Touching on Technology

Posted on May 19th, 2015 by

In the second week of May, the Wall Street Journal ran an article by Vipal Monga entitled “The New Bookkeeper is a Robot”.

One of the case studies involved Pilot Travel Centers, where Treasurer David Clothier looked back five years to a pre-software operation in which 80 clerks and salespeople spent a combined 3,200 hours a week tracking and paying for orders for thousands of goods (from chocolate bars to diesel fuel), typing orders into an accounts-payable database and printing out thousands of cheques to put into envelopes, add postage and mail them off to pay suppliers.

The reminiscence led to the memorable observation: “It was just awful: there were humans everywhere!”

Well, Jean-Paul Sartre famously said: “Hell is other people.” But we don’t quite think he was talking about any particular colleagues…

Michael Armstrong, a Principal at Deloitte Consulting, has recently attributed the latest software surge to the financial crisis and portrayed it as a measure to reduce “human capital” costs in favour of computers. We know, of course, that the trend for technology goes back further than that. And we saw clearly at this year’s Annual Conference of the Institute of Supply Management (ISM) that there was a plethora of Procurement Technology suppliers exhibiting their latest upgrades and solutions.

SpringTide has always been keen to place Procurement at the strategic level it deserves. So one concern we have is around the rhetoric of “back office” and “white collar” work being next in the automation queue after the blue-collar automation to which we’re now accustomed (and where – till recently – the actual “robots” had more widely taken over). We say that value is a higher consideration than cost: and that Procurement is emphatically not “back office” but a very significant link in any enterprise value chain – whose strongest links of all are the stakeholders.

Solution Problem

There is no doubt that Procure to Pay technology (P2P, sometimes Purchase to Pay – raising electronic requisitions, the generation and despatch of purchase orders and invoice payments etc.) can be an essential, indeed business-critical, facility. With e-Procurement come the considerable benefits of, for instance, intelligent information, procurement dashboards, analysis and modelling tools and price comparator reports. Source to Pay (S2P), meanwhile, includes the disciplines of Spend Analysis, Demand Management, Strategic Assessment, Supplier Management, Category Management and Contract Negotiation and Management.

The trick is to maintain the advantage any organisation gains from the experience and skills of its professionals and balance those with the systematic efficiencies of the software – establishing the right “human-electronic mix”. The holistic operation that can result from the “end-to-end” (E2E) integration of people and platforms is the gold standard for Procurement Transformation, when handled correctly.

So: how to handle the implications of “automation” for both the image of Procurement and its human professionals? It’s a complicated chain. According to Hackett, large companies employ 44% fewer full-time Information Technology workers and 20% fewer Human Resources staff than they did a decade ago – at least in part because automation has cut the number of employees needed in those departments, too.

Then there is the complex impact on information gathering and data analysis. Even while employing fewer people to gather data, global intelligence and publishing company Wolters Kluwer reports that it is hiring more analysts to help crunch its data for planning and forecasting. This, in turn, is indicative of a broader current challenge to recruit good analysts. Wolters Kluwer’s CFO, Kevin Entricken, says that competition for those skills is making such talent scarcer and more expensive: “It’s harder to find people.” (Interesting to compare that with “It was just awful: there were humans everywhere!”)

Analysis

This whole question has led, indeed, to some startling pronouncements. Mihir Shukla, Chief Executive of Automation Anywhere, recently observed: “If you think like a human, there are only certain things you can do. When you think like a robot, many things are possible.”

Hmmmm… The Wall Street Journal article came out while the SpringTide team was exhibiting at the ISM conference in Phoenix, AZ. The conference itself was a very informative, professional and gregarious occasion, with a lot of emphasis on socialising in and around the event.

As well as the cheerful networking facilitated by ISM, the conference was also notable for the amount of software vendors present. People looking at Procurement Technology were, indeed, “spoilt for choice” – and it looks like a choice that many Procurement people will increasingly make.

ISM itself, with fellow exhibitors ThomasNet.com, hosted a celebration of the “30 Under 30” Rising Supply Chain Stars Program. And we see plenty of similar initiatives elsewhere, such as the Chartered Institute of Procurement and Supply (CIPS) “Young Procurement and Supply Chain Management Professional of the Year” Award (open to all procurement professionals aged 30 or under) and the Modern Apprenticeship in Procurement for 16–24 year olds launched in August 2014.

Electronic purchasing is already an established trend, in any case. According to Acquity Group’s recent “State Of B2B Procurement” Study, online procurement spending is on the rise: 68 per cent of B2B buyers made online purchases in 2014, compared with 57 per cent in 2013. Nearly half of buyers surveyed spent at least half of their corporate procurement budgets online in the last year; whilst 18 per cent of buyers spent 90 per cent or more of their corporate procurement budgets online, which was double the amount in 2013. Meanwhile, 46% of procurement officers say they expect their companies will increase the percentage of budget spent on online purchasing in the next year.

To complement those eyebrow-raising B2B figures, ISM was certainly characterised by a proliferation of Procurement Technology providers, which caught SpringTide’s attention in terms of our own “agnostic expert” role with them – and demonstrated to us, yet again, how potential end-users can be faced with a lot of options when it comes to selecting the right platform for the business, getting the best deal on it, generating relevant, timely Market Intelligence and, of course, driving stakeholder adoption once correctly implemented.

With all of the above swirling in our minds, the most striking entrant to the discussion was the widely reported University of Bath Psychology Department study that found the Human Touch – specifically, the handshake – to be a statistically significant factor in establishing trust and legislating for more successful deals.

Researchers from the Department of Psychology in the lab with the humanoid robot 'Nao'.

That might sound like common sense – but how does it play against the trend for automation, with all its implications (and people like the Pilot Travel Treasurer declaring, “Our motto is: leverage computers, not humans”).

The Bath Study coincided with the UK election campaign, and the press didn’t fail to notice that several politicians were seen shaking hands with robots, albeit usually on shop floors. The Bath study went on to prove, quite seriously, that shaking hands with a robot can actually be useful for building trust during “remote” (e.g. teleconferenced) business negotiations – provided that the robot is controlled by a human negotiator.

No, really: the experiment set-up simulated negotiations for a real-world deal in order to test whether any of the “physical” trust was lost during “telepresence” business meetings. Study participants were first placed in two different rooms and asked to shake hands via a telepresence robot (specifically, the two-foot tall Nao robot, made by Aldebaran Robotics).

One person shook the robot’s hand, while an operator in another room controlled the robot’s arm movements (via a Nintendo Wii-mote). The researchers found that the participants didn’t rate their negotiating counterpart as any less trustworthy than if they had been actually shaking hands in the same room.

This might all sound a bit like a Dilbert strip… but the study concluded with some rigour that “tele-trust” could be maintained, as long as the meeting is started with a robotic handshake to replicate that all-important human touch, the corollary being to make us all reflect how much is lost if you just leave it to the robots.

Readers are invited to draw their own conclusions from the bewildering inter-connectedness of the above impressions of early May. Better yet: please share them with us! As for SpringTide, we think we’re going to go with: “Enjoy the very real benefits of automation by harnessing them to human expertise – we can help with that.”.
To find out how SpringTide can help with your technology, call our experts now on +44 (0) 1543 466835 or just fill in this form