In recent months, we at Procurement Leaders hosted our inaugural Ovation event in Frankfurt, a gathering designed exclusively for CPOs of our membership community. It was quite an occasion, with speakers that included Andy McAfee, a professor from the Massachusetts Institute of Technology, and innovation guru and author Charles Leadbeater.
Neither of the speakers knew much about procurement, but this didn’t matter. They talked about issues that will have a major impact on procurement and business in the years to come.
McAfee in particular got delegates thinking. In his best-selling book The Second Machine Age he argues that the pace of development in data, computing and artificial intelligence is reaching such a level that it will easily outstrip the importance of the industrial age. He says that while the industrial age freed humans from the limited power of their bodies; the second machine age will free us from the limitations of our minds.
He made a convincing argument. IBM’s Watson computer thrashing America’s best human Jeopardy! players, Google’s driverless cars, technologies being used to diagnose disease more effectively than human doctors…
It’s all a bit scary and futuristic, and most people’s initial reaction is what will it mean for employment levels? After all, if humans no longer need to think, there really isn’t much left for us to do. (I would argue creativity, but then perhaps I’m biased and McAfee did point to tech-company Narrative Science whose software is able to write articles that are indistinguishable from those written by a human.)
More importantly for CPOs, is what impact it will all have on procurement? The answer to this is both refreshingly simple and maddeningly complex: it will impact everything.
Data must become central to everything we do, and decisions taken by gut instinct must become a thing of the past (procurement has direct access to huge volumes of useful data, both external and internal). New suppliers and new technologies must be embraced, and new risks taken on board. The corporate world has to embrace with open arms the type of personality that is driving this revolution, and they aren’t typically the type of personality used to wearing a tie.
McAfee talked about IBM’s Watson at some length, which was brave because both its recently retired CPO and his replacement were in the room listening.
As it turns out neither had an issue with anything he said, rather they developed the thinking still further and it’s public knowledge that Watson is already being deployed in certain procurement scenarios.
How long until procurement itself can be automated, I wonder.
This column appears in Issue 52 of Procurement Leaders Magazine, published Sept 3rd. Find out more here.