Entering 2023, the world looked chaotic but at least predictable to some extent. We had the ongoing fallout from the Russian invasion of Ukraine; we all expected the U.S. to plunge into recession, and inflation was maybe going to be a problem in a way it hadn’t been for quite a while.

Chief financial officers made plans on this basis. But entering 2024, we have to do it all over. We still have the ongoing fallout from the Russian invasion of Ukraine, but we also have the tragedy of the Israel-Hamas conflict to factor in, too. The American economy didn’t weaken in the end, though in some ways we have no clue as to what will happen. Meantime, the global economy seems to be sounder than may be expected. So, what comes next?

The Last Automation Frontier

Automation of repetitive tasks frees up time and resources, allowing staff to focus on strategic activities. Financial planning and analysis (FP&A) needs to start proactively looking for ways to adopt automation in spend management to drive better decision-making, increase productivity and efficiency, and deliver savings. It’s no puzzle as to why: Autonomous sourcing technology delivers cost savings of 10%-20%, efficiency gains of 70%, and 20x return on investment. 

The profession is starting to agree. According to a recent survey by Thomson Reuters, 60% of FP&A professionals believe artificial intelligence will transform the function. The FP&A manager must use the power of automation to identify critical factors and link them to financial performance with data. Forward-thinking chief procurement officers are adopting intelligent, autonomous sourcing platforms to optimize the sourcing process and enable their teams to operate in a more agile manner. 

There are pressing reasons to do so. For most brands, 2023 hasn’t been a stellar year, and instead has been more one of consolidation and treading water. That’s not likely to change soon, so CFOs will continue to prioritize cost control and cash accumulation.

This calls for a new approach to procurement — one that enables a business to drive bottom-line improvements. Such efforts are due to accelerate dramatically due to the impact of AI-driven autonomous procurement.

Today’s sourcing tools lack advanced automation and machine learning. The smart use of AI in procurement radically increases sourcing efficiencies, improves ROI and total cost of ownership, and maximizes cost savings. Leading global companies such as Europe’s BT, Tesco and Santander Bank have adopted AI to maximize returns of billions of dollars on annual spend.

Companies are using machine learning’s power to automate previously fuzzy and inefficient sourcing processes. In 2024 and beyond, AI-powered technology will make a real difference when it comes to optimizing company spend across procurement, and eliminating outdated manual sourcing models.

More Than Just Machine Learning

Doing all this makes possible the next big trend in procurement automation: the widespread adoption of Generative AI. Its’s already starting to transform workplace processes, improve productivity and help organizations gain competitive advantage. 

Gen AI can deliver insights into corporate requirements and cut costs through autonomous sourcing. Think of how much paper and spreadsheets still get used to maintain supplier lists and organize requests for proposals. Now imagine that same set of processes happening in seconds with the use of ChatGPT-like tools, filling forms with the right information and allowing much more rapid searching and matching of partner opportunities.

According to McKinsey, procurement leaders who can use data and metrics to show the real strategic value that they bring to the table will become full-fledged strategic partners to the C-Suite.

Companies have long been held back by an inability to acquire true transparency into indirect spend. That capability is long overdue, and procurement and finance can take the lead by pursuing innovation and boosting employee productivity through the power of AI.

A New Approach to ESG 

Too often, environmental, social and governance (ESG) strategy is seen as a hindrance to growth, rather than a driver. But there’s a way to realize value from what can seem like a mere box-ticking compliance exercise. It’s achievable through a smart data- and AI-fueled approach to procurement.

By definition, autonomous sourcing and modern-day spend management reduce costs while maintaining good governance, transparency and compliance. So why not use the power of this technology to enact positive “enterprise spending for good” procurement actions?

The work should include conscious spending on local suppliers, and prioritizing working with more diverse employers. Most companies only direct about 6% of their supplier spend to diverse suppliers. Optimized procurement can go a long way toward achieving improved gender equality. 

To meet the challenges of 2024’s uncertain global economy, CPOs need to start working with their CFOs and finance teams to introduce Gen AI-powered autonomous sourcing.

The message is clear. By using intelligent digital technology to prioritize suppliers who contribute to better business and social outcomes, we can achieve a lot. If we add in the power of automation, optimization, data, machine learning and Gen AI, then this will be an incredible year for U.S. businesses, no matter what challenges we may encounter. 

Seth Catalli is chief revenue officer at Globality.