I was interested to read in a recent press release of T-Systems’ successful deal with Baloise Group, a Swiss-based finance and insurance firm of 7,300 employees.

In the deal T-Systems is providing a procurement platform that will enable Baloise to transform their purchasing activities into a procurement-as-a-service model.

The structure of the deal is a collection of different technologies and services, including Ivalua Buyer Suite (the core procurement capability including access to catalogues and contracts), T-Systems Multimedia Solutions (for consulting and implementation services) and configuration consulting services from OptiBuy (the consultancy, not the Adware virus you will be glad to hear). The whole thing has been wrapped up in T-System’s Open Telekom Cloud. As well as the expected purchasing capability, Baloise will get an employee self-service portal, supplier management, billing management, contract management and supplier evaluation.

But it’s also interesting what the press release doesn’t say. For example, it doesn’t mention anything about the commercial model between Baloise and T-Systems. By packaging everything up, then this is surely a great opportunity to link value to fees. The whole idea of As-A-Service models is that the supplier takes on more of the risk because they control more of the process. If this is just a cloud-based solution (i.e. technically As-A-Service rather than a true commercial As-A-Service model) then maybe Baloise have missed a trick.

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HG Insights provides deep sourcing intelligence and diagnostic tools on and for the IT industry, analyzing the sector’s supply and purchasing activities to identify points of significant business value for enterprise companies and the vendors that serve them.

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The press release also doesn’t mention anything about automation or artificial intelligence. Of course, implementing an enterprise procurement system will inherently provide plenty of automation that wasn’t there before, but I’m talking about the sort of automation that will reduce the number of resources required in the purchasing function and that frees up the employees’ time in dealing with purchasing activities (self-service portals generally pass more of the work to the employee so are not necessarily the right answer all of the time).

Artificial Intelligence, though, is where real value can be delivered in procurement. AI can be used to process unstructured and semi-structured documents that come into the procurement department, and it can extract insights from all of the available data that are generally beyond the scope of human beings. Baloise may not have a huge spend compared to global insurers but I would have thought that the benefit of tapping into the T-Systems platform would give them access to wider data sets to help them manage forecasts, pricing and risk. Procurement is no longer just about processes and cost savings – it is about delivering holistic value to the organisation.

With the right relationship and a flexible contract then there is no reason why Baloise (and thousands of other companies like them) cannot benefit from automation and AI in their purchasing. T-Systems have done a great job in bringing together the right technologies and partners to satisfy their client’s current needs. Using their Multimedia Solutions division as the implementation partner may be a shrewd move – let’s see if they are able to satisfy their future needs as well.

About the author

Andrew Burgess has been the lead architect within several major change projects, including strategic development, IT transformation and outsourcing, in a wide range of industries across four continents. He has developed and implemented sourcing strategies for global organisations, running sourcing programs and helping re-organise IT departments to maximise their value from sourcing. Andrew was recently awarded ‘Automation Champion of the Year’ by the GSA, the industry association and professional body for the global sourcing industry. He is widely considered to be a leading expert in the growing Legal Transformation and Outsourcing market and has recently written ‘The Rise of Legal Services Outsourcing’ in collaboration with the London School of Economics (LSE). Andrew’s latest book, ‘The Executive Guide to Artificial Intelligence‘ has recently been published by Palgrave Macmillan. Andrew is a council member of the Global Sourcing Association and is Head of Consulting at HG Insights.