Predictive procurement for insurers and financial services companies

As financial services and insurance companies evolve their legacy procurement strategies to include advanced data analytics and AI, organizations that are already implementing strategies that lean on these technologies are likely to be ahead of their peers.

Tiffany Jensen, Head of Financial Services at Amazon Business, has seen how this evolution has led to smarter spend management, competitive advantages, and operational efficiencies. But how can companies get started?

Perhaps most importantly, they should know they aren’t alone.

“Digital transformation is an important objective for the majority of our financial services and insurance customers,” Jensen said.

What is predictive procurement?

Predictive procurement is a strategic approach that uses data analytics and artificial intelligence to forecast, anticipate, and address procurement needs and challenges.

For example, MIT Technology Review Insights shared that AI procurement tools can help recognize patterns that indicate an emerging supply shortage. Those tools can automatically recommend product alternatives to business buyers, which can prevent supply issues.

Julie Scully, Director of Software Development at Amazon Business, told Insights that AI-based procurement tools can sift through “millions and billions of data points to recommend and suggest items that the employee may not have even thought of”.

“As we get into really large language models, AI/ML can help answer questions or help buy items you didn’t even know you needed by understanding your particular situation in a much more detailed way,” Scully told Insights.

Procurement teams trending toward automation

Data shows that procurement strategies that lean into automation are becoming more widespread. The 2024 State of Procurement Report found that about 60% of companies use procurement analytics or reporting tools.

Roughly half of survey respondents also said they have automated manual procurement processes (54%). Forty-seven percent are tapping into AI-driven optimization of purchasing decisions, while a staggering 98% of respondents reported plans to invest in analytics, insights tools, automation, and AI in the next few years.

Where do insurers and financial services companies start?

Jensen said that change management can be a key obstacle that prevents insurers and financial services companies from taking this technological jump. She explained that getting users to adopt new technology presents challenges, such as considering the human element when shifting to a culture of innovation.

Additionally, when it comes to technology, insurance and financial services companies often trail behind their peers in other industries because they may have more regulations to comply with and historically manual procurement processes in place.

Jensen’s advice to insurance and financial services procurement teams is to identify the most pressing pain points and prioritize improvements that address them. If visibility into spend is a pain point, for example, Amazon Business Analytics can help procurement officers capture correct data and provide ongoing visibility. Or, if maintaining controls is a challenge, implementing buying policies on Amazon Business can assist with providing the control procurement teams need.

How Amazon Business can help

Amazon Business integrates with a wide range of systems, enabling financial services customers to streamline operations within their existing procurement solutions. Amazon Business can also help with implementation planning and act as a strategic partner, providing tools and training to support effective change management.

“Digital tools are not a fad,” Jensen said. “They’re here to stay.”

From small businesses to Fortune 100 companies, Amazon Business can meet and support insurance and financial services organizations at any stage of their procurement journey.