Trends in Technology Procurement: The Evolution of Retail and How It Applies to Self Service Procurement
Before I discuss my views on the direction of Self Service Procurement, I think it is worthwhile to reflect on the evolution and revolution of self-service in retail: The “modern” retail business model is one that has been static for over a hundred years. From the days of the original Sears mail order catalog in 1888 (it was a mailer then) to department stores, the rise of the shopping malls, and the big box retailers, we have observed an evolution in the different ways that retailers innovate in an effort to reach an ever growing number of consumers and geographies. The shift to big box retailers meant more supply chain effectiveness (read: lower costs), but also resulted in less selection, and more consumer independence from sales people and even cashiers during the checkout process.
Fast forward to capabilities afforded by personal computing, broad internet availability, and more robust and secure on-line shopping experiences which created an explosion of capability and innovation that led to the birth of many on-line only retailers like Amazon and eBay to name a few. Fast forward further and you now cannot imagine not being able to shop from your tablet or mobile phone. Today we are in a time ever-increasing connectivity where the “Internet of things” is a central tenet for all manufacturing enterprises. Today, we have appliances that can check inventory and even order online replenishments for water, food, detergent, etc. This explosion of capability has created a new ‘normal’ when it comes to consumer expectations as it relates to retail.
Just like we have seen an evolution and revolution in the way we shop as consumers, these are trends that will also impact the way in which we source as procurement professionals. We live in an always on, on-demand, real-time world where consumer expectations and satisfaction are no longer measured in weeks, days, or hours, but in minutes and seconds. It is my belief that we have grown so accustomed to these real time, delightful customer experiences (mobile shopping, mobile banking, mobile whatever) that when we arrive at work, these expectations are no longer checked at the door. We demand these on-demand, real time, delightful experiences from our Enterprise systems.
Self Service Procurement is a new way of thinking about business enablement and customer empowerment
There are many factors that are driving the emergence of self-service procurement trends: The dominance of cloud solutions that make it easier than ever for the business to self-procure just in time solutions, the rapid pace of innovation that fuels the need for the business to be more nimble than ever in order to remain competitive and relevant in the market place, the vast availability of data, metrics and analytics that provide intelligence and decision making abilities, and finally, the consumer mind set (that is no longer checked at the front door at work) that demands real time results and delightful experiences.
These are just a few of the factors that are driving the rapid shift to Self Service Procurement.
The overarching strategy behind Self Service Procurement is to enable the business to operate at the speed of the business without risking profitability, (cyber) security, and legal protections. This may not in and of itself sound very revolutionary. The change lies in technology and business processes improvements, which empower the business to rapidly acquire products and services. Artificial Intelligence algorithms are creating predictive analytics that can forecast demand with higher accuracy. Cloud “app stores” and cloud “Coke machines” in conjunction with internal systems will create even broader capability for real time ordering and (software) delivery.
One particular cloud only retailer is piloting a “Business” services portal to eliminate internal catalogs that require maintenance and headcount to support and which are woefully outdated soon after deployment. The retailer “business” experience is very similar if not identical to the consumer experience, which makes it more predictable and therefore drives a higher acceptance and utilization rate. These types of capabilities result in lower operating costs, reduced number of purchase orders, and more delightful and predictable customer experiences.
As we think about the future of Procurement and Strategic Sourcing, we can expect higher demand and expectations for real-time, on-demand capabilities like:
• Vendor spend reporting that can be pulled up on a mobile device in real time, with the same ease and accuracy as your bank account balance.
• Shift from internal to external catalog management
• Artificial Intelligence algorithms will buy, manage, and optimize the lower risk, low dollar transactions in the portfolio
Self Service Procurement is a new way of thinking about business enablement and customer empowerment. It is based on the premise of close alignment between the business and procurement organizations in order to reduce complexity, improve cycle time, increase revenue, and eventually create those predictable, delightful customer experiences that we are all used to once we leave the office. Each journey will be different depending on the business model, industry, access to technology, but most importantly, the company culture and the drive of Strategic Sourcing leaders to help enact meaningful change.