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Home » Blogs » SCQ Forum » The procurement data ecosystem explained

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Blog author olli saksa

Olli Saksa is the Head of Channel Sales and Partnerships at Sievo. At his current role he is enthusiastically building an ecosystem of partners around Sievo to work closely in solving the most challenging business problems clients have.

The procurement data ecosystem explained

When technologies, tools, information flows, and people are connected through a procurement data ecosystem, exciting possibilities await.

January 12, 2022
Olli Saksa
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A procurement data ecosystem is the collection of networked systems and applications that together manage all of procurement’s knowledge and data. It is made up of information (data), relationships, institutional networks, and implicit knowledge and expertise.

Procurement has a lot of knowledge that can bring value to the organization: they follow markets and commodities, manage risk, seek new sourcing opportunities, and nurture supplier relationships. This knowledge, though, can often be too disparate and disconnected to truly maximize its value. It can often exist in messy forms of data, like in emails, meeting notes, or spreadsheets. Market insight and knowledge may only exist in the minds of the people. The challenges in reporting and managing this knowledge can hold back value generation. 

A well-functioning procurement data ecosystem, on the other hand, allows more time for strategic action. It uses better data flows and data management to bring insights faster. Consider how spend analytics is handled without a good procurement data ecosystem. It becomes a time-consuming monthly reporting task. When connected to a procurement data ecosystem, insights are more responsive and nuanced, while risk and disturbances are seen more clearly. When internal and external data are integrated, planning becomes much more agile.

The procurement ecosystem perspective emphasizes collaboration, information exchange, and sustainability. It is the sum of all the data and technologies, relationships, and institutional actors connected to the business network. While the traditional approach to procurement sees a narrow view of buyers and suppliers, the ecosystem view of procurement sees an interconnected web of suppliers. As opposed to the traditional bilateral view of supply relationships and transactions, the ecosystem view of procurement expands to cover networks of supply chains and collaborators. Therefore, the ecosystem view of procurement encompasses a variety of organizations, technologies, market spaces, stakeholders, decision makers, and even NGOs. 

Drivers of well-functioning data ecosystem

Having a holistic procurement ecosystem means that spend data is connected to other components in the network; internal relationships and processes connect to market networks; third party data connects to supplier relationships; and so on. All the components feed into each other. Only through the digital transformation of procurement can this implicit knowledge be leveraged. It requires managing both internal and external knowledge and data, robust systems and information flows, world-class data, agility, hyper relevance, and intelligent platforms. For a long time, the idea of a procurement information hub that could make sense of the vast amounts of procurement data floating around was only a dream. But thanks to several technological and market advancements, that dream has become a reality thanks to these factors:

  • The ubiquity of the internet: without the internet, a procurement information hub can’t exist.
  • The growth in data storage and data capacity: the ability to store data has grown exponentially. With cloud storage capabilities, the possibilities are almost limitless.
  • Machine learning (ML), robotic processes automation (RPA) and artificial intelligence (AI): these technologies do routine, repetitive tasks and can process vast amounts of data faster and more accurately than humans can.
  • The evolution of the procurement software market: new specialized service providers have changed the game in terms of procurement digitalization.
  • The emergence of the data economy and third-party data market: procurement professionals now have access to a wide array of data service providers, who gather and moderate data sets on things like supplier risk, sustainability, and commodity prices.

These factors have made it possible for the dream of a unified procurement data hub to move from theory to practice.  

Architecture of a procurement information hub

A procurement information hub is a centralized service for procurement data that connects to the procurement data ecosystem. It orchestrates the connections between systems and manages the data flow amongst them. In the model below is an illustration of how this procurement information hub can leverage the procurement data ecosystem. There are seven key channels which direct the flow of information:

  1. Between users and the procurement information hub
  2. From internal data repositories (e.g., ERP systems) to the procurement information hub
  3. From external data repositories (e.g., supplier risk score databases) to the procurement information hub
  4. Within the procurement information hub, where data is cleansed and combined
  5. Between the procurement information hub and community intelligence (e.g., partner networks or consultants)
  6. From the procurement information hub to the internal data repositories or other systems to trigger actions, and
  7. From the procurement information hub to any other systems and back to the data lake.

The end result for users is easy access to a wide range of information or a “single source of truth.” A procurement information hub is one piece of the wider IT architecture and serves the greater whole by feeding combined and enriched data back to the data lake for further repurposing. 

The procurement information hub is the key to agility

As the data complexity of an organization increases, the more mature analytics must become. While the individual parts of a procurement data ecosystem have always existed, the technological capabilities to connect both internal and external data is becoming better every day, making for a very exciting time to be involved in the digital transformation of procurement and supply chain. 

The procurement role is becoming way more advanced in its ability to provide a window to the external data world, due to the possibilities in creating procurement data ecosystems. Procurement data ecosystems take advantage of a wide partner network, as well as the diverse knowledge and capabilities of people. 

When technologies, tools, information flows, and people are connected through a procurement data ecosystem, exciting possibilities await. The users and their knowledge will have a greater opportunity to shine. 

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