Laying the foundations for GenAI adoption
The introduction of GenAI in Procurement is poised to significantly enhance efficiency, decision making and overall performance.
The degree of impact that can be achieved for Procurement will be shaped by not only the needs and capabilities of the enterprise, but also the maturity of the AI technologies that have been adopted so far.
For processes like P2P, for example, their transactional, linear nature will mean that pure automation (rather than GenAI) will be the initial evolution to unlock impact.
However, further upstream in the process, GenAI will transform the way that Procurement approaches not only Source to Contract but the entire wider Procurement strategy.
“GenAI is a powerful leveller of performance and, if used across the Procurement function, will bring consistently higher performance.” Michael Rooney, Principal, ProcureTech
The KPIs for successful GenAI implementation
Beyond simply enabling teams to complete tasks faster, GenAI will facilitate greater efficiency, effectiveness, and precision. GenAI can most accurately be seen as a coach, rather than an extra player on the field. Initially, it helps you to get started. But then, it will also help to drive improvements and facilitate better overall performance.
As with any coach, the greatest effect can be seen when the proficiency of the user is lowest. For Procurement teams, GenAI has the power to drive a step-change in performance.
Firstly, GenAI KPIs will need to include the time required for tasks, and how these change over time. This point should be relatively easy to measure. But beyond that, GenAI will also need to be measured in terms of its broader effectiveness. Taking the example of Procurement strategy, how much more effective is a strategy created using GenAI, compared to one that was produced by a member of the Procurement team in isolation?
How much more effective is a strategy created using GenAI, compared to one that was produced by a member of the Procurement team in isolation?
While this is inevitably more difficult to measure, it should be visible in the overall strategy, and should be identifiable when using the key Procurement metrics that your KPIs are based on.
In the early days of GenAI adoption, measuring its success will also need to include performance tracking, monitoring and evaluation of how many people are using it within the organisation (and how that changes over time). So, if you deployed GenAI in a company of 1500, you would need to monitor the journey of taking usage from a handful of individuals, to everybody using it for everything, as the realisation of the ultimate vision.
Alongside this, of the people that are using it, what tasks and activities are they using it for? And, how much of their typical day job is being supported by GenAI?
Progress towards comprehensive GenAI adoption can be seen as a long-term journey, which initially starts with individuals using it for 10-15 minutes, here and there. Then, in the ultimate end state, people will be using it throughout the day, as an instinctive way to increase the effectiveness of everything that they do.
In summary, GenAI will initially impact our day-to-day work gradually - whilst people grapple with the early adoption challenges - and then, suddenly and completely, once it reaches a critical mass.
The main challenges and barriers to GenAI adoption
As with any new piece of Procurement technology, there are the hurdles of integrating with existing systems, allocating the required cost and resources, and choosing the best-fit vendor for your specific use cases. However, GenAI represents a relatively unique scenario as, in many instances, the primary barrier to adoption will simply be whether or not its usage is allowed within the organisation.
Across numerous industries, many companies are adopting a blanket ban on GenAI. In the face of fears over cybersecurity and the secure management of sensitive company data, it is easy to see why many would resort to this approach. However, it can only ever be a short-term solution.
Across numerous industries, many companies are adopting a blanket ban on GenAI
Organisations and their Procurement teams need to have permission to use GenAI, and they need to know the guidelines for its safe, secure and ethical usage. These must clearly cover points including: how they can use it, what they can use it for, what they can't use it for, and how they can (consistently) adhere to the GenAI regulatory landscape.
Once these steps are overcome - teams are granted permission to use GenAI, and they are given the best practices for its safe usage - the next barrier is ensuring they understand what its potential is. In many cases, early users of GenAI open up the tool and use it to write an email to a supplier, for example. It is very unlikely that they will immediately appreciate the broader use cases and, without training or guidance from leadership, the full potential of GenAI cannot be accessed.
Although on the surface GenAI is - in the world of Procurement technology - a fairly straightforward solution to use, for it to be truly effective and win Procurement teams over, education and awareness are proving critical.
For GenAI to be truly effective and win Procurement teams over, education and awareness are proving critical.
To help teams harness the full power of these tools and achieve best-in-class outputs, they need to be able to put best-in-class inputs in. Procurement teams need to understand how to write the best-fit prompt for their specific use case. This includes the most effective phrasing, content, specifications and structure for a prompt.
Another key point that GenAI training will need to cover is the limitations of the outputs that you receive. In terms of output quality and reliability, with GenAI, not everything can be taken at face value. Users need to understand where those areas of risk and weakness are. These weaknesses can also create some nervousness amongst users. Knowledge of these potential flaws can make people uncomfortable with using the output. To navigate this hurdle, comprehensive change management will be imperative.
Establishing confident and well-rounded usage of GenAI is also dependent on the assistance of Procurement leaders. It is only with their assistance that organisations can navigate these barriers, and establish a pioneering approach to GenAI usage. As GenAI continues to evolve at speed, its potential applications in Procurement are likely to expand, offering more opportunities for innovation and improvement.
10 GenAI priority actions
10 actions that Procurement leaders should take to set the foundations for GenAI:
1. Assert your position
Determine your company’s stance on GenAI and how you intend to use it. Then, communicate this to your employees and suppliers, providing them with guidelines and the opportunity to learn or ask questions.
2. Partner with your IT and Digital stakeholders
Procurement needs to strengthen their partnership with Technology stakeholders. Understand how they are developing a GenAI strategy. Then together, explore the art of the possible and ensure you both have a seat at the table.
3. Speak to your peers
Expand the discussion, and engage with the wider Procurement community. Understand the stances and approaches of other corporates, share ideas, and determine where your GenAI plan ranks.
4. Upskill your team
It is critical that your entire team is on board. To achieve that, they need to understand what GenAI is, and the potential that it has. Furthermore, they need to understand the nuances of its applications from various perspectives. For example, as an enabler for digital transformation, and as a risk assessor. At this point, you should also work to understand (and resolve) any fears that they may have.
5. Invest in GenAI discovery
Invest some time in identifying potential use cases of GenAI. What challenges can it resolve in your organisation? How can GenAI enhance the efficiency of your Procurement process? You should also determine the priority areas to focus on within your organisation.
6. Perform a risk assessment
Before you start deploying GenAI, understand all the specific risks that it presents in your context. Start by identifying low-risk use cases and then beginning a controlled experimentation. Then, identify the biggest risks and determine the best ways to mitigate them. You should also identify the areas of the highest value, and set those at the top of your risk assessment priority list.
7. Evaluate your current tech stack against GenAI
Understand where you rank in relation to the rest of the market. Ascertain the areas of the greatest strengths and weaknesses, and the constraints that your architecture may place on you.
8. Speak to your existing/potential digital suppliers
How can they assist you with this endeavour? Understand their position on GenAI, their GenAI capabilities (and how these are advancing), and identify opportunities to deploy the solutions in targeted areas.
9. Build a GenAI roadmap
Use this to determine your approach for different types of opportunities. Ensure that your roadmap considers data architecture, quick wins, and ‘moon shots’ for more strategic use cases.
10. Invest in new skills
Consider the capabilities that will be required to drive GenAI (both in general terms, and for the specific use cases that you are planning for your processes). Equipping yourself, your team and your stakeholders with these skills will be critical to leveraging GenAI to its full advantage.