SIG University Certified Sourcing Professional (CSP) program graduate Aaron Eleazer shares how the advancements of AI technology provide an exciting and innovative space that has an important place in how business is done and improved upon and also shares the concerns associated with it.

Artificial Intelligence was quite an exciting presentation. It’s such a big part of our daily lives that I wanted to write my final paper on the subject and hopefully bring a different light to it. I want to write a few paragraphs on the pros and dangers of artificial intelligence. I say threats instead of cons because this technology is moving so fast; not even the creators of it have any idea what could happen.  

The first SIG conference I attended was back in 2018 in Washington, D.C., and what I found intriguing was that the focus of all the speakers was on Blockchain and AI. I didn’t know much about either, but soon thereafter, my director started talking about AI capabilities in contracting. AI or machine learning is excellent for running mundane tasks like searching for specific contract clauses.

Quickly identifying or comparing two legal documents for similarities or contrasting clauses is a tremendous step forward in the evolution of process improvement, effectiveness, and efficiency. This same technology is used in invoice processing, where it can read, analytics, and process submitted invoices quickly, which eventually means the end or a considerable reduction in the resources needed from a BPO for that specific service which the AP function lends itself well to.  

Accounts Payable function is fundamental to the operational and financial success of many organizations across the globe. Yet it continues to be viewed as a cost center.

It was never uncommon to hear of documents buried in paper trails, missed discounts and strained supplier relationships, etc. But recently, the pandemic added to these woes and proved that the ways in which many Accounts Payable teams still operate are not just dated and costly, but may also put the health and safety of employees at risk.

Stuck in the dusty alcoves of the back-office and bogged down by a myriad of time-consuming, manual tasks, an un-optimized AP Function is host to a slew of redundancies, avoidable costs, and frustrating friction areas.

Not recognizing and dealing with these redundancies will become increasingly costlier to businesses – competition is already at an all-time high and teams are being asked to deliver more every year. And in addition, issues like climate change mean that uncertainties and global disruptions will only become more frequent with time. In this backdrop, organizations that still haven’t got on the AP Automation bandwagon need to ‘level up’ to survive.

Fortunately, as per the latest bodies of research, these problems aren’t just easily rectifiable but they’re also ones that are likely to pay the most dividends once solved. Case in point: Gartner’s research found that AP (APIA in specific) is one of the best applications of artificial intelligence in a business, both in terms of business value and in terms of feasibility.

Procurement is entering a new era of increasing complexities in which traditional measures of success such as cost savings are no longer the sole focus.

Instead, and as reported in the Deloitte 2021 CPO Survey, "changing business dynamics and increasing layers of complexity" and corresponding "expectations" are transforming the way the industry thinks and acts.

For example, new and more challenging areas such as "climate change, geopolitical stability," and "increasing societal expectations" are now part of the new equation.

The introduction of these emerging variables is causing organizations to re-examine their digital transformation strategies, including how Artificial Intelligence (AI) can help them address the industry's challenges.

The SIG Survey

In 2021 SIG surveyed 100 procurement professionals from Fortune 500 and Global 1000 organizations on digital transformation and AI in procurement.

Based on the results, it is clear that those responding to the survey believe that "procurement's priorities lie with how AI technology can streamline the roles and processes to deliver meaningful and sustainable results."

Unfortunately, and despite the opportunity for more significant gains, the survey reports that "several obstacles" make it difficult for organizations to "bridge the divide" between the promise of digital AI and the realization of its optimal benefits.

Crossing the Divide

Understanding the importance of AI and identifying the challenges with realizing its potential to redefine and empower procurement to achieve critical objectives is the first step to crossing the aforementioned divide.

Before any organization can do business with an external vendor, it needs to examine its data privacy protocol against new legal requirements. Recent legislations like General Data Protection Regulation (GDPR) in the EU and the California Consumer Privacy Act (CCPA) in the U.S. has cast a spotlight on the handling of consumer data, especially the way it is shared among third parties. Organizations of all sizes in every industry are upgrading the vetting processes to make sure that new vendors don’t bring additional risks.

These risk assessment processes contain several moving parts, and a mistake at any point along the way can jeopardize the result. The easiest way to pinpoint the holes in your organization's vendor vetting workflow is to review the entire process from beginning to end and examine the opportunities for data privacy lapses. Here are four common pitfalls to look for:

1. Overlooking Contract-level Details

Amid all the changes happening to the regulatory landscape, it’s easy to overlook errors in the language of your contracts. In a short window of time, contract language—on old and new agreements—needs to be updated to provide consumers with new legal protections and redefine business-to-business relationships with any party that touches consumer data. If contracts are being negotiated in that window, some terms might slip through the cracks and expose you to new risks.

What is your role and your day-to-day responsibilities? 

As CEO of a software SaaS company, I spend time with my leadership team focusing on the product and obsessing over the problems we're trying to solve for our customers. I focus on making sure all of our teams – internal product management, sales, engineering and customer support – are functioning at optimal levels. I also enjoy spending time with our customers, hearing about their pain points and how they're actually using the software we've built. 

What is something that you wish more people knew about sourcing and procurement? 

Sourcing isn't just about finding the right vendor or supplier, it's about understanding the problems business stakeholders are trying to solve. Very often I see teams obsess over the solution, its features and price, rather than focusing on the problem the stakeholder is experiencing. The best sourcing and procurement teams I've worked with are strategic in their approach and never lose sight of the pain points stakeholders have throughout the sourcing process.