Are we transitioning from a long era of business stability to what the U.S. Army calls “VUCA” (volatility, uncertainty, complexity and ambiguity)? It’s certainly starting to feel that way. What will be the future of procurement and the transformative impact of Artificial Intelligence (AI) on business and its regulation?
AI-Driven Procurement Will Reshape Spend Management
With a new U.S. President already challenging norms and threatening to impose a wide range of tariffs, wars that have scarred the economic landscape, and a global economy uncertain about growth and whether major trading blocs will be squaring up to each other or not in the next few months, 2025 already feels shaken by that mythical Chinese curse: “May you live in interesting times.”
Despite all the kerfuffle the year’s started with, I’m cautiously optimistic about the OECD’s forecast for modest growth this year. However, for the CFO and Finance Director making calculations about their risk profiles in a world that seems to be moving determinedly away from the certainties of globalization and other established patterns, there are many variables and unknowns.
If there’s a silver lining to the “COVID era,” it’s that it was good training for what’s to come. Instinct and experience will cushion you well over bumps in the road ahead. Good data will be critical. Even more potentially useful will be systems that anticipate and mitigate risk up and down supply chains to help you gain an edge during this “interesting year.”
AI will play a big role in all this. 2025 will absolutely be the year AI goes from peak hype to becoming a business staple.
Agentic Procurement Will Shake Up Strategic Sourcing
Over the last couple of years, more and more organizations have been discovering the power of AI-enhanced procurement. This has traditionally been harder to automate than other processes due to its inherent complexity. That’s all going to be turbocharged in 2025 by AI agent-driven procurement—smart systems that will help you proactively challenge the vendor and program supplier status quo.
Specifically, more CFOs are adopting AI-enhanced procurement platforms that mine and synthesize live and historic, internal and external data sources. Why is that useful? Because it will allow your office to proactively identify the most optimal contract renewal opportunities, competitively benchmark suppliers, provide alternative sourcing options and enable more strategic procurement decisions.
In some cases, this will lead to businesses either changing or renegotiating price/terms/SLAs with vendors due to data and patterns surfacing you never had a chance to see before. But refreshingly, using that data transparency may lead to fine-tuning spend decisions in existing programs. For example, we have one customer that after evaluating competitive bids decided to optimize a mix of spend areas—such as Facebook and Google—while continuing to work with its existing digital advertising agency.
The result was cost savings, greater ROI and a burgeoning relationship with a very motivated new supplier. This new class of tireless and super-smart AI agents will also continuously monitor supplier performance for you, constantly sifting and assessing their financial health and other risk factors. Imagine all that happening automatically in the background, leaving you confident that no potential issues will sneak up and surprise you.
These AI agents will also provide other sorts of useful advice, like recommending risk mitigation strategies such as diversifying the supplier base. This will enable finance to become a much better business partner and be seen as a leader in harnessing technology that boosts the bottom line.
Handling Complexity Gets Fast and Frictionless
AI will also mean procurement and business units will work better together, properly orchestrated across multiple data sources and workflow. It will evolve beyond automating simple tasks to managing complex trade-offs, identifying risks and optimizing workflows across multiple departments and stakeholders.
This will mean greater human interaction delivering more timely, informed, value-driven decisions based on a wide range of factors—which could prove extremely important in 2025. That matters because all this reduced friction and convenience means that businesspeople will be much less likely to avoid following established financial policies. For example, let’s say someone is using an agentic-enhanced AI system to arrange travel. Instead of just codifying the company's travel policies into an online booking tool, a smart assistant proactively looks for opportunities to optimize the travel arrangements—flights, but also their ground transportation, hotels and other factors of the trip. Even better, with the latest in Gen AI natural language interfaces, it can chat with the user to get their approval and fine-tune the arrangements.
Gamification Will Motivate Users, Lower Costs and Boost Efficiency
I also see all this technology unleashing a really powerful aspect of human psychology that your colleagues in L&D are already very familiar with—gamification. Over the course of what could be a complex year, I foresee organizations experimenting with tech-supported but user-driven (and welcomed) policies that incentivize employees to identify and capture savings and, virtuous-circle-like, making internal value optimization a goal the team can get behind.
To make all that a bit more concrete, let’s return to that business flight example. Let’s say the AI travel “agent” knows a particular flight to London typically costs $1,000 but has spotted and recommended one for $800. An incentive for the traveler to save the company $200 might be allowing the department to keep 50% of that savings in their budget (while the other 50% would go back to the corporate P&L as realized savings). Setting up processes whereby teams are recognized and congratulated publicly for making savings could be incredibly motivational.
I can see this kind of playfulness and responsiveness encouraging an environment where users are motivated to work with the agentic procurement system to find savings and undertake competitive sourcing, as they directly benefit from doing so. It also aligns the users’ interests with the company's goal of reducing costs and improving efficiency. A win-win all around.
Excel Lives On Alongside AI-Powered Systems
The spreadsheet isn’t dead, and in fact looks set to be with us for years to come. But autonomous (that’s to say, AI-powered) procurement offers a much more advanced and systemic approach for solving complex buying problems.
As stated, that’s through its extensive but conscious use of AI agents that can run simulations, make predictions and communicate with humans to make decisions. The type of analysis required for complex procurement decisions goes well beyond what can be done in ordinary rows and sheets. For example, a business might continuously monitor competitor contracts, analyze product usage data and then use that to inform contingent labor contract decisions at levels of complexity and detail that would be impossible to manage in a flat spreadsheet.
In other words, while 2D tools got us this far, their limitations are becoming evident. To seize all the opportunities of 2025 and beyond, we’re going to need something with much more intelligent firepower. Maybe it’s no coincidence that Agentic AI came along just in time to help overcome the challenges of the “interesting” 2020s.
