Empowering Procurement with AI

Transcript:

Bruce Morton:  Allegis Global Solutions (AGS) presents the Subject to Talent podcast, a hub for global workforce leaders to unleash the power of human enterprise. Thank you for listening in as we explore the most innovative and transformational topics impacting business today.

Hi, I am Bruce Morton, the host of the Subject to Talent podcast. Today I am joined by Doug Halka. Doug is the Vice President of Business Development at Globality, the market leader in autonomous procurement and sourcing. Doug, thanks for joining me today.

Doug Halka: Good morning, Bruce. Good to be with you as well. Thanks.

Bruce Morton: Awesome. Here on Subject to Talent, we always start by asking the same question, and that is how did you get where you are? How did you get started in the procurement industry and what was your journey to get to this point?

Doug Halka: Yeah, journey's been kind of a winding road. I'd say I spent the bulk of my career in the professional services space in various roles from service delivery, sales and business development, running various service lines and business units. The first real exposure I got to seeing the opportunity in workforce strategy and management, I was working with Accenture. At the time, I was running a couple of portions of Accenture's operations business, specifically procurement outsourcing and HRO outsourcing engagements. That's where I really saw the disconnect that existed between HR and procurement within these organizations. I got to see firsthand the real disconnect in decision-making between hiring talent and what I call buying or renting talent. Which is, ‘do you go out and hire someone or do you go out and hire a firm or a contractor?’ I realized there's a real problem to solve there.

Bruce Morton: Great. Then so how long have you been with Globality, now?

Doug Halka: Yeah, so I've been with Globality just over four years now. It's been a pretty amazing journey. The growth of artificial intelligence (AI) and what we've seen happen with what we call GLO, our AI engine. The growth of GLO over those four years has been pretty dramatic.

Bruce Morton: Yes. Let's get into that because regular listeners will hopefully remember we had your colleague, Keith Houseman, your chief customer officer, back on here [the podcast] a couple of years ago when we first launched our partnership. Well, just to underline that, obviously this partnership empowers us to utilize that AI-powered platform to deliver our customers a great procurement solution, to really get the most value out of that spend. Can you just give our listeners a brief overview of how the product has evolved in the last couple of years?

Doug Halka: Yeah. It's a great question. It's been pretty amazing and fun to watch. I'd say the examples are pretty vast, but there's probably two main areas where I've seen the greatest advancements. Firstly, is the ability of AI to digest the data and the spend and the number of events that we're running on platform, and to be able to use that data to really act as a procurement advisor for the business users.

The more AI gets access to more data, more spend, more events, Glo really gets smarter around all aspects of the sourcing process, from supplier identification and matching, learning best fit suppliers. [AI identifies] not just best fit suppliers for a particular project, but for the individual user. Tailoring that end user experience and also close ability to analyze responses and provide insights for things like negotiation assistance. It's really freeing up people from time-consuming tasks and allowing them to focus on areas of value creation.

Then secondly, I'd say, which is really the more exciting aspect, is the introduction of generative AI and the advancement we've seen in generative AI. As we continue along the curve of autonomous sourcing, enabling true self-service, the ability for GLO to generate content has really proven to be invaluable for stakeholders. GLO's ability to learn from her experiences on platform and then generate content for stakeholders to use and edit is really helping them with generating fast, efficient, accurate SOWs and RFPs.

Bruce Morton: I know you talked about the platform being built AI up and not jumping on the bandwagon of ChatGPT-4. I think that's a really important point for our listeners to hear. Can you just talk about that for a minute?

Doug Halka: Yeah. Globality is about eight years old. We've been building this platform with an AI-up approach. Everything, the way that data is all connected, the way that user experience on the front end and the suppliers are experiencing interactions with the platform, it's really built with AI from the ground up.

There's a lot of companies out there that are bolting AI on top of their current solution, which is providing user interface, but that really affects how the data's interconnected and the platforms and their solution or our solution's ability to connect data, provide responses, analyze the data, analyze responses, and to really generate an end-to-end experience for business users, for procurement and for business stakeholders.

Bruce Morton: The reason I brought that up, is that I think organizations are at different points of maturity or different points on the fear versus opportunity spectrum when it comes to all things AI. I know that you are able to use AI without those risks that an organization would necessarily be taking by simply, using ChatGPT. If you look at this through the prospects that you speak to and the customer lens, how have those conversations evolved over the last couple of years? One with AI starting to get into the public domain, so perhaps they’ve started understanding it, but there's also that risk and some fear as well. How have those conversations altered?

