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September 19, 2017

Big Data – what’s the big deal for Procurement?

How is big data driving digital change in the procurement industry?

By Ellie Burns

We’re in the midst of a big data revolution. Around the world 2.5 quintillion bytes of data is produced daily. That’s a mind-boggling amount. And how about this: approximately 90% of the world’s data was generated in the last two years alone.

When the phrase “big data” was added to The Oxford English Dictionary in 2013, the industry had only seen the tip of the iceberg. For years, companies have been collecting and analysing massive amounts of information – everything from structured data on production, marketing, sales, HR, finance, facilities and operations to transaction-level data on suppliers, customers and partners.

Big Data – what’s the big deal for Procurement?

Marcell Vollmer, chief digital officer, SAP Ariba

The explosion of data created has led organisations into a period of necessary innovation. The imperative to transform this data into intelligent insights has never been greater and no industry or line of business is immune from the big data revolution. It therefore comes as no surprise that Procurement is turning to big data to drive digital change.

 

The path to digital

To understand the priorities and challenges that global companies are facing on their digital journey, the University of Applied Science Würzburg/Schweinfurt, in cooperation with SAP Ariba, conducted a survey of more than 650 leaders in procurement, finance and supply chain functions from organisations in North America and Europe.

Among the key findings was that big data and predictive analytics are the number one priority for procurement. When asked to rank the top five priorities for their organisations, a clear majority of respondents (72 percent) placed big data and predictive analytics in the top spot.

Procurement systems capture a vast amount of data, including sourcing information, weather reports, manufacturing and delivery data, supplier data, purchasing data, catalogue data. This begs the question; how can procurement leverage the insights of big data, integrate predictive analytics in daily work and provide prescriptive guidance to buyers in the future?

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There are undoubtfully very valuable insights within that data, but the challenge for procurement is to understand and use it to make better, informed decisions. Big data, predictive analytics and prescriptive guidance can further scale with cognitive computing power to provide better information that will enhance situational awareness and speed-to-decision. The resulting business value will improve the way procurement roles and processes are executed, making both more effective, valuable and sustainable.

 

The challenges of today

Today, most procurement organisations are faced with three core challenges when working with big data:

  • Digitising processes: The first challenge for procurement is to access unstructured datathat resides in scanned documents, email inboxes and spreadsheets. The key to unlocking the data’s potential is to ensure it is stored in a digital format that can be analysed.
  • Driving insights: It is then vital to be able to analyse and utilise the digitised data. Human limitations, such as skills and time, as well as technical challenges can hinder find patterns, process the information intelligently and accurately, and derive insights. Customers are challenged to figure out how to tap into cognitive capabilities and build them into their processes.
  • Enabling talent and skills: Once this is in place organisations need to foster a change in culture and mindset that will help them embrace these disruptive technologies. Big data, predictive analytics and cognitive computing require new skillsand new ways of working, such as self-service analytics.

 

The opportunities of tomorrow

Advances in technology and new concepts like intelligent computing fueled by SAP Leonardo provide ample opportunities to predict and respond more effectively to customer and market demands. This insight can guide buyers or requesters to create request for information or a contract template based on potentially unlimited amounts of information analysed across multiple databases. Connecting people and information guided by “intelligent” procurement systems will fundamentally change how companies buy and sell.

The digitalisation of business is real, and it is here to stay. The combination of new technologies and skilled talent working with intelligent systems may provide the competitive edge that businesses need to stay ahead of competitors in the market. But it will also fundamentally elevate the importance of procurement to providing guidance on innovations, mitigating risks and securing a sustainable supply chain. As with any revolution there will be winners and losers and those that make the most of big data will come out on top.

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