E-commerce 'will change power balance in deals'

22 September 2016

The exponential growth of technology and data can be useful for procurement, but also has destructive potential, warned an engineer and policy consultant.

Professor Jim Norton said technology can already “change the balance of power” in purchasing relationships by allowing companies to aggregate their buying or selling power.

However, he said misusing e-commerce to drive down price had the potential to harm supplier relationships.

Norton said in particular data had the potential to reform procurement. Instead of robots taking work, he predicted the automation of low-level procurement processes would allow people to innovate. “I think you will see value added to that work,” he said.

Speaking at a CIPS fellows event on technology at the Oxford and Cambridge Club in London, Norton invoked the fable of the emperor and the chessboard. Asked to place rice in each square, doubling the amount in every time, the emperor was caught out by the exponential growth.

As a metaphor for the exponential growth of technology, Norton said we were now living in “the second half of the chessboard”, where fast technological advancement was the new normal.

Not all companies have found it easy to operate when the exponential growth of technologies or markets starts to take off, and technology companies in particular are “delivering more and more but not making money from it,” he said. “Microsoft is finding it hard to operate in the second half of the chessboard.”

The future is difficult to predict though, said Norton. He said as a young man he told his father there would be no future in the paper industry. However, today it is still strong and fuelled in part by the demand for packaging. “It’s good for the soul to be proven so thoroughly wrong sometimes,” he said.

Norton is a policy advisor, a non-executive director at B2B marketplace Applegate, and was one of the thinkers behind the Blair’s government’s e-commerce paper.

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