Doug Halka: Yeah. Well, it's interesting. When I first got here, I guess four years ago or so, I would call on people I knew, people in the industry, people I had great relationships with and would talk about our platform and the use of AI. The responses were all over the place, but they generally all fell along the lines of, "Hey, man, stop selling me snake oil. This AI's not real, it doesn't exist." It's funny almost to a person, they're all calling me back now and they're all saying, "Hey, I'm getting questions from my leadership around what's the strategy for using AI and can we talk now? What are you guys doing and tell me more about it." The AI conversation is coming to the forefront. We're seeing this be a board-level discussion. We're seeing leadership talking about, ‘how are we going to use AI within our organization?’

It’s getting a lot of traction. I think it’s it's all basically on the heels of ChatGPT and what that's created in the consumer world. There's a lot of buzz around ChatGPT and rightly so. People have access to it, it's free, it's fun to play with. One of the things I talk to people about in the business world is to be careful because there's a vast difference between the consumer version of AI and enterprise AI. We could probably spend the entire time talking about that alone. What I'd say the most important thing that people need to realize is there are differences in data security and partitioning and the scale of the AI engines in particular for business use. People need to be careful not to disclose things like trade secrets, confidential information, competitive advantages. You need to be cognizant of the source data that's training the AI. With ChatGPT and other consumer AIs, it's learning from every interaction on the platform. Every person that goes in there is just playing around with it, it's learning from that. If you're relying on that to solve your business problems, you're at risk because someone's gone in there and trained the AI with maybe zero context around what the problem is that you're trying to solve and AI has learned from that interaction, and other actions.

Bruce Morton: Right. That's a really interesting point. You mentioned this getting traction at the board level. Looking through a procurement lens, do you think there was, I mean there were certainly plenty of articles about procurement using AI and being more inhibitive and so on. Is that your experience, that you're seeing this giving procurement leaders an opportunity to actually use AI but not, as you said, have those risks of bringing ChatGPT inside the walls?

Doug Halka: Yeah, it's a great question. We are seeing that occur and we're seeing it across our customers, almost every one of them. There's some specific examples that kind of jump out to me. We had one large financial institution that their CEO attended the CEO Roundtable with other leaders in the tech industry. These tech leaders were saying, basically, "You've got to get on board with AI because it's coming and it's real, it's going to affect your business." This CEO came back and brought her leadership team together and looked at every person in the room and said, "What's your AI strategy? How are you going to use it going forward?" Our CPO raised their hand and he said, "I've been using AI for over a year now." She was amazed that it had been deployed.

He started talking about the benefits and how they were getting 20% savings. They were saving 50% man-hours, and they were getting reduced cycle times of up to 80%, which means the business was getting what they need faster with less effort from procurement. That has really elevated his role within that organization. It's put him in a positive spotlight. He's now having weekly or biweekly debriefs with the CEO on the results and how the AI is being deployed and things like that. It's been pretty amazing to watch how those customers of ours that are putting this at the forefront of their strategy is putting them in a really positive light internally.

Bruce Morton: That's great. You mentioned, let's get very tactical for a moment. At a desk level, if somebody is using your platform to generate an SOW and then go out and find development vendors and everything else, what's the impact that's having? How would you compare that to pre-AI and pre-Globality? What are some of those data points?

Doug Halka: If you think about the traditional sourcing process, well first we'll start out with the typical tension that exists between procurement and what I'll call the business. Somebody's out in the business, they need buy something, hire a firm to do something. There's this constant tension between someone that's trying to run a business and get something done, and time is their enemy. They need to get something done and get something quickly. Procurement's got the pressure of they need to introduce compliance and visibility and savings and all those things that are important to the business, but they're kind of the enemy of speed.

What we often see is someone in the business say, "I don't have time to go to procurement because they're going to introduce their sourcing process, which is going to take me months to get something done." Whereas with our platform, that business user can now come on the platform and draft a body of work, define what it is that they need to buy in as little as 20 to 25 minutes. Then with the click of a button, they can be shown suppliers that the business has already approved to do that type of work, which means contracting is expedited. That means that they know they've got a quicker path to getting that firm or getting that good that they need into the building as quickly as possible.

