Procurement 2025: Exploring the Future of Big Data in Procurement
Since its inception, the term “big data” has meant many things to many people.
Conceptually, it’s been marked by the 5V’s: Volume, Velocity, Variety, Veracity, and Value. The first four V’s describe the data itself, while the fifth V adds the fuel to the hype: Value. The value of big data is in its ability to drive smarter and more accurate business decisions.
But what does this mean for the future of procurement?
For years, procurement analytics has been achieved through collating historical spend, contract, and supplier information against transactional data streams, and manually enriching this output with spend categorization. This, more or less, has been the driving principle behind most Procurement Spend Assessments and remains a viable solution to assess enterprise consumption patterns.
But as big data technologies continue to penetrate the procurement landscape, the possibilities become more and more endless. Today, we explore three (3) outlooks for big data in Procurement:
1. Enhanced Sourcing Execution and Decisioning. For the modern procurement department, data serves as the foundation for strategy and helps transform functional insights into a true hub of intelligence and performance excellence. Big data will only reinforce this mantra by providing procurement organizations with more power than ever. More specifically, big data integration and processing will extend itself into underutilized data-sets, integrating “dark data” with not only spend analytics, but the sourcing execution and decisioning process. Imagine a procurement environment in which:
- Supplier performance, risk analysis, and current events are integrated into a sourcing decisioning process.
- Supplier cost proposals are effectively collated and leveraged against your company’s market intelligence to provide real-time market trends and executable insights.
- Relationships are agile, resulting in improved stakeholder engagements and efficiencies are surfaced in opportunity identification.
2. Proactive Contract Management and Discovery. The concept of the “black hole” is derived from theoretical physics. Stephen Hawking’s work on the black hole suggests that once pulled past an event horizon, information is lost. In procurement, Contract Management is the epitome of this theory. While many companies invest heavily in contract management systems, these repositories are generally unintegrated and often-times, unreliable. Developments in more sophisticated Artificial Intelligence (AI) will:
- Automate extraction of key contract data and information
- Alert business leader of impending contract expiration
- Allow for rapid search of contract terms and clauses
- Monitor live transactions, as-they-happen, to ensure contract governance (i.e. cost, lead-time, etc.)
3. Parametric Pricing Models Based on Predictive Analytics. Access to cutting-edge technologies will transform procurement roles and responsibilities. Companies will steer away from reactive cost models, and employ strategies that harness actual conditions, in correlation to market trends and anticipated demand patterns.
As technologies continue to improve, these outlooks are only the beginning. The challenge lies in identifying analytics tools that deliver useful procurement intelligence, while fully integrating with e-procurement platforms for maximum efficiency.
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