“We’re in a new world where we’re trying to converge all these different areas, not only to fix problems, but to drive different kinds of capabilities for procurement, ones that are not theoretically possible with the old approach.” – Nick Heinzmann, Head of Research at Zip
Towards the end of 2024, I was one of many procurement leaders invited to contribute to a report full of 2025 predictions. I suggested that this year procurement teams will be under increased pressure to do more with less, leading to an adoption of tools – and, yes, AI – that enable stakeholder-led automated and semi-automated buying.
In this same report, Nick Heinzmann, Head of Research at Zip, suggested that 2025 will become what he called procurement’s “year of convergence.” I found this idea very interesting, so to explore further, I invited Nick and his colleague Matthew Hardin, Director of Advisory at Zip, to share their vision for 2025 and how they think it will impact the procurement operating model of the future.
Here, in their own words, are some of the key highlights from our conversation:
The Three Forces of Convergence
“It’s a really interesting year that we’re in right now, because as I look back even to 2020, there’s been a lot of trends bubbling up,” Nick said. “The first one, which is probably not surprising to anyone, is AI. The second one that’s converging is orchestration. And the last one is procurement itself. These three things – procurement, orchestration, and AI – are all converging on the same problems.”
Breaking Free from Traditional Models
“We have the ability now to move really quickly into strategic activities and impact because of the technology that’s available,” Matthew observed. “It used to be very 1) people 2) process and 3) technology, in that order. That’s not the case anymore. All three have to be evaluated in parallel.”
Where AI Ends and Humans Begin
“People are always going to be at the core of successful procurement functions, but I think that the people’s time will be spent more with person-to-person interaction and establishing and generating value,” Matthew told me. “Some of that being relationship-based, which, I think, is one of the most exciting and interesting components of being successful in procurement.”
Beyond the Operating Model Pendulum Swing
“What I would love to see in this decade is that we stop having to swing back and forth because, really, the swing is a little nauseating,” Nick joked. “Instead of being fully decentralized or fully centralized, procurement in the background view is really orchestrated. It’s one where there is centralized control and visibility, but you can enable that decentralization.”
The Importance of Measuring Procurement’s User Experience
“It’s important to evaluate a user’s emotional state as they navigate a process that you’ve designed and are requiring them to participate in for you to be successful,” Matthew pointed out. “You have to understand what their state is as they move through that process, and that’s a critical component of your success.”
Risk as a Driver for Transformation
“In some of our most interesting collaborations with customers, risk is always in the room,” Nick confessed. “Rather than procurement just being an order taker and a transaction processor, there’s this realization that in order to address enterprise level risks, which can be regulatory, they’re essential existential to the company.”
Design Procurement for Flexibility
“When people approached past transformation exercises in the name of efficiency, what they often ended up doing was creating very brittle processes,” Nick admitted. “Increasingly, what people are doing now is they’re actually trying to tame the complexity with design simplicity.”