It also introduces competition, which means they're getting a better solution. You've got firms that are competing for the business, so they're getting better solutions for a better price, and they're doing it in a fraction of the time that it would take during the typical sourcing process. By a function of our platform making it fast and easy for that business stakeholder to get what they want, procurement is getting what they want, which is compliance to preferred supplier lists, savings, transparency, visibility, efficient contracting, et cetera.

Bruce Morton: Right. That's awesome. Thanks for that detail. Let's look at the other end of the spectrum here, the human end versus generative AI. I'll take this opportunity of a quick plug that I know your colleague, Matt, is going to be speaking. We've got a AGS live event coming up on November the 15th to explore generative AI in the future of work and how we see that impacting now and in the future. On that, one of the topics I know that's going to come up on there is what is the human impact of generative AI? Let me ask you that question. What do you see how humans will be impacted or how generative AI, particularly in the areas of procurement, what are some of those changes we're going to be seeing or are seeing?

Doug Halka: Yeah, so I think there's a couple of elements. One, there's this fear out there that AI is going to eliminate the need for people. We're not seeing that come to fruition. We're seeing the exact opposite. We're seeing what it's really doing is allowing humans to be more human and interact with other humans. What the AI is doing is it's really automating and eliminating time-consuming, laborious tasks, such as identifying suppliers. On our platform, comparing proposals side-by-side, creating that side-by-side comparison that typically can take anywhere from 20 to 40 hours for a person to copy and paste stuff out of different documents into one and highlight.

Bruce Morton: Right. Been there.

Doug Halka: Again, that's not necessarily fun work. It's time-consuming work, and it's often done by very valuable resources, but it's not adding value to the organization. By using AI to automate a lot of this, now people are elevating their role to working with other people to figure out, now this platform is showing us likenesses and differences between these suppliers. Let's talk about how we evaluate them. Let's talk about the credentials. Let's talk about which of these suppliers you want to work with and why. On the backend, it's like, what's our negotiation strategy? Procurement's now working with the business stakeholder to figure out what's really important to you and how can we expedite this negotiation process to get these people working on your project sooner? Again, we don't see AI as a threat. We see AI as an enabler for people to do more and to focus more on those human interactions, which AI isn't really good at. AI doesn't form a bond. It's just automating these tasks.

Bruce Morton: Yeah. I like to say stop getting your humans to do jobs of robots. It's not the robots are taking our jobs, it's they're doing what they should be doing.

Doug Halka: Right. That's a great way to put it.

Bruce Morton: I think one of the challenges when as an industry, or any industry, when you introduce efficiency and effectiveness tech, and then you get that, ‘well, yeah, that's just soft savings because those people, I've still got to employ those people. They're doing something differently, but how do I really measure the impact that's having?’ Have you been able to get into that through seeing some real tangible results from your clients in terms of the level of savings perhaps by using the tool?

Doug Halka: Yeah. There's a few levers that we talk about with clients when we talk about tangible results. Some of them are quantifiable and measurable, and some of them aren't. Generally speaking, we're seeing one, an increase in spend under management. What that does is it obviously leads to savings, leads to compliance to convert supplier lists, it reduces risk in the organization because [you’re] buying from suppliers that you know, and you trust. You're also getting SOWs that are measurable so you can hold suppliers accountable to outputs and outcomes, versus just giving them open-ended ability to work on a time and materials basis with no end in sight.

Measurably speaking, we're seeing savings in the 20% range. We're being told by most of our procurement leaders that they're seeing about a doubling of their procurements team ability to do work, meaning they're managing about double the number of events with Globality than they were before Globality. I talked earlier about cycle times, which is an important one because when you reduce cycle times, you're giving the business confidence that running a compliant process doesn't slow them down from doing what they need to do. Seeing that cycle time reduction of up to 80% is now enabling the business to move at pace while reducing risk for the business and generating savings in the process.

Bruce Morton: Right. Great points. We think about the change of behavior that this needs to create, because obviously it's all about change management. The majority of those buyers have been buying professional services, probably are being reliant on their suppliers actually writing the SOW.

Doug Halka: Right.

Bruce Morton: Now we're saying, no, we're not doing that because your great point, it needs to be measurable, so let's make sure it's a good SOW. Well written and some real measurement milestones in there. How have you seen across your client base, what are those more successful companies from an adoption and change management perspective? What have they been doing well compared to the other end of the spectrum?

