B2B Payments

Procurement Tech Refocuses To Help Corporates Digitally Transform

Procurement, like other finance-related areas in the enterprise, is quickly finding itself with a seat at the corporate leaders’ table — but it hasn’t necessarily been an easy ride to get there.

Even as new technologies offer sophisticated eProcurement, eSourcing and spend management solutions for corporates, grappling with the adoption of these tools has been a challenge for many organizations, says Alex Yakubovich, CEO of Scout RFP. According to Yakubovich, as the eProcurement technology market continues to evolve, it’s also learning how to aid companies in their overall digital transformations — an area in which the industry once hampered it, in some cases.

“More and more, the best leaders in the procurement space are getting a stronger position internally,” he told PYMNTS in a recent interview. “It’s very similar to how the CFO role is now a very strategic role — the CIO role, too. Procurement is moving in a similar direction into a very strategic role.”

These shifts are part of a larger trend for the enterprise today as businesses endure the growing pains of digital transformation.

“Procurement is getting a stronger seat at the leadership table as companies become more driven to drive bigger, more impactful outcomes,” he said.

Crucial to better outcomes is data analytics and the procurement function is finally getting recognized as a potential source of high-value financial data.

“In pretty much everything in business, there is a shift to go from just data and automation to actual insight and actionable insight,” he explained. “That step means leveraging things like artificial intelligence and machine learning. But, to do any of that, you have to start with a digital transformation initiative. You have to go from decentralized data — spreadsheets and emails — to [being] able to put that data into one place so you can drive insight.”

With procurement becoming more strategic, top leaders in procurement departments are beginning to consider their own positions in their organizations’ digital transformation and their role in embracing artificial intelligence (AI) and machine learning to gain a better grasp on data.

But, as with any major transformation, this shift hasn’t been easy. In fact, while many procurement technology firms were able to innovate and create incredibly sophisticated tools, Scout RFP’s corporate customers did not always implement those solutions in strategic ways, causing many solutions to be left unused within the enterprise, Yakubovich said.

“Especially in procurement, you see tools that have been in the field for a really long time, but there is additional complexity that’s added to those tools,” he explained.

As companies began to place heftier responsibilities on procurement departments, their list of demands for technology grew. Technology providers were able to deliver, the CEO said, but that’s not necessarily a good thing.

“They grew more complex, and then companies just wouldn’t use them,” Yakubovich said. “That weakened our industry. They ended up buying Formula One race cars, when they should have been buying BMWs and Honda Accords — solutions that people can use every single day, and be very comfortable with, that are practical and usable — instead of something that’s incredibly sophisticated but hard to use, and dangerous in the wrong hands.”

Procurement isn’t the only industry that’s experienced this challenge. According to Yakubovich, this trend can be seen in the software-as-a-service (SaaS) market overall, and while corporates may have purchased these tools, adoption rates can often fail to pass the 15 percent mark.

For businesses and technology providers alike, it’s led to a bit of soul-searching. As companies explore how they’re going to digitally transform, software firms have begun to focus more on the usability of their solutions rather than complexity to boost adoption rates. And, as those adoption rates grow, so does an organization’s ability to centralize and use the data those technologies can produce, Yakubovich noted.

“Companies spent a lot of time and money on putting the tools together, but then didn’t have the data integrity going into it,” he said. “With the drive towards adoption, the data gets a lot better and stronger. I really think this lack of adoption has been the biggest hindrance to data being available.”

Scout RFP recently released new stats on company growth, reporting this week that $13 billion in corporate spend is now managed through its services. That figure is certainly a mark of expansion for the company itself, but it also represents growth in corporates’ ability to adopt — and actually use — eProcurement and spend management technologies as a whole. That is a result of the industry refocusing on the usability of its services, Yakubovich noted.

Plus, he added, it highlights procurement’s role not only in becoming a more strategic component of the enterprise, but in promoting technological transformation and arming businesses with the high-grade data they need for actionable insights.

“We’re really making a push towards strong digital transformation, and that speaks volumes about companies really working on getting adoption rates up and getting data,” Yakubovich said. “[That way] they can work on where they want to see their procurement teams in the future.”

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