Together, We Can Realize Procurement AI’s Value for Spend Management
Despite AI’s recognized potential to streamline procurement operations and enhance spend management efficiencies, there remains a substantial gap between the excitement for AI’s capabilities and its actual implementation. But that gap need not separate the procurement function from realizing AI’s full potential to drive enterprise-wide value.
Wanted: Better data analysis, tracking, and reporting
We recently surveyed procurement professionals to uncover their top priorities for improvement this year. In order, they are 1) analyzing historical spend 2) tracking procurement initiatives, 3) ESG benchmarking and 4) producing finance reports.
A combined 70% of respondents indicated it takes them anywhere from several days to several months to prepare their data for analysis. Clearly, procurement teams still have widespread issues with data readiness that impact the speed and efficiency of decision-making.
Additionally, a large majority of respondents (74%) see AI as crucial for saving time on data tasks, while 60% recognize AI’s role in uncovering cost savings. Another 53% see value in AI automating tactical procurement workflows like purchasing and invoicing.
Procurement teams are increasingly recognizing the value of AI in transforming their operations, and many are taking significant steps towards harnessing its potential. However, several challenges remain that need to be addressed to fully realize AI’s benefits. By understanding these challenges and following a clear roadmap, procurement practitioners can successfully implement AI in their organizations.
Challenges, reservations over AI remain for most
Survey respondents provided four main challenges to adopting AI-enabled solutions:
- Lack of budget for AI tools and resources – 66%
- Enduring data accuracy and completeness issues – 60%
- Data security and privacy concerns – 50%
- Resistance to change within their organization – 44%
We also found tepid interest for exploring and proving AI use cases for procurement. While 37% of respondents believe AI should be experimented with, they also wouldn’t trust it to make decisions or handle strategic tasks. In fact, just 25% of respondents advocate for procurement to fully embrace AI across all areas of its operations in 2024.
Procurement AI’s early adopters
There are encouraging signs that companies are building the analytics, data, and training foundation necessary for procurement’s AI adoption. Consider that:
- 56% of companies have been investing in advanced procurement analytics or spend intelligence solutions, such as SpendHQ’s platform
- 43% of companies have been focusing their investments in data warehousing technologies to enhance their data analytics capabilities
- 40% of respondents indicated their companies are investing in AI technologies
- 35% of companies have been investing in training for their procurement teams on data analytics and visualization skills
These investments may indicate long-term plans to develop custom, AI-enabled procurement solutions, beyond “advanced” analytics capabilities.
Leaning on procurement AI for spend management
We believe there’s a simpler approach to deploying AI-enabled procurement applications that will lead to greater ROI, faster. While challenges exist, there are clear steps procurement practitioners can take to overcome these hurdles and fully leverage AI’s potential—here’s how.
Educate yourself on procurement AI
Start by understanding the basics of AI. Explore successful use cases, consult AI experts, and invest in training for your team. Begin with pilot projects to test and refine your approach, ensuring your team is well-equipped to implement AI procurement initiatives successfully.
Start with master data
A solid foundation of master data is essential for effective AI deployment in procurement. Begin by ensuring all data—be it supplier information, transaction records, or expense categories—is clean, accurate, and well-organized. This foundational step is critical as high-quality data enables AI to deliver reliable insights and improvements. Consider conducting regular data audits and employing data governance practices to maintain data integrity.
Think “outcome,” not “technology”
Clarify what you aim to achieve with AI. Focus on the pain points you want to address rather than the technology itself. Engage with experts who can guide you on whether AI can solve your specific problems and how best to implement it. This approach ensures that AI initiatives are aligned with your business goals and deliver tangible benefits.
Create alignment within your organization
Ensure that your AI initiatives align with your organization’s overall goals. Foster collaboration and communication across departments to build consensus on AI objectives. Identify available resources and establish clear guidelines for AI deployment. This helps to create a cohesive strategy that uses AI effectively across the organization.
Collaborate with your software vendors
Software vendors are valuable partners in your AI journey. They invest significantly in researching use cases and developing solutions. Collaborate with them to explore AI applications that can meet your needs. Using AI through a vendor can be a practical way to start integrating AI into your processes and can provide you with the necessary support and expertise.
Prioritize your efforts
Determine which problems are most critical to solve and prioritize them based on their impact and the resources available. Align your AI initiatives with these high-priority areas to maximize the benefits and ensure successful implementation. This ensures that your efforts are focused on areas that deliver the highest ROI.
SpendHQ’s role in procurement AI-driven spend management
SpendHQ has been delivering competitive, innovative, and turnkey spend intelligence and procurement performance management (PPM) solutions for more than a decade. We continue to lead the solutions market by integrating AI into our spend intelligence and PPM solutions and pairing that AI/machine learning with more than two decades of procurement experience to create a spend taxonomy purpose-built for procurement.
Our intelligent procurement solutions give our customers the efficiency, accuracy, and agility they require to drive financial and non-financial value. We remove so much of the guesswork (and gruntwork) that goes into gaining visibility into enterprise-wide spend data, analyzing it, and employing it to make data-driven decisions. That said, our AI-enabled applications make suggestions, not decisions. And, our implementation specialists work with clients to review our models and output for accuracy before making final decisions.
If you’re a procurement leader that wants to take your organization into the AI revolution via AI-driven spend intelligence and PPM but are facing headwinds at home, let’s talk. We can show you SpendHQ’s platform can overcome your data challenges to deliver remarkable results in just a few weeks.
