It’s 2024, and if you are just starting up with your Procurement Digitization journey, you are in a much better position than companies locked in with legacy solutions. But, here is one advice that might not resonate with many.
For 2024, I will not invest heavily in a long-term contract for a Procurement Digitization suite. The third point is key. Here are some reasons and, of course, solutions.
1 - Be cautious of companies selling "Ai" driven platforms and even more with companies having Ai as suffixes in their company name. Most of these firms are using OpenAI Api and have little or no control over your output generated and will expose your enterprise data to the OpenAI cloud.You can choose to opt out of not allowing OpenAI to use your data for training, but this will require customisation, and this is where most companies will fall apart.
2 - Legacy solution providers are struggling in terms of functionality upgrades because of their inefficient and dated technology stacks (some are 10 and 20 years old). They are using temporary patchwork in the backend to stay relevant, but with their abysmal corporate work culture, the innovation won't happen. Legacy players are taking anywhere between 6 months to 2 years to roll out a major improvement feature.
3 - We are at a point where OpenAi is becoming mainstream and will disrupt the spend analysis and contract management industry later this year. However, the input and outputs are determined by OpenAi and not these procurement suite providers. This space is evolving so rapidly that we can expect completely different solutions in 2025 with much more automated and user-friendly prompts.
So, what you should do?
1- Use a non-integrated solution rollout approach. It is foolish to spend 6 months or more just to integrate a bunch of ERPs (for PR and PO automation) and then roll out the eSourcing suite. This is not only inefficient but also an expensive and dated approach. Use RPA smartly to automate and bypass integration deadlocks. Your digital tool rollouts should happen in 1-2 weeks time at max.
2 - Build your solution using low-code solutions. You only need basic technology to get more of your procurement automation work. You need advanced tech to get recommendations and insights. This is where I will spend time and money.
3 - Ask your teams to use Supernegotiate. Not only are we teaching you how to build a best-in-class Procurement Excellence setup along with spend analysis and negotiations, but we are also rolling free-to-use sourcing tools. More on this later. (self promotion:-P)
4—If you must use an external provider, sign up for newer players (and ditch legacy players) and choose shorter-duration contracts. Do not extend your renewal beyond 2025. Define exit clauses and termination for convenience clauses.
5—Postpone your investments if you are buying a contract management tool, supplier management tool, or sustainability management platform. These can be easily developed in-house using low-code tools.
Thoughts?
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