NASPO: Digitization and AI Are Reshaping State Procurement

Procurement Offices Tackle Transformation Challenges

State procurement is compliance-driven, as procurement staff must adhere closely to the laws of their respective jurisdictions.

“A lot of the procurement codes and regulations organizations have to deal with were written before we even had eProcurement systems, AI and a lot of other technologies,” Christensen says. “That means some procurement codes need to be updated to account for a lot of the situations that we find ourselves in these days.”

Nevertheless, Christensen says, procurement offices are already benefiting from digital technologies.

“We've embraced a lot of that technology,” he says. “And I think it has transparency, since with many of these different systems, everything is tracked and logged, so there's that perfect audit trail.”

RELATED: eProcurement is revolutionizing state procurement.

Change management, training and carefully selecting use cases with input from users all play key roles in the ongoing digitization of procurement processes.

“It's hard to get people to adopt new technologies when they're very used to what they've had or what they've always used,” Christensen says. “They need to feel like they have a voice and that their concerns are heard and addressed.”

Recycling Time Savings Is Critical to Long-Term Success

Digital technologies free up resources by eliminating time-consuming processes. These savings can be reallocated to training, certification and initiatives that enable continuous improvements to boost agency customer service, according to Christensen.

For example, automating three-way matching for purchase-order verification is a potential way that digital technology can save time. Likewise, tools such as intelligent document processing and robotic process automation can integrate with an enterprise resource planning system to reconcile expenses associated with the procurement process. Discrepancies and other issues can then be escalated to employees, Christensen says, who would now have more time to focus on problem-solving and working more directly with other agencies.

There have also been efforts, especially at the federal level, to automate vendor responsibility review.

“Some agencies have created different tools that can automatically research databases to find instances of vendors having delivery problems with certain organizations, or other instances where they had great reviews on certain other ones,” Christensen says.

Other potential timesaving cases involve using generative AI as a research assistant tool to help in the development of requests for proposals. Some organizations in the private sector have even created AI chatbots that answer questions about RFPs, according to Christensen.

Traditionally, procurement training has been conducted in classroomlike settings, usually on a quarterly basis. But rapidly changing technology demands a continuous approach to learning, and Christensen says time savings realized through digital technologies can be recycled into ongoing training programs.

“On-demand, microtraining and microcertifications allow people to learn these different skills in different environments faster than they otherwise could.”

Cooperative Purchasing, Local Procurement Are Potential Winners

In the long run, knowledge and resources cultivated at the state level have the potential to trickle down to local procurement offices. 

“If a state has been able to help modernize or has implemented some of these tools or resources, then you've got a lot of support and justification from some of the other local organizations that think, OK, if the state is doing this, then it's acceptable,” Christensen says.

Digital technologies also can be used to flag cooperative procurement opportunities.

“We’re actually working right now with the University of Utah on creating an AI solutions cooperative contract portfolio that would be available nationwide,” he says. Cooperative procurement generally offers better terms to buyers, which is important for budget-strapped jurisdictions.

At the end of the day, Christensen says, these modernization efforts all come back to citizens, directly or indirectly, in the form of better, more cost-effective procurement.

“A lot of these AI tools can help make state and local procurement staffs more effective, and that's going to help them better serve their communities.”

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