There is no doubt that artificial intelligence (AI) is a world-changing technology, comparable to PCs, smartphones, and the internet. And like all these breakthroughs, AI is having an incredible impact on both B2B and B2C operations.
Procurement, like many other business functions, is no exception. AI is reshaping the function in significant ways, and its impact is evident in how often it comes up in conversations with clients. The most frequently asked question is: “How do I implement AI in my business, and how can you help me do that?”
Although the question is important and urgent, it is often asked without considering the current state, functional objectives or the core problem(s) to be solved. If procurement teams don’t fully consider the opportunity, including benefits and challenges, they risk wasting valuable resources, time, and money on misplaced priorities.
To keep AI implementation on the right track, here are six traps to avoid in digital transformation.
1. The belief that AI can fix anything
One of the biggest traps is the belief that AI is a magical technology capable of fixing every problem in procurement. Unfortunately, it isn’t. While AI is a quantum technological jump, it cannot overcome fundamental problems such as poorly designed processes, bad or incomplete data, lack of policy or process or cultural compliance. Expecting AI to solve everything leads organizations down the wrong path.
AI only performs well when supported by proper processes, clear data, and thorough user training. Think of it like a Formula 1 car: on a well-engineered track with the right quality fuel and a trained driver, it excels. But put that same car on a muddy field with poor fuel; it will stall.
A better approach is to first understand the current state in terms of people, processes, and most importantly, technology and identify key procurement challenges. Then, evaluate which of these challenges AI can realistically solve, what preparation is required, and what investment is needed before moving towards implementation.
2. The desire to cure FOMO by jumping right in
With the level of frenzy that AI has created across not just procurement but every aspect of our lives, it’s natural to feel pressure to act quickly or risk falling behind. If businesses aren’t already using AI, a fear of missing out (FOMO) can set in. That pressure creates real risk, as FOMO often drives CPOs to launch costly AI investments without sufficient planning.
Before any investment, it’s essential to identify the problems AI is intended to solve and assess whether the organization is ready to support it.
In a recent client discussion, for example, the CPO wanted us to build and implement an AI transformation roadmap. After asking foundational questions, we found out that the company relied on on-premises platforms and ERP systems, due to strict data security requirements. This meant significant decisions, changes, and investments needed to happen before AI could deliver a meaningful impact.
3. The urge to build AI in-house
AI may seem user friendly, and many AI platforms now offer tools to build custom solutions and agents. But creating AI in-house requires significant investment to develop the technology, maintain infrastructure, and hire specialized talent to build and troubleshoot it. With AI evolving quickly, ongoing investment becomes a long-term commitment. Meanwhile, there is a plethora of plug-and-play AI products already available for almost every procurement need ranging from autonomous sourcing to contract authoring and redlining, to should-cost modeling.
Given this landscape, an asset-light and nimble strategy of buying existing AI solutions is often more practical and cost effective. Some situations with highly unique requirements may still call for custom development, but these should be exceptions. As the AI product landscape is growing and maturing at breakneck pace, new products for procurement and supply chain emerge every day. At minimum, organizations should conduct a robust make-versus-buy analysis before pursuing in-house AI development.
4. The drive to go big or go home by trying everything at the same time
This ties back to FOMO. AI influencers and AI product companies frequently showcase unrealistic results, leading some to want to experiment with every AI tool in the hope that something will succeed. In practice, this approach usually backfires and wastes time and resources at best and causes catastrophic disruption at worst.
While AI’s potential is proven beyond doubt, its applicability and results depend heavily on the maturity of the procurement organization and the specific problem being addressed. Launching too many AI initiatives divides time, attention, and budget and reduces the likelihood that any one effort will succeed.
A more effective approach is to select a high impact but narrow problem that allows for robust analysis and planning, sufficient training, and efficient oversight. This enables teams to execute quickly, learn from mistakes, and accelerate stakeholder alignment to build momentum for future projects.
5. Let’s wait and see where this is going!
This is an opposite reaction to FOMO. CPOs have seen plenty of technology fads throughout the years, from ERP to blockchain to robotic process automation. Not every innovation delivered business value to every organization, and many implementations exposed limitations along the way. These experiences can make leaders apprehensive about AI.
This can get reinforced by constant hype, unproven ROI, a lack of proven use cases, and the rapid pace of AI technology and innovation. As a result, a common response is to take a “wait and see” approach until the technology stabilizes. While these concerns are valid, the reality is that AI's value is proven beyond doubt, when applied with the right rigor and planning. Delaying action carries real risk. Waiting for things to stabilize will likely create significant competitive disadvantages in cost management, agility, stakeholder satisfaction, and supply chain resilience.
6. Treating AI the same way as earlier technology investments
This is another common trap CPOs face. Over the years, procurement executives have developed fixed views on where technology can make a meaningful impact, based on past technology changes like ERPs or S2P platforms. That mindset is now a limitation. Given the truly revolutionary nature of AI, this paradigm must shift.
There is no holy grail left for AI in procurement. Instead, procurement leaders must remain open to applying AI across workstreams that traditionally have been seen as strategic and therefore left largely untouched by technology. For example, AI has already demonstrated strategic value in areas such as strategic sourcing, supplier risk management, and market intelligence. However, many CPOs limit AI to more tactical functions like contracting and P2P. As a result, procurement organizations are either using AI to solve the same problems they were trying to solve with previous technologies or using AI as just a slightly more advanced automation tool.
To capture AI’s full potential, CPOs must challenge legacy assumptions about where technology can add value and explore across all levels of procurement including tactical, transactional, and strategic. This requires upskilling leaders and teams, including bringing in AI-ready talent, and leveraging external expertise during the early stages of building and implementing an AI strategy.
Navigating the path ahead
AI presents significant opportunities for procurement, but complete transformation requires a tempered approach. Procurement teams must first assess the current state, overall objectives, and long-term vision for AI. Available AI solutions should then be evaluated to determine those best suited for the organization. With this foundation, team can plan, prepare, and implement effectively. Understanding the common traps to watch out for will help ensure a smoother and more successful AI journey.
