Don't let digital transformation become a meaningless buzzword

By Chris Wood

If you are using technology to radically transform your business, you understand the mechanics of digital transformation. Digital transformation is predicted to fundamentally change how procurement services are delivered in the next three to five years, with artificial intelligence, robotic process automation, blockchain, the Internet of Things and 3D-printing being just some of the new and powerful tools available to purchasing and procurement teams.

However, we risk turning these new technologies into meaningless buzzwords unless they are used in line with a digital strategy that has been designed to change our business or the customer's experience. In most cases it is the implementation, and not the digital system itself, that determines the success or failure of a 'digitised future'.

The term 'digital' can be a very distracting buzzword: while there is no doubt that the efficiency, scale and flexibility offered by digital solutions all demand attention, without a goal in mind we can lose sight of what makes an existing business model work.

Therefore, a digital strategy is really about two things: firstly, efficiency - reducing the cost of business by digitising processes and increasing either security or output; and, secondly, revenue - unlocking new lines of revenue that may not have existed in traditional models. In both cases, the initial investment is the hardest part, as digital conversion can be very costly and does not happen overnight.

The benefits of a solid digital strategy and digitisation in the procurement sector are countless. Procurement relies on a number of transactions taking place, in some kind of sequence, between parties that trust each other. In this context, digital solutions can help show the many steps involved in a transaction and even accelerate the process.

Take, for example, a basic transaction, such as purchasing goods within a supply chain: done digitally, the transaction would be logged and visible to both parties, the volume and value would be agreed upon instantly, the payment would be verified on the same platform and the goods would be released. Finally, the reconciliation of the whole transaction would be clear to both parties in almost real time. All of this could be done at the click of a button and on a mobile device. Assuming that you have in place the systems that support each of these previously fragmented processes, a simplified, faster execution would be the result in every scenario.

Looking ahead, new digital platforms will influence how parties connect during the purchasing, order monitoring and payment processes. It is essential that we get the wider ecosystem (payer and payee) on to systems that can talk to each other to enable this efficiency.

Digitisation can add much-needed security to payment transactions, as we move away from physical card transactions to digital tokens or virtual cards.

Virtual payments also allow for far greater control when it comes to setting the amount to be paid, identifying who can authorise the payment and agreeing on timelines. Virtual cards or virtual payments can be created for a specific need, where the validity date and amount can be defined. Furthermore, the data generated by digital payments and digital platforms could lead to better ordering, stock management, payment management and more.

It is thus less about what will drive the digital shift in procurement and more about how these technologies will enhance the overall procurement experience and deliver results for our organisations.

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