Businesses that lead the way in innovation and technological implementation are reaping much greater rewards than those that take a less-focused approach across a wide range of industries, according to Accenture’s Future Systems Report.
While the research was done before the coronavirus disruption changed the business landscape, the report has lessons for C-suites now that companies’ top leaders are relying on procurement more than ever to stabilize supply chains, improve insight into spend and automate processes if staffing levels can’t be maintained.
The report found that the top-performing 10% of companies are already recording 15% greater revenues compared to those in the bottom 25%, which the company referred to as “laggards.” That revenue gap is projected to widen — laggards are set to miss out on nearly 50% of potential revenues by 2023.
And while most advanced technology implementations span the entire business, the report contains a number of key takeaways for procurement executives to supercharge their functions and add even more value to their organizations. Top-notch future systems are complex, but all share traits of being boundaryless, adaptable and “radically human,” the report said.
Accenture’s paper was generated using case studies, interviews and surveys alongside machine learning and economic modeling, pulling together data from more than 8,300 companies in the consulting firm’s database. The companies ranged across 20 countries and 20 different industries, with approximately half focused on information technology and all with a value of at least $500 million.
Being more resilient in the future
Future systems that are boundaryless start in the cloud, laying the groundwork for future growth and making data systems and the overall business more resilient to changing market conditions. Transitioning to the cloud also helps businesses eliminate dependencies that are common in legacy data systems.
Both of these aspects are vital to modern supply chain management, where political or environmental disruptions require procurement professionals to be more agile than ever, often dealing with a multitude of suppliers that are dealing with disparate data systems and challenges. Boundaryless systems also open facets of digital transformation technologies that are familiar to procurement functions like blockchain, advanced analytics and process automation to areas of the business that can leverage them in creative new ways to increase efficiency and further reduce costs.
As businesses adopt and proliferate future systems, adaptability must be kept in mind to ensure opportunities for growth are not missed due to a lack of coordination or inability to scale. Technology like AI and infrastructure-as-a-service can help dovetail departments with different data systems and practices toward much closer integration and better data hygiene, allowing cross-functional decisions to be made using consistent, high quality data.
While procurement departments may be familiar with and comfortable using AI for routine business tasks, they will need to help lead the charge in explaining and showing other departments that AI can be understood, reliable and allow more resources to be devoted to strategic tasks by automating routine workflows.
What does ‘radically human’ technology mean?
Procurement departments are often at the forefront of advancing technology adoption within an organization. As such, they are vital components of helping shape “radically human” future systems and stand to be one of the biggest beneficiaries of streamlined processes.
Radically human systems put users at the center of information systems, implementing tools like natural language processing and Amazon-style buyer portals to make human-to-machine interactions intuitive and streamlined, the report said. Data infrastructure also must be accountable to designated managers or teams as part of a broader culture of accountability within the organization; there should be no question about who is responsible when data is missing or isn’t delivered in a timely manner.
Future systems leaders are also some of the first to experiment with new technologies to familiarize their teams and gain an edge on competitors — another area where procurement professionals can take a leading role.
Accenture encourages all businesses to act more like the top 10%, offering these steps to help reach that high bar:
- Adopt technologies that make the organization fast and flexible —More than three-quarters of future systems leaders (83%) say it’s essential to de-couple data from legacy IT infrastructure. Advances like microservice architecture, where applications are broken down into discrete services and application containers that separate some programs from the broader system to allow rapid testing and refinement, are favorite tools of leading organizations.
- Get grounded in cloud computing — Almost all leaders (95%) have adopted cloud services for their data operations, compared to just 30% of laggards. Cloud computing allows formerly siloed databases to be combined in novel ways to help the business, and help ensure future scalability to accommodate growth.
- Recognize data as being both an asset and a liability — Real-time data capture and analysis was ranked the most important advancement for improving business process surveys for the report, but data quality is vitally important. AI-driven decisions can be harmful if they employ low-quality data, and other functions are less likely to take data-driven changes seriously if they are not confident they are getting reliable information. While 90% of leaders take steps to ensure data quality, only 40% of laggards do the same.
- Manage technology investments well across the enterprise — Measuring the impact of technology changes throughout the business is essential to continuous improvement, keeping what works and winding down what doesn’t. Almost all leaders (94%) systematically track ROI for automation processes implemented within the business, compared to less than half of laggards.
- Find creative ways to nurture talent — Responses from leaders make it clear that what is cutting-edge today is unlikely to stay that way for long. They anticipate that half of most workers in and outside of IT’s skills will be obsolete within three years. Leaders implement experiential learning and apprenticeship programs at three times the rate of laggards, and many employ AI systems to guide employees toward the most impactful courses for their specific needs or virtual reality systems for training on tasks or processes too dangerous to demonstrate in person.
“Today’s C-suite is making significant investments in new technologies,” the report said. “Yet they are not necessarily achieving full value. They’re deploying technologies in pockets, or silos, of their organizations, without a strategy for scaling the innovation from these technologies across the enterprise. Unable to scale their innovation, they’re not realizing the full benefits of their technology investments.”