It has long been a quandary for financial leaders but, thanks to new transformative technology the answer is simple – embrace AI and automate your spend management model. 

As businesses continue to embrace the transformative power of artificial intelligence (AI), a clear business case has developed for CFOs that delivers an immediate return on investment (ROI), reducing operational expenses (OpEx) and cutting up to 20% on their corporate spend.

As highlighted by McKinsey, Generative AI, which involves using machine learning algorithms to create new content such as text, images, or videos, has the potential to automate processes, improve customer experiences and streamline operations to help drive new efficiencies and create new value across business.

And according to PwC, companies that implement AI technology have the potential to increase their profitability by 38% by 2035.

Identifying the right use cases is key to success

To reap the benefits of generative AI, CFOs must identify and prioritise the most impactful use cases that align with their business objectives, focusing on the tasks and teams which can make the most impact from day one and drive instant improvements to the bottom line.

By successfully identifying the right areas of their operations to leverage generative AI across their workplace tools, companies can increase their productivity, reduce their OpEx and gain the competitive advantage that is more important than ever in today’s volatile economic environment.

The CFOs big opportunity: AI-driven spend management

There is an area, often overlooked by CFOs, where the power of AI and Gen AI can deliver immediate bottom-line savings – every dollar their company spends, especially on indirect goods and services.

The amount of indirect spend is typically around 20% to 40% of revenue, and is usually classified as Selling, General and Administrative expenses (SG&A). For a typical Global 2000 corporation, this can amount to costs that run into billions of dollars.

However, numerous organisations make the incorrect assumption that they have their indirect spend well-managed, when in reality the situation may be quite different.

Globality’s research for CFOs found 82% of procurement leaders say their indirect spend is not well managed during the sourcing process, leaving substantial cost savings on the table.

Leading global companies like Adidas, BT, Tesco, Fidelity and IQVIA are already using advanced AI sourcing tools such as Globality to avoid overbuying and saving 10-20% on their billions of dollars of indirect spend.

A perfect match: generative AI and sourcing

When Generative AI meets autonomous sourcing, the use cases are compelling and it can transforms an organization's spend management by automating processes, providing intelligent insights, and improving decision-making, enabling business stakeholders to buy what they need more quickly with more competition among suppliers and the ability to negotiate better on price.

If CFOs work closely with their technology teams to identify the most impactful use cases and develop a clear roadmap for implementation, they can realise substantial cost savings from day one, ensuring that all third-party spend is tendered fairly, competitively, and transparently.

Autonomous sourcing also supports the tendering process, comparing proposals and driving negotiations, while at the same time implementing appropriate guardrails and policies to maintain full organisational compliance and risk management.

As a result, CFOs now have visibility and control of indirect procurement. They can be much more confident that they are buying the right goods and services at fair market prices.

And if line-of-business managers are freed from unwieldy procurement processes and empowered instead with user-friendly, self-serve sourcing technology, they are highly likely to embrace this new way of working with enthusiasm.

Our survey found that  85% of procurement leaders believe business users would comply with procurement processes if their companies offered intuitive self-service technology.

Equipping your teams to do more with less

Adopting an intelligent and intuitive spend management platform will also free up sourcing teams from transactional work. By automating these low-value manual processes, they can instead focus on high-value strategic tasks, such as supplier collaboration, scenario planning and improving the function’s operational excellence. This shift will greatly contribute to driving much-needed growth across the business.

Contact us for a demo of Globality’s AI-driven spend management platform – winner of Best Technology Provider at the World Procurement Awards – to see how it uses cutting-edge AI, built from the ground up, to deliver 70% efficiencies and 10-20% cost savings instantly.