The future frontier of Procurement: Realtime insights and predictive analytics

I’ve just read two interesting blogpost of Joe Payne about predictive analytics in procurement.

Although I definitely see the value of  'predictive analytics', I think the definition itself for the content of his blogposts is to narrow. It’s just scenario 3 in which there is something about 'predictive analytics': ‘provides a forecast out for the year based on’.  

I think 'predictive analytics' is (a very important) part of a greater whole. At the same time I must admit I haven’t got the right label for that ‘whole’, but it could be something like: ‘Real time insights and Predictive analytics in Procurement’, ‘Procurement Excellence 2.0’, ‘Managing the now and the future of spend’, ‘Insights based decision making for now and the future’, and then probably a somewhat catchier name…

But as you see, the key elements are mainly now, future, decision making, realtime insights and predictive. What I want to make clear with those non-catchy names is that a new version of procurement is around in which Operational decision making in procurement is based on realtime information and strategic decision making is based on predictive analytics.

I named it a ‘new version’, but ‘upgrade’ is perhaps a better word, because most traditional procurement parts are still necessary, or better: they are the building blocks for the upgrade (sourcing strategy, purchase to pay, spend analysis, category tree, master data management).

The change for the procurement department will mainly be in their way of working: how to interpret the information and how to use it to make better decisions. Cooperation with IT experts, content expert (to define which information is useful) and analytic experts to assure the right input/output, software selection and maintenance, master data management is a prerequisite in order to succeed.

It is something new (at least for procurement) and it will cost some time and money to implement it, but it will become the new frontier in procurement. And as Joe Payne mentions in his blogpost: ’ The investment will be substantial, but so is the payback.’

Predictive Analytics and the Future of Spend Management (Joe Payne)

Predictive Analytics and the Future of Spend Management Part II (Joe Payne)