The two business technology providers have agreed to co-develop procurement applications using their respective business intelligence software platforms, SAP Ariba and IBM announced today. Among the new features: the ability to set contract terms most likely to close deals that result in larger sales volumes.

Leonardo and Watson will be putting their digital heads together to make procurement “smarter, faster and more efficient.”

That was the word today from procurement technology and services provider SAP Ariba, whose parent company SAP calls its business intelligence technology Leonardo, and IBM Corp., developer of the heavily promoted artificial intelligence system it calls Watson.

We’ve built a cognitive procurement platform trained specifically to understand procurement transactions and unstructured data such as weather, non-standard part numbers in contracts, and complex pricing structures.
Jesus Mantas, general manager, cognitive process transformation
IBM Global Business Services

The two companies say they will collaborate to use these systems to develop “source-to-settle” procurement applications designed to match buyers with the most appropriate suppliers, help them set contract terms most likely to close deals and build sales volume.

“We’ve built a cognitive procurement platform trained specifically to understand procurement transactions and unstructured data such as weather, non-standard part numbers in contracts, and complex pricing structures,” says Jesus Mantas, general manager, cognitive process transformation, IBM Global Business Services, the consulting arm of IBM.

Alex Atzberger, president of SAP Ariba, says the co-developed procurement applications will also be designed to improve how buyers’ companies can manage spending by large teams of buyers throughout an enterprise.

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For example, SAP Ariba and IBM say, both suppliers and procurement departments could view information pulled and analyzed from large volumes of prior transactions as well as from current pricing on thousands of products and information on weather trends to better predict the volume and type of products a procuring company would need—and buy—over a certain period.

This sort of collaboration among vendors isn’t unusual, says Duncan Jones, vice president and principal analyst covering procurement at Forrester Research Inc.

Many software vendors are working on making their software smarter, to reduce user input and automate validation, for example. “SAP and IBM have a lot of expertise and scale, but some of their competitors are more agile, and are building on foundations that are more modern and flexible,” Jones says.

One key to success for this project will be making use of the innovation occurring “on the sell-side of B2B, to improve user journeys with better personalization, while adding the controls and validation that people don’t get if they go direct to sell-side B2B e-commerce sites,” Jones says. “Cognitive is about learning, so SAP, IBM and others need to learn from sellers and end users, not only from procurement.”

SAP Ariba and IBM also will collaborate on offering consulting services to help companies develop and deploy new procurement tools. They also plan to launch a “Cognitive Procurement” hub where technology developers from both companies will work on new procurement applications using such emerging technologies as blockchain, which can be used to develop an internet-based ledger of procurement transactions.

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