The procurement technology (ProcureTech) industry has come a long way since its humble beginnings. Just think, procurement professionals used basic tools like pen and paper and – at least more recently – long, winding spreadsheets. Today, the sector has transitioned to using highly cutting-edge technologies that drive strategic decision-making. These solutions have created a higher line of visibility into administrative decisions, in large part thanks to real-time analytics, artificial intelligence (AI), and machine learning (ML).
But despite the inherent benefits of AI and ML adoption, only 25% of procurement leaders have deployed AI/cognitive solutions in their operations so far, while the same percentage express interest in doing so in the near future. This mixed reaction suggests that there is still some hesitation in fully embracing AI solutions, likely thanks to the perceived high cost of digital transformation.
However, this hesitance will likely soon abate. The global AI market is expected to surpass $1 trillion by 2029. And with recession concerns driving increased demand for cost reduction and risk mitigation across all industries, many leaders are turning toward solutions that offer a competitive advantage and business agility. As such, this year is poised to be a turning point in the adoption of AI-based solutions. Procurement leaders who embrace such technologies early will ultimately have a significant advantage over their competition.
Here are some of the other trends to watch for in 2023, particularly as they relate to AI and ML adoption/deployment.
Organizations relying on inaccurate supplier data will flounder
Lack of reliable data has always created problems for procurement professionals, including but not limited to extended delays, lack of critical parts and end-consumer frustration. As supply chain difficulties persist (and become exacerbated by recession concerns), these issues will only become more pronounced. Half of senior decision-makers in procurement identify reduced access to raw materials as the top supply chain challenge for 2023. In this scenario, supply chain agility, including stock contingency plans through second- and third-tier supplier relationships, will become increasingly crucial.
Prolonged supply chain disruptions will ultimately make comprehensive data platforms a necessity for procurement leaders. Accurate data will become a critical component of the ProcureTech stack, and teams that neglect to adopt such solutions will be impeded by laggard project timelines. In fact, data-related delays and missteps are expected to become an even more significant issue in the coming year – which is stark news, given how common these delays were in 2022.
SEO practices will shift with the ProcureTech market
SEO will adapt to fit the AI-based data platform industry this year as such tools become more common. Although this may sound unlikely, such adaptation is natural and well-documented in other industries. For example, we have seen this occur over the years with Google Maps. When the app became popular, transportation authorities began formatting data on their websites to improve UX and drive traffic to their services.
Similarly, leading suppliers will soon format their data in a standardized, AI-friendly format that allows leading data and AI platforms to ingest, disseminate, and in some cases, recite (using advanced chatbots) information with high accuracy (correct and current) to procurement professionals. This trend will drive the industry toward greater transparency and mobility, even in the face of inflation-based concerns and extended supply chain interruptions.
The AI procurement market will advance (and grow smaller)
AI is growing rapidly alongside increased adoption, leading to the development of new capabilities and applications. For example, chatGPT has burst into the scene, clearly demonstrating the potential power of AI. This was the culmination of multiple advancements in the field over the last decade or so, but we’ve reached a tipping point recently where the speed of innovation and wider-scale adoption is accelerating. The fact that the underlying AI techniques that produced chatGPT (OpenAI), Claude (Anthropic), and Bard (Google), among others, evolved from the approaches used in familiar AI tools, such as Google Translate, clearly demonstrates the speed at which the technology is advancing and transforming multiple industries right before our eyes.
And the doubling time for AI advancements is decreasing thanks to the skyrocketing volume of raw data. The growth of device usage is expanding the internet of things (IoT), providing new growth opportunities for AI and advanced analytics. Companies that adopt these technologies now will stake claim over digital maturity in their respective industries, while those who lag behind will lose out on competitive advantages. As a result of these headwinds, a well-qualified group of ProcureTech leaders will soon dominate the market.