Procurement’s AI Adoption Parallels – and Affects – Indirect Tax’s AI Use

In the past 18 months or so, many procurement groups have leveraged artificial intelligence (AI) tools to improve productivity, reduce spending and more effectively manage supply continuity. A recent study of procurement transformation conducted by the benchmarking and consulting firm, The Hackett Group, shows that “digital procurement and automation” and “AI and/or GenAI” ranks among the most effective enablers of procurement transformation.

Both trends have implications on the end-to-end indirect tax lifecycle.

Procurement teams, which anchor the procure-to-pay lifecycle in organizations, negotiate contracts with suppliers and manage vendor relationships. Any errors or oversights related to tax codes, tax determinations and exemption certificates during those purchasing activities can have negative repercussions on tax compliances. Accounts payable (AP) teams are also part of the P2P lifecycle, and their work frequently intersects with tax compliance activities. As such, it’s important for indirect tax groups to keep tabs on how procurement groups are transforming. 

From a systems and technology perspective, 49% of procurement teams piloted GenAI last year; that’s more than twice the portion of procurement groups that test-drove these tools in 2023, according to The Hackett Group’s report. The benefits of this Gen AI usage include improvements to contract lifecycle management, category management and customer support. 

The Hackett research also indicates that roughly 47% of organizations use embedded GenAI features in existing procurement solutions, while only 30% rely on custom-built or general-purpose GenAI tools. Indirect tax groups also have the opportunity to leverage these features in existing tax automation solutions. “This includes Vertex, where AI plays a pivotal role in revolutionizing tax automation,” according to my colleague, Vertex Director Product Management, Data & Insights and AI, James Bartol.

In a recent post, James highlights the benefits of Vertex Copilot, a conversational AI assistant that revolutionizes how tax professionals interact with their indirect tax compliance platform. 

As indirect tax and procurement groups embrace advanced technologies and progress on their transformation journeys, it is important for them to work together.  

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