How the Intelligent Enterprise Simplifies Procurement
Everyone needs the newest bright, shiny object. Or at least that’s the message we often hear from commercial advertising. It’s essentially the jewelry industry’s marketing strategy, only repackaged in a different velour box.
In enterprise software, however, a new product’s flash and sparkle can sometimes obscure its true selling point: How does it create value for my organization and simplify my work and that of my colleagues?
As businesses adopt increasingly sophisticated analytics capabilities, mobile technologies, and cloud-based applications, they accumulate vast troves of data — more than they’re equipped to leverage effectively. Compounding the problem is that these data sets frequently reside on systems that don’t “talk” to each other. With the data left unexplored, revenue opportunities lie untapped.
Welcome to the intelligent enterprise, where cognitive applications empower employees and accelerate competitive advantage by unlocking the value hidden away in data, drawing meaningful insights, and allocating resources accordingly.
But how?
Aided by emerging technologies like artificial intelligence and machine learning, cloud-based applications are transforming the enterprise through predictive analytics. By collecting, normalizing, enriching, and connecting data that was previously siloed, these applications can recognize unseen patterns, foresee changes in demand, iron out manufacturing bottlenecks before they arise, and even replenish raw materials based on past purchasing patterns.
At the same time, predictive analytics can simulate the impact of potential options — millions of them in mere seconds — and direct scarce resources toward optimal outcomes. In short, enterprise software is beginning to shoulder many of the tactical activities that once preoccupied procurement and supply chain professionals, freeing them to focus instead on more strategic responsibilities such as shoring up their supply chain’s resilience, managing third-party risk, and cultivating new sources of innovation. Thanks to digital transformation, procurement is broadening its role from generating cost savings to fostering collaboration across the value chain and, in the process, fueling growth.
Meanwhile, just as procurement networks spur collaboration and create value among trading partners, they produce similar benefits within organizations when integrated with other business-process applications. Consider, for example, the benefits of integrating SAP’s S/4HANA business suite with SAP Ariba’s business network and the cloud-based procurement applications that underlie it. Not only do organizations reduce the operational cost of exchanging procurement documents among buyers and suppliers, but they optimize efficiencies in the source-to-settle process by digitizing the exchange of documents and automating their conformity to compliance requirements. And with S/4HANA, they can transform their data assets into actions and create significant value by making smarter, better informed decisions that drive innovation and growth.
As organizations integrate their internal business-process applications with the digital networks they rely on to collaborate with external trading partners, they heighten their ability to respond to — and even anticipate — changing market conditions. These integrated systems gain critical insights from every successive transaction and apply them with increasing accuracy toward subsequent ones. The upside for the professionals who manage these systems, besides cost savings, is the ability to divert resources to more strategic purposes. That’s why the intelligence enterprise is about much more than dollars and cents. It’s about marshaling vast troves of data to glimpse tomorrow’s business needs today – and aligning limited resources, both human and otherwise, to stay ahead of them.
As just-in-time manufacturing becomes increasingly widespread, the intelligent enterprise takes on greater importance than ever — particularly for those organizations with global operations (or aspirations). Every few weeks, it seems, another well-known international brand experiences a product shortage, causing damage to its reputation and stock price. In many instances, though, cloud-based procurement networks could might averted the problem.
Automotive manufacturing provides an excellent illustration. Mechanical breakdowns threaten to sideline a production facility. Or severe weather affecting a key supplier forces a scramble for substitute parts. Or labor unrest at a cargo port delays the shipment of electronic components from overseas. By the time any of these breakdowns occur, it may be too late to draw up a backup plan. A loss has already left a dent in the automaker’s income statement and that of its dealerships downstream.
By contrast, the intelligent enterprise — equipped with real-time visibility across the supply chain thanks to digital networks and cognitive applications — can pinpoint issues before they surface, identify optimal alternatives, and pursue them, in many instances, without the need for human intervention. Financial risk plummets, while operational resilience soars and competitive advantage skyrockets. But as enterprises embrace cognitive solutions, increasingly relieving their human managers of tactical duties, will these newly freed-up professionals reimagine their roles around more strategic objectives?
What a wonderful problem to have as the intelligent enterprise takes shape around us.