Why AI and Sustainability?
Our S2P expert Ewald Schaap recently analyzed five leading research reports. This included the report by Gartner, The Hackett Group, and Ardent Partners. This analysis revealed four clear trends that strongly influence the Source-to-Pay and business landscape. During our knowledge session in November, we zoomed in on two of these trends: AI and sustainability.
In this blog, we go one step further. We'll briefly share what these trends mean, but will mainly discuss the practical application within your organization. How do you make your business processes AI-proof? And how do you turn sustainability into concrete results? We give you insights and practical tools to successfully integrate AI and sustainability into your daily processes and strategy.
Trends: how do I interpret them?
When we look at trends, we often use the Procurement Hype Cycle by Gartner as a guide. This graph shows what the current trends are and how you can interpret them as a purchasing or finance professional. This gives us insight into the risks and opportunities associated with an innovation or trend. The Procurement Hype Cycle shows which five phases a development goes through:
- Innovation trigger:
The start of a development. A new technology is generating a lot of interest. This phase is about curiosity and the first explorations.
- Peak of inflated expectations:
The technology is receiving a lot of attention and raising high expectations. The development of generative AI is in this phase. Development is rapid, but the tools and techniques still need to be refined.
- Trough of disillusionment:
After the hype, reality follows: early experiments produce mixed results and enthusiasm is waning. For generative AI, this can mean that organizations struggle with reliability or managing expectations. Nevertheless, this phase is essential for improving quality and stimulating sustainable innovation.
- Slope of enlightenment:
Demand is stabilizing and early adopters are starting to take advantage of the first benefits. More and more organizations are discovering how they can apply the innovation in a practical way. This is the time when opportunities are converted into strategy and value can be realised.
- Plateau of productivity:
The technology is mature and widely used. It is clear which suppliers offer effective solutions. Organizations have a good understanding of best practices and implementation has been streamlined.
How to put AI on the map in your organization
AI is still in the early stages of the Procurement Hype Cycle. As independent Source-to-Pay consultants, we expected the integration of AI into S2P applications to be faster. In practice, however, it appears that the complexity of data and the size of business processes slow progress.
Drafting a business case and convincing the internal organization to embrace AI comes with its share of challenges. However, there are a number of elements that you can take your internal organization with you to prepare your business processes for AI.
- Strategy and Vision
Leading companies often have a clear vision of AI and how it adds value to their business processes. They set measurable goals, such as process optimization, cost savings or customer satisfaction. Setting up a multi-year roadmap that focuses on AI helps to ensure focus and priority.
- Innovative company culture
An innovative culture within the organization is a breeding ground for integrating AI into business processes. Companies that are open to AI as a means of improving their products or services are experimenting with this new technology. Teams are given the freedom to test and learn, allowing them to arrive at new insights and optimizations more quickly.
- Knowledge development
AI requires new skills. Leading companies are investing in training programs and training to prepare their employees for the future. This not only builds knowledge, but also provides support within the organization.
- Strong data management
Companies that have their data well organized in one central system often have an advantage. This is because this allows them to analyze trends, optimize reports and innovate in a targeted manner. A solid data management structure makes AI projects feasible and scalable.
Organizations combine a clear strategy with innovation, knowledge development and strong data management to put AI on the map. This not only offers benefits such as process optimization and cost savings, but also strengthens the organization's future-proofing. The practical translation that is needed here is also seen in sustainability ambitions. With the right approach and tools, companies can achieve their goals in both areas.
Sustainability as an integral part of business operations
More and more, sustainability is becoming a necessity. New regulations, such as the CSRD (Corporate Sustainability Reporting Directive) and ESRS (European Sustainability Reporting Standards), companies are imposing increasingly stringent requirements to be CO₂ neutral by 2050. Stakeholders expect organizations to take sustainability seriously. Sustainability also offers an opportunity to save costs and distinguish your organization from competitors.
Nevertheless, we notice that many organizations are struggling with practical implementation. Although the majority of companies set ambitious goals, there is often no concrete action to achieve those goals. Annual reports show limited investments. And sustainability sometimes seems like a dot on the horizon, rather than an integral part of daily business operations. How can organizations achieve their sustainability ambitions?
- Concretize goals with KPIs
Translate your sustainability goals into concrete KPIs and action plans. Procurement policy is a good starting point: selecting sustainable suppliers is important, but only effective if you clearly define what “sustainable” means and how to measure it.
- Insight and tooling
Access to reliable data is important to provide insight into sustainability performance. For example, S2P tools with ESG modules, such as EcoVadis or IntegrityNext, help assess suppliers for sustainability. They also support in analyzing spend based on CO2-emissions. With insight into your data, you can focus on improvements.
- Behavioral change in the organization
Sustainability requires behavioral change. With guided buying, you can encourage employees to make sustainable choices. In addition, you can train purchasing teams in applying sustainability guidelines in sourcing and contract negotiations.
- Experiment and make a quick impact
Start with a pilot project where the impact is quickly visible. This helps to gain trust within the organization and create support. Then gradually expand to other processes and categories.
With the four tools, you can also get started to give sustainability a central place within your organization. There are a number of good practice examples of organizations that successfully apply sustainability and thus not only improve processes, but also stimulate green innovations. Over the past year, for example, Intergamma introduced more sustainable paints and focuses St. Antonius hospital focuses on waste reduction by focusing more on recycling.
Your challenge in good hands
Going along with trends such as AI and sustainability is more than just nice words on paper. With these tools, you can turn these developments into concrete actions within your organization. Our advice: get started with it, experiment and find out what best suits your organization.
Are you still facing challenges, such as preparing a strong business case? We are here to help you. Feel free to contact us and find out how we can further support you.
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