Transforming Services Procurement - The AI Driven Path to Creating More Business Value

The landscape of services procurement is undergoing a significant transformation, accelerated by the integration of artificial intelligence (AI) technologies. This shift is enabling businesses to create more value across services contracts, enhance user experiences when buying services, and streamline end-to-end processes.

Artificial Intelligence is becoming an invaluable tool in the procurement of services. Traditional procurement processes often involve manual, time-consuming tasks that can be prone to human error and limit procurement’s ability to focus on strategic initiatives. AI driven procurement, on the other hand, can automate these processes, providing greater accuracy, efficiency, and insights.

Our recent roundtable event explored the state of the market and, and the specific challenges faced by organisations' as they look to transform how they procure and measure value from service contracts. With procurement leaders attending from organisations representing a variety of sectors, it was a unique opportunity to share expert advice, best practice, and to understand what innovation looks like in procurement solutions, as leaders look at how to integrate AI within the services procurement workflow. In general, the message was clear. Everyone can see the benefits, but there are key challenges to overcome.

Benefits of leveraging AI in Services Procurement

The adoption of AI in services procurement can offer several benefits:

Enhanced Decision-Making: AI algorithms can analyse historical data and predict future trends, helping procurement professionals make more informed decisions.

Cost Efficiency: By automating routine tasks, AI reduces operational costs and frees up human resources to focus on strategic sourcing activities.

Improved Negotiation Power: AI can provide detailed insights into market conditions, supplier performance, and pricing trends, empowering businesses to negotiate better contracts.

Risk Mitigation: AI can identify potential risks in the supply chain, allowing companies to proactively address issues before they escalate.

Services Procurement Challenges

Despite the numerous benefits of transforming service procurement solutions and implementing AI, there are key challenges for organisation’s to solve:

Limited ability to capture real time contract performance information at an SOW deliverable level within the Enterprise Resource Planning (ERP) platforms

Time consuming and inefficient processes to guide users through a scope development processes, especially for smaller SOWs

Difficult to provide users with "best fit" supplier recommendations using existing systems to enable a move from "direct awards" to "competitive bid"

5 key focus areas for better Service Procurement Strategies

Move from "Direct Award" to "Competitive Award" - the key value opportunity to enable better cost and quality is to move strategic sourcing from direct award to competitive award, at scale, but without adding complexity to the process or reducing cycle times. This is a key AI opportunity. (on average adding a second supplier to create a completive bid creates 20% savings vs. direct awards)

Create a “Digital Front Door” - misclassification and “rogue” spend often happen because of complicated or slow processes. Creating a single "Digital Front Door" for users to triage new workforce resource requests is a top priority to simplify the process and enhance value.

Focus on Change Mangement – A dedicated focus on user adoption and change management is required to mitigate end users going "out of process". The real focus should be on creating “ease and simplicity” throughout the process.

Review the Business Case for Dedicated Technology – Frustrated with using enterprise systems not custom built, More organisations are now looking at needing dedicated tech, that leverages AI, to optimise value from Service Procurement strategies.

Get better visibility of Supplier’s “total” Capabilities – There is waste and missed opportunity for supplier consolidation because of the lack of visibility of supplier’s capabilities, beyond the projects they are utilised for today. This presents a significant opportunity to build smaller/focused PSLs with better negotiated rate cards, making it easy for end users to access the best suppliers every time.

Get in touch

Guidant Global provides access to a global gateway of talent, services, tools, and trailblazing innovation that transforms workforce complexity into custom strategies. If you would like to explore the use of AI in services procurement, get in touch with our team of workforce experts.