The company, a leading provider of business commerce solutions, presents a bold view of the state of procurement in the future, asserting that the procurement function “as you know it will no longer exist in 2020.”
In 2020, according to the report, procurement will have evolved so much it will be “barely recognizable” because it will no longer be a discrete centralized function — it will be decentralized—or outsourced—“leaving leadership to focus on very different things.”
The report’s basic message is to get prepared—fast!
To prepare, the report has this advice for executives and managers:
- Cultivate a reputation as a collaborator and communicator who recognizes great ideas and can influence others.
- Imagine the infrastructure needed for such an organization, and lead the discussion that will shape it.
- Start measuring and reporting on procurement job performance by both current and future standards.
Collaboration is a recurring theme—indeed the report predicts that “collaboration reigns” in 2020. For example, companies will dramatically “increase their dependence on suppliers for products, services, manpower, expertise, and new ideas.”
The report says the task will be to tear down the barriers between procurement professionals, suppliers and internal customers in order to create contractual environments that enable innovation and collaboration.
The cloud will also force pricing transparency: “Market pricing for goods and services will become so transparent—due to e-sourcing, global trading networks, online communities, and procurement’s intrepid scrutiny into still cloaked categories—that negotiation will be a lost art.”
No negotiation? I can see the shudder going up and now down the spines of procurement professionals—but I see definite advantages to seeing procurement and spend management organization shrinkage.
More from the report: innovation will come from without and procurement outsourcing will “explode.” With growing demand for it “both the quantity and quality of third-party procurement services will increase dramatically by 2020. Their performance in many spend categories will surpass what can be done in house.”
On contracting the Ariba report says contracts will become motivational tools: “Beyond sharing risks and rewards in contracts, some project participants suggest they will accept greater risk in commercial relationships with critical suppliers by leaving out all the classic kinds of legal protections that can de-motivate suppliers.” Vested has sung that tune for some time now!
Many of the predictions in the report are right in the wheelhouse of the Vested framework on flexibility, innovation, collaboration, pricing and contracting.
But the neat thing is that you don’t have wait until 2020: The Vested future is now when it comes to all of that.