The Future of Procurement: Contract Management and AI

It was a real pleasure to be able to contribute to the ProcureCon benchmarking report on ‘Driving Procurement Transformation’ this year. The report surveyed 100 Chief Procurement Officers (CPOs) from across Europe to find out more about the challenges they face, and the innovative solutions being brought to the table.

The results reflected a shifting attitude toward introducing automation and other technologies into the procurement process. Highlights included:

65 percent of participants confirmed they already use contract management as an automated procurement process within their organisation

This makes sense! Contract management, as part of modern digital transformation, has quickly become a must-have procurement technology, driven by a growing recognition that contracts form the foundation of all commercial relationships. By placing contracts at the center of the sourcing process, procurement organizations see significant benefits for themselves, their suppliers and their legal teams.

“32 percent of participants stated that they would have no problem securing budget for the implementation of automated procurement processes and 42 percent confirmed it would be possible to secure budget if RoI can be demonstrated.”

This shows a clear desire by businesses to invest in self-service and automation technology to drive consistency and efficiency in the procurement process. Automating the enforcement of contract consistency within procurement with enterprise contract management carries clear ROI.

As I mentioned in the report, a global pharmaceutical company using the Icertis platform was able to save $70 million a year by reconciling contract terms across suppliers and geographies. Creating tangible value through efficient management of contracts is something every business can achieve if they are willing to invest in the right technology to enable it.

“65% of Chief Procurement Officers surveyed expect that in the future, negotiation assistance using Artificial Intelligence (AI) will be the most useful procurement automation technology.”

No surprises here! Digitization is turning contracts from static documents to strategic assets and AI is bringing them to life, so they can interact with humans, surrounding business systems and, ultimately, even other contracts.

So, it’s encouraging to see that the majority of CPOs recognize AI’s potential to transform the contract management process and support their business growth. At Icertis, we continually look for opportunities to apply AI to the use-cases where it will be most effective – especially high-scale, data-driven business challenges, setting the bar for how AI can be effectively infused in the business process.

Our AI-infused platform enables users to make better decisions during procurement negotiations –  first by recommending optimal contract language based on best practices from other related contracts and secondly, by surfacing historical performance data from suppliers, allowing businesses to avoid unnecessary risks during selection and contracting.

Icertis also just announced our new ICM Obligation Management application, which uses the power of AI to automatically identify and track obligations throughout the life of a contract. This extends the benefit of ICM after contract execution since insights about met and unmet obligations for each of your suppliers is critical when it comes to subsequent contract renegotiations and renewals.

We plan to add to our AI app portfolio in the coming months – stay tuned.

“16 percent of participants are currently using AI in their procurement system”

There is room for growth and innovation in this space and it’s really exciting to see that businesses are aware of the impact AI can have on improving their key processes.

Looking ahead, I believe AI will eventually be combined with blockchain networks to create even greater business value from contract management. We’re currently working on ways to apply this exciting technology with select customers on solutions that allow them to utilize smart contracts in a consortium blockchain. Applications vary from ensuring contract terms compliance to enable ethical, secure and environmentally safe sourcing to more transparent and agile supply chains.

If you would like to learn more about enterprise contract management and its role in sourcing and procurement, contact Icertis today.

Contract-centric Sourcing: A New Paradigm

Sourcing organizations need to move faster than ever to assess and secure vendors. The multi-step process of securing a vendor is time-consuming and prone to leakage and risk. Leveraging contracts and relevant data is crucial for any sourcing organization that wants to improve time and leakage outcomes. In this eBook, we examine how organizations can overcome these challenges by bringing contracts to the center of the sourcing process.

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2018-11-06T07:19:46+00:00

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