Then apply what he calls “boundless thinking” to produce better outcomes. But always, he counsels, keep a broader picture in mind ensuring “every small project is one step forward on a clear and value-added path to the digital future.”

Dharani echoes the idea and builds on it offering, “Be agile and iterative with that ambition and vision in mind so you’re incrementally building capabilities and working towards a goal … That’s the right mindset to think about how procurement organizations are going to be sustainable and keep pace with growth.”

With a final thought on digital procurement and ISM, Chowdhury deftly removes two barriers to entry: time and cost. He offers that new technologies are not that expensive or time-consuming to implement, and by applying cloud-enabled technologies, companies can “slowly increment and scale to deliver tremendous benefit in a short period of time and at a pretty low investment.”

 

Want more transformation insights from enterprise leaders? Visit deloitte.com/SAP to download future podcast episodes or listen to previous ones.

 

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