Other parts of this series:
- Continued evolution in procurement means even greater benefits for insurers
- Identifying key suppliers, razing silo walls critical to reshaping insurers’ procurement function
- Digital technology investments needed by insurers to reshape their procurement function
- Advanced analytics can be the foundation of insurers’ efforts to reshape procurement
Highly anticipated advancements in digital technology are expected to play a critical role in reshaping insurers’ procurement function, allowing it to facilitate its organization’s strategic goals. Let’s examine three of the most important advancements that insurers already should be at least investigating: cloud computing, the Industrial Internet of Things (IIOT) and cognitive computing. All are expected be at the root of insightful procurement spends in the future.
Cloud computing will in my view be key in facilitating the virtual connection with the world external to the insurer. Its benefits extend beyond those it historically has provided, such as reduced operational costs, process and technology standardization and quicker access to new functionalities. It should also lead to enhanced usability and more effective use of content.
The full development of cloud computing’s capabilities, and therefore its advantages, are still in the offing. Still, some early adopters are realizing its benefits. For example, we have observed a chief procurement officer (CPO) of a consumer packaged-goods company have visibility into 150 should-cost models—a core piece of enriched content and the basis of a competitive advantage.
How should insurers begin their cloud computing experience? Accenture recommends:
- Aligning technology with procurement strategy
- Getting the basics right by standardizing process and technology.
- Applying cloud computing technology wherever possible in the procurement process to, for example, enhance analytics capabilities and to increase user-friendliness.
Another technological advancement that we foresee having a significant impact on the procurement function is the IIOT—a universe of intelligent industrial products, processes and services connected through sensor-driven computing. In this new universe, the procurement function will be positioned to effectively trace products and materials far more efficiently and rely more on analytics to improve decision-making.
The IIOT also will allow companies to rethink how some fundamental procurement organization processes should operate. For example, given the promise of the IIOT, our report, Procurement’s Next Frontier, shows that company leaders are questioning whether:
- A purchase order will be a required document.
- An embedded sensor would allow an item to be auto-receipted.
- An auto-receipted item still would require an invoice document, or could the auto-receipt trigger a check against a digital contract for appropriate pricing and then release payment automatically.
Payment could be in digital currencies.
In addition, we anticipate that cognitive computing–intelligent and self-learning computers that can perceive the world through audio/video sensors—will become trusted and specialist advisors of sorts, augmenting complex decisions and even operating autonomously under human supervision.
As cognitive computing capabilities advance, an organization’s routine, manual work increasingly will be handled by intelligent virtual agents in the next five to seven years, our procurement research report indicates. Insurers’ increased reliance on cognitive computing should lead to reduced costs, improved quality and faster and better decision-making.
Some of this work could include:
- Finding relevant suppliers.
- Setting up and conducting requests for proposals.
- Evaluating suppliers’ performance.
- Order fulfillment, report generation, reporting and catalog maintenance.
- Creating cost models and industry cost curves.
Some companies already are implementing and using key components of this technology. For example, we have seen a major oil and gas company test the use of an intelligent virtual agent to largely operate its supplier help desk.
With all of these upcoming technological advancements in mind, here are the five apps that we believe insurers should invest in developing, as they are poised to become the foundation of technology in procurement:
- A virtual collaboration room that allows the insurer to interact with its strategic suppliers and fosters innovation throughout the virtually integrated enterprise.
- An app that connects the insurer with the supply market and supports tendering, performance assessment, supplier discovery and supplier interaction.
- A central place, driven by social media, where category managers can find category-specific and relevant market intelligence.
- A cloud-based set of pre-approved private and public shops from which the internal customer can select goods and services from preferred suppliers—in line with company policies and contracts.
- A standard dashboard that provides a wide variety of data and allows procurement and business users to solve specific problems or answer questions.
Next time: The importance of analytics.