Thinking about Automation During Sourcing and Procurement Can Make or Break Your Automation Strategy


In sourcing and procurement, an “x-first” approach is often used by those considering technology strategy to prioritize an emerging trend. For example, mobile-first means ensuring a tool has an app or at least a responsive webpage for small touch-screen devices. Cloud-first means factoring in where your application or data is stored, or if the product is compliant with AWS, Azure or GCP.

So what does automation-first mean?

An automation-first approach is often associated with the adoption of automation by the workforce. It's typically about prioritizing automation over traditional outsourcing methods, including using automation in the design of a new process or empowering colleagues to become citizen developers. But that's not the only place you can apply an automation-first approach. In fact, it’s likely the final place to apply it.

The first place is all the way back in your sourcing strategy.

Historically, sourcing strategies for IT and business processing outsourcing (BPO) have been focused on moving “commodity work” to providers that offer low-cost delivery centers, access to resources, improved tools, better processes and higher levels of operational discipline. Sourcing buyers retain key leaders, subject matter experts and certain functions deemed too risky or important to be done by a third party. These types of agreements have been – and continue to be – beneficial for both clients and providers.

Augment outsourcing with automation

Today, with the rapid advances in automation technologies, it makes sense to think in this order: 1) “what can I automate?” and then 2) “how can sourcing help support what remains?”  This sounds simple, but it requires a paradigm shift in thinking.

For example, when thinking about BPO, the areas of greatest interest are likely Finance, HR and Procurement. These lend themselves to an automation-first approach. The reality is that the days of humans doing all the work involved in Finance, HR and Procurement are long gone. We now have the ability and technology to bring digital workers to the forefront. We can transition to exception-based, touchless accounting and an employee-first digital model for most HR functions.

Procurement is process heavy. Consider all the processes needed to create a PO, request an RFP, generate an RFP. Based on a string of questions, we can accommodate all those by automating the work that is human intensive. This way, you take the error-prone humans out of the process and replace them with unfailing, never-sick and rules-based automations.

What is your automation trajectory?

An automation-first mindset in sourcing is not just about what to consider when selecting an automation platform, it is about how your whole business modernizes and digitizes. When selecting a new CRM, an automation-first mindset takes into account how an application can support or be supported by your automation strategy and meet functional business requirements. This means selecting applications that dovetail with your automation trajectory. For example, this might mean prioritizing solutions with comprehensive API libraries that are easy to integrate with middleware or RPA, or it might mean looking for applications with prebuilt connectors for platforms like Enate or Power Automate.

Automation-first thinking in the real world

Here’s an example of how automation can support the business tactically and inform future strategic decisions:

An enterprise planning to upgrade a system of record can often become resistant to introducing change to that platform as benefits diminish. This results in new business ideas that become paralyzed by the upgrade schedule of that system. Using relatively low investment tools like RPA tactically in this situation allows the business to respond to market conditions and trial new things quickly.

If the trial is successful, it would be hardened into something enduring until the system is upgraded. If it is unsuccessful, RPA solution gets thrown away.

If the automation is implemented, it would make it a key requirement when replacing the application. While RPA can save the day sometimes, a replacement application has to be able to support greater business agility and easily integrate into other applications, processes and tasks.

Support your strategy with automation

There is no single answer to applying the automation-first principle successfully; it will be specific to an organization and its automation strategy. Your platforms and tools today, as well as your aspirations for those tools and platforms, will drive what you think is important in the business applications you choose. As will your organisation's skills today and in the future. Are you planning on widespread citizen development? Creating an internal development team? Or relying on partners to supply skills?

Decisions made during sourcing and procurement can even make or break something like citizen development. If you are encouraging your workforce to develop automations but providing applications that require deep API understanding, then you are probably in for a painful journey. But an application that's friendly to object recognition or has pre-built connectors is likely to be adopted by citizen developers far more readily.

For organizations looking to extract maximum value from their platform and people investments, it is essential to question how you can apply automation-first thinking in decisions that are upstream of adoption. Thinking about automation during sourcing will empower your workforce at the process and task level, because you'll have made your applications support that way of thinking, too.

ISG helps enterprises design an intelligent automation strategy that considers what the organisation has invested in already, makes the most of advances in the automation market and meets the specific needs of the business. Contact us to learn more.


About the authors

Tom Knight

Tom Knight

Tom Knight is a Principal Consultant at ISG.
Brian Thompson

Brian Thompson

Brian has delivered Automation Services, Managed Services, Applications Development, Infrastructure Services, Business Analysis and Program Management services across the Pharma Distribution, CPG, Retail, Apparel, and the Travel, Transportation and Hospitality industries. He also provided solutions development for CPG, Retail, and Apparel clients in the Warehouse Mgmt. Systems, ERP, and Non-WMS - Applications Support, Maintenance and Development space. Brian managed the strategic direction and day-to-day operations support for applications development, applications support, new business and production support for warehousing, and delivery for the client base – replaced legacy systems with a strategic and new platform to cover e-commerce, OMS, WMS and Distribution