Doug Halka: I think it starts with leadership and messaging at the top first and foremost. Those organizations that are adopting this at scale, they're doing it across the enterprise. They're making it as a new way of doing business. Versus we have some customers that want to put their toe in the water, they want to use it just within a small part of their business first. They want to do it kind of behind a wall where they don't want to introduce their stakeholders to it. A lot of times we hear, "Hey, the business isn't ready for this. We don't want to put this in the hands of our stakeholders because they're not going to want to use new technology." To which I say, those people are ready for this. I mean, if you think about how we're using technology in our daily lives, we're doing everything on our phone. We're buying cars on our phone now. We're applying for mortgages on our phones. AI is all around us. Everyone's using Alexa, everyone's using Siri, everyone's using Google.

I think we underestimate that business stakeholder's ability to engage with technology and to want to do things in a self-serve capacity. If you think about in your personal lives now how people are doing self-service for things like payroll, benefits, banking, all of these things that people expect in their personal lives from a self-serve perspective, we need to turn around and give them those same capabilities and those same benefits within the business world. Those organizations that are embracing that self-serve mentality, empowerment mentality and pushing it out into the business are the ones that are being the most successful.

Bruce Morton: That's great. I love the line you use that we're changing the way we do business. This is not a procurement initiative or anything else, really. It will literally change the way we do business. We're using the tools that are available. As you said, in our real world, in our normal day-to-day lives, we're embracing this stuff. That's a great point.

Thanks for that, Doug. We're coming rapidly to the end of our time now. That's going really quickly. We do like to ask all of our guests the crystal ball question, so here it comes. If you had that crystal ball, pick a time yourself, pick your own number of years, how do you see procurement will have changed particularly and how work's getting done, those changes have been caused by AI?

Doug Halka: If I had a crystal ball, I probably wouldn't use it to predict procurement. I'd get the lottery numbers, so we wouldn't be having this conversation. If I had a crystal ball that could only look through a lens of procurement…

Bruce Morton: Yeah. There you go. It's a special crystal ball.

Doug Halka: Special crystal ball. I guess there's a couple things. You asked a question about timeline. I mean, in terms of timeframe, it's happening now. I mean, we're seeing it come to life every day. Things that used to take weeks or even months and hundreds of man-hours are happening in seconds with zero effort and everybody's benefiting. The business users getting what they need faster, procurement's getting those savings and the compliance and visibility that we talked about. I mean, suppliers are benefiting. They're spending less time responding to meaningless RFPs.

Bruce Morton: Yeah. Great point.

Doug Halka: They're spending less time on administrative tasks just filling out templates, and they're spending more time on the qualitative aspects of differentiating their product and their solution. It's happening now. Everyone's benefiting from this now. As for what's to come, I mean, it's pretty vast and it's pretty amazing and it's somewhat endless, but I see really efficient markets. I see predictive modeling around things like workforce management and planning, should cost and predictive pricing. I mean, there's real time supply chain visibility. There's predictive planning in the supply chain. I mean, we're really just getting started. I mean, the opportunities for AI are endless and the opportunities for people working within AI are limitless.

Bruce Morton: That's awesome. Thanks Doug. We're truly excited about that, and we couldn't be more excited about having great partners to go on that journey with. So, we really appreciate everything you do, and your organization does, in our partnership. We're definitely all reaping benefits from it. For those folks that'd like to know more about Globality, the blindingly obvious question, how do they find out more about the organization?

Doug Halka:  Well, they can go to globality.com where we've got an interactive website. People can see demos of the platform, they can learn more about what we do, and they can see about the future of AI and procurement.

Bruce Morton: Great. Thanks, Doug. Thank you so much for your time today.

Doug Halka: Thanks for having me, Bruce. We appreciate the partnership and we're looking forward to working together.

Bruce Morton: If you enjoyed this episode, please rate and review us on Apple Podcasts, Spotify, or wherever you get your podcasts. And if you have questions, send them to SubjectToTalent@AllegisGlobalSolutions.com. Follow us on LinkedIn with #SubjectToTalent and learn more about AGS at AllegisGlobalSolutions.com where you can subscribe to receive additional workforce insights. Until next time, cheers.