How technology is revolutionizing the procurement business

Customers

Article Mar 13, 2024 Read time: 1 min

Chain IQ is partnering with Kyndryl on its digital journey to become the leading technology-based professional service provider for indirect procurement

Procurement is witnessing a new era of growth as the world adapts to supply chain disruptions, technological advances and sustainability requirements. The new normal is here to stay, and procurement aims to embed agility, innovation and technology into every aspect of the value chain. Analysts report that indirect procurement is growing roughly 7% a year globally, but few companies have turned this opportunity into a competitive advantage.

From left: Herbert Brecheis, CIO of Chain IQ Group; Xerxes Cooper, president of Strategic Markets at Kyndryl.

Chain IQ, a global leader in indirect procurement managed services headquartered in Switzerland, is driven to bridge this gap for its clients. By offering strategic procurement solutions, Chain IQ enables organizations to leverage these global trends and transform procurement challenges into competitive value creation.

One of the steps to achieve this vision was for Chain IQ to go with a cloud-only strategy and modernize its IT infrastructure. Leveraging its partnership with Kyndryl, Chain IQ has enhanced its operational efficiency and strengthened its ability to serve its clients more effectively. This collaboration has resulted in a simplified technology landscape for Chain IQ, facilitating a modern infrastructure for its clients who aim to capitalize on procurement's potential. Achieved in just five months, this initiative demonstrates a rapid return on investment, underscoring the tangible benefits of modernizing procurement practices through strategic partnerships.

Here, Herbert Brecheis, CIO of Chain IQ Group, and Xerxes Cooper, president of Strategic Markets at Kyndryl, discuss key trends and lessons for IT leaders in procurement, and provide insights into their successful collaboration.

What are the key drivers for Chain IQ’s modernization and simplification in the indirect procurement space?

Brecheis: Chain IQ is determined to take indirect procurement to the next level, concretely, to provide value beyond cost reduction. Today we are offering our clients a fully digitally-supported end-to-end procurement managed service value chain, increasing efficiency, assuring compliance with the latest environmental, social and governance (ESG) regulations and rules, leveraging AI in creating spend cube transparency, and defining category strategies or offering chatbots helping to guide clients through buying channels. We guarantee up to 40% accumulated savings of customers’ annual indirect spend over five years.

However, Chain IQ’s impact is not just about significant profit and loss (P&L) effects, as we aim to generate value far beyond cost reduction, transforming indirect procurement toward a world-class, resilient and digitalized end-to-end function. To offer this competitive advantage and be an industry frontrunner going forward, we continue to invest significantly in our future.

Our strategic ambition is to build a market-leading procurement platform that seamlessly connects clients and suppliers by leveraging vertical AI, based on domain-specific datasets and a procurement-based large language model (LLM). The system will be capable of processing multimodal information, generating optimized decisions in the context of cost, quality, resilience and ESG targets.

What are the common misconceptions enterprises have around IT modernization? How did Chain IQ do it differently?

Brecheis: Companies often believe that steady, step-by-step migration to the cloud is the safest and least expensive approach to IT modernization. From our own experience, it is the exact opposite. It is better to sprint for a quarter than run a marathon for years at a time when public cloud-based services allow for quick implementation — especially at a time when cloud providers have reached high levels of maturity. Moreover, the real benefits, particularly the radical simplification, can’t be achieved if there is still any on-premises infrastructure left.

Cooper: If the management of “new” and “existing” infrastructure is drawn out for a long time, it ties up capital and resources. It is also a common practice in many companies to carry out optimization in silos, shying away from modernizing their IT estates as a whole and aligning it to their company’s goals. Taking a holistic and consistent approach is challenging no doubt, but it is possible with proper governance and management support.

Another longstanding myth is that cloud migration is a costly undertaking for businesses. This is only true if the switch is not made consistently. Kyndryl’s success story with Chain IQ shows that once the transition to cloud is implemented, costs may be reduced, security can be enhanced and user experience can be improved.

What unique value did Kyndryl bring as an IT partner?

Brecheis: Kyndryl — along with its alliance partner, Microsoft — helped in building a secure foundation for Chain IQ on Azure, while ensuring that the new virtual networks, servers and storage were seamlessly integrated with existing applications. The users were migrated to the new environment, along with the applications and data. We have successfully replaced our on-premises environment and its complex network and IP telephone system with Microsoft Teams and installed a simple network connection to the internet in all locations.

As part of this transformation, Kyndryl and Five9 rapidly deployed a business-critical Five9-based Contact Center-as-a-Service across Europe, India and Singapore, while integrating telecom providers and backend systems — all in a matter of a few weeks. What stands out in all this are Kyndryl’s capabilities in carrying out these migrations without disrupting ongoing operations, thus reducing a great deal of complexity.

Cooper: Kyndryl’s deep understanding of Chain IQ’s needs comes from our own experience as a relatively new company. As a newly independent company, Kyndryl was tasked with a massive digital transformation to reduce costs, drastically simplify our complex application landscape, and offer our employees and customers an improved experience. The fact that Kyndryl was able to drive and complete its own modernization at scale globally and save in costs is telling of the insight and expertise we infuse into our customers’ projects, regardless of their size or industry.

What is the secret to this successful collaboration?

Brecheis: The aim to be a full cloud company is a strategic pillar of our digital vision that adopts a client- and business-centric approach, aligning both people and technology. This vision is endorsed by our top management.

Our collaboration with Kyndryl as our IT partner is based on freedom of action, personal accountability and the collective will to succeed. The project team, led by our Head of Infrastructure, Felix Burri, took many decisions directly together with the Kyndryl team — empowered people are an absolute must to provide agility and success in such complex projects. Throughout the organization, we share a clear idea of the business objectives, the supporting IT architecture and the necessary steps that need to be taken. This is key to our successful collaboration.

Cooper: Great collaboration cannot be achieved by implementing a project with incremental improvements. IT partners need to operate like a “task force,” where an enormous amount can be achieved in a short time. This is especially important when we communicate with each other as it motivates everyone to function in a more goal-oriented and effective way than they are used to. On the Chain IQ project, our teams were able to drive high levels of efficiency through direct communication and nimble decision-making.

What has been the business impact overall?

Brecheis: Only five months into our IT transformation efforts, we are seeing substantial returns on our investment. Our workforce is now able to work securely from anywhere in the world thanks to the full integration of mobile devices and the simplified network topology — making for an improved employee experience overall. Chain IQ is now fully scalable to operate with business continuity and security, ready to take the next step to achieve our vision. This in turn means that we can expand to new locations and offer clients new services such as contact service centers.

Cooper: Chain IQ’s new IT enables them to implement workflows themselves, use AI and seamlessly exchange data with clients in a secure way. End users — who barely noticed the transition when it was underway — have been providing positive feedback and are excited by the possibilities that Microsoft 365 and Microsoft Teams can offer them.