Edward O Donnell. The Digital Procurement Process

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1 Edward O Donnell The Digital Procurement Process How the Integration of Data and Analytics is Revolutionizing the End-to-end & Cognitive Procurement Process IBM Procurement Data Officer

2 Please Note: IBM s statements regarding its plans, directions, and intent are subject to change or withdrawal without notice at IBM s sole discretion. Information regarding potential future products is intended to outline our general product direction and it should not be relied on in making a purchasing decision. The information mentioned regarding potential future products is not a commitment, promise, or legal obligation to deliver any material, code or functionality. Information about potential future products may not be incorporated into any contract. The development, release, and timing of any future features or functionality described for our products remains at our sole discretion. Performance is based on measurements and projections using standard IBM benchmarks in a controlled environment. The actual throughput or performance that any user will experience will vary depending upon many factors, including considerations such as the amount of multiprogramming in the user s job stream, the I/O configuration, the storage configuration, and the workload processed. Therefore, no assurance can be given that an individual user will achieve results similar to those stated here.

3 The Digitization of Procurement Procurement functions are a rich source of data Accessing this data unlocks benefits $50B Spend Managed 148K Active Contracts 740K Purchase Orders 14K Suppliers Managed 22K Sourcing Events IBM Procurement 2M Invoices Supplier Selection Material and Labor Sourcing Supplier Relationship Management Cost Management Contract Management Supply Chain Risk & Social Responsibility Accuracy Speed Flexibility Innovation Quality Efficiency

4 Automation & HandsFree ramp up Evolution of IBM Procurement catalog strategy Journey Phase 1 Establish e- commerce & catalogs as backbone of order processing strategy 80% Phase 2 Transition content maintenance to suppliers via B2B solutions Phase 3 Revise strategy and eliminate use of Punch Out catalogs 78.9% 79.2% Phase 4 Implement analytics, and automation to the data flood 81% Phase % Behavioral Influencing concepts. 90% + 75% Percentage of hands-free orders Global Catalog Facility deployement GCF Hands Free Center of Excellence HFCoE

5 IBM Procurement Cognitive Journey Map Current Solutions in Development User experience journey Procurement Requisition New User Experience Trusted Buying Advisor Supplier evaluation & qualification Supplier IQ Supplier risk management Pricing negotiation Pricing IQ Supplier lifecycle management Contracting Blue Hound Deep supplier insight Dynamic pricing info Instant contract analysis Purchase User Experience Risk Insights Predictive risk mitigation info Simple easy engagements completed with speed Ability to use natural language, unstructured text & digital imagery. Highly personalized experience that learns over time Virtual Agent Assistant Client Transaction Support Procurement Experience Refined real time data to make quicker more informed decisions Maximizes preferred suppliers Tactical and administrative tasks automated to allow a focus on strategic and relationship management activities 5

6 Cognitive Procurement Assistant Trusted Buying Advisor The vision A mobile-enabled, smart, digital buying assistant which recommends appropriate & preferred products & suppliers to business users on the go. The disruption Allows users to specify their procurement needs through natural language, unstructured text & digital imagery, including active dialogue. IBM Catalog information Natural Language Classifier + + Speech to Text The result: Business utilizes preferred suppliers and users get a highly personalized experience that learns over time Demo link 6 Tool

7 Pricing IQ Dynamic Pricing Information The vision Collect and refine real time comprehensive market intelligence data to identify pricing trends by category or skill and recommend optimized price points The disruption Procurement Professionals freed from time consuming research and data aggregation Internal pricing trends External market intelligence + + Watson APIs The result: Procurement professional equipped with enhanced pricing knowledge for improved negotiations 7

8 Pricing IQ - Market Intelligence Advisor (MIA) Market Intelligence - market forces pressuring rates to go up or down? Services value added (% of GDP) in short term? Investments in IT? GDP growth according to capacity? Demand inflation for price increase? Inflation rate? Interest rate? Currency exchange rate? Unemployment %? Minimum wages? Employment in technology sectors and knowledgeintensive service sectors? Demo link 8

9 Agile Development with Progressive Enhancements Crawl Walk Run Start with Category with strong taxonomy Good market insight and benchmarking data Technical Services Large spend/strategic category Connect pricing data with market benchmarks Leverage data to identify trends in pricing new insights in context of historical spending and market sentiment/price Use trends to start building predictive model Correlate predictive pricing with macro data points and indexes Infuse cognition a smart pricing system Predictive pricing leveraged to secure competitive advantage Optimal time to buy Deploy across broader set of categories across the portfolio Trusted buying advisor for Category and Sourcing teams 9

10 IBM Supply Chain Risk Insights Predicting Risk with Certainty The vision Monitor natural, social, and economic supply chain disruptions to make fast informed decisions in the most critical situations when every minute counts. The disruption Hyper-localized insights that are now built into supply chain models. Supply chain operational data Twitter The Weather Company Local events + + Watson APIs The result: Cognitive event monitoring that saves time and money focusing efforts on true impacts to your supply chain 10

11 Procurement Agreement Risk Manager (Bluehound) Instant Contract Analysis The vision Accelerate contract analysis by identifying clause similarities and deviations from IBM standards The disruption This solution manages large volumes of unstructured written data with leading-edge Watson technology Differing contract language + + Natural Language Classifier Ontology builder The result: Maximize T&C s to IBM s benefit, and reduce overall risk Demo link 11

12 Virtual Agent Project for Internal Help Desks Business objective Reduce operational cost by driving to intelligent self service channels Approach Cognitive Chat Agent that can identify issues and drive to resolution Delivery - In Process Early stage engagement for internal end user help desk Opportunity Once core components are working leverage for other internal and external channel. 12

13 Cognitive Spend Enrichment 13

14 Watson Analytics in Procurement Key Values Predictive and Prescriptive Analytics Customized Reporting Real-Time Data Maintenance Common use cases Payment Term Analysis Compliance Analytics Master Data Management Analysis Transaction Automation Analysis Risk and Fraud Analytics 14

15 Explore and Predict Watson Analytics 15

16 Impact Analysis using Predict Module in Watson Analytics 16

17 Key Take aways Big Data and Analytics are foundational in delivering contribution from hidden insights Intelligent tools and processes elevate the Procurement Professional Cognitive Procurement brings a new Era to our profession an opportunity to take outcomes to new levels of excellence 14

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