The Digital Business Depends upon Orchestration and AI InfoBrief, sponsored by ServiceNow | May 2025 Mickey North Rizza Group Vice President, Enterprise Software, IDC 2InfoBrief, sponsored by ServiceNow May 2025 | IDC #US53352525 The Digital Business Depends upon Orchestration and AI Table of Contents CLICK BELOW TO NAVIGATE TO EACH SECTION IN THIS DOCUMENT. Top Concerns for Organizations Transforming to a Digital Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Digital Business Requirements Push Organizations to Improve Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Organizations Know They Need Process Improvements . . . . . . . . . . . . . . 5 Employees’ Pain in Completing Tasks Reveals Technology Issues and the Use of Bandages to Work Effectively . . . . . . . . . . . . . . . . . . . 6 Finance Transformation with AI Is a Business Imperative . . . . . . . . . . . . . 7 Manual and Semi-Automated Workflows Are Inefficient and Create Bottlenecks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Finance Struggles with Financial GRC and Operations . . . . . . . . . . . . . . . . 9 Orchestration and AI Bring Organizational Relief . . . . . . . . . . . . . . . . . . . . . . .10 Essential Guidance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 About the IDC Analyst . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Message from the Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 3InfoBrief, sponsored by ServiceNow May 2025 | IDC #US53352525 Table of Contents The Digital Business Depends upon Orchestration and AI Top Concerns for Organizations Transforming to a Digital Business of organizations are concerned about financial transformation. 44% of accounting and finance employees across Europe and the Americas are very concerned about financial transformation. worry about whether the addition of AI enablement to finance, procurement, and other functional workflows will benefit the business. 46% of IT employees across Europe and the Americas are very concerned about AI enablement across functional workflows. of organizations across Europe and the Americas are troubled by economic uncertainty. 44% of corporate executives and 30% of procurement professionals are worried about economic uncertainty. of organizations are worried about technology disruptions. 36% of IT professionals are quite concerned about technology disruptions. 36% 34% 31% 31% n = 819; Source: IDC’s ServiceNow BB Digital System Workflows Survey 2024 — Final, December 6, 2024 4InfoBrief, sponsored by ServiceNow May 2025 | IDC #US53352525 Table of Contents The Digital Business Depends upon Orchestration and AI Digital Business Requirements Push Organizations to Improve Performance Note: Digital business processes are defined as new technology/innovation that provides rationalization and automation. n = 819; Source: IDC’s ServiceNow BB Digital System Workflows Survey 2024 — Final, December 6, 2024 What were the three most important business outcomes your organization was trying to achieve from your digital business process initiatives in the last 12 months? Increased operational efficiency/employee productivity . . . . . . . . . Improved customer satisfaction . . . . . . . . . . Revenue growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Faster innovation/time to market . . . . . . . . . These translate to the following outcomes: Operational efficiencies and employee productivity improvements mean better key performance indicators (KPIs) and increased decision velocity to improve customer satisfaction and revenue growth. Manufacturers are working toward improved operational efficiencies, employee productivity, and revenue growth. The public sector needs to improve employee productivity and achieve cost savings. The telecom, media, technology, and financial services industries need to improve operational efficiencies/ employee productivity and customer satisfaction. 41% 36% 36% 34% Improved employee satisfaction. . . . . . . . . . 34% Improved business agility . . . . . . . . . . . . . . . . . . 31% Cost savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31% Reduced business risk . . . . . . . . . . . . . . . . . . . . . 26% Shorter process cycle times . . . . . . . . . . . . . . . 23% Critical factors such as improving automation across all organizational workflows and removing manual processes have been paramount to organizations. 5InfoBrief, sponsored by ServiceNow May 2025 | IDC #US53352525 Table of Contents The Digital Business Depends upon Orchestration and AI Procurement Relies on Collaboration from Customers to Suppliers and Insights into Many Other Process Areas to Run Efficiently and Effectively Organizations Know They Need Process Improvements Which of the following areas need the most process improvements in procurement? Orchestration and AI Can Help American and European Procurement Organizations are currently investing in or using orchestration layers that sit with existing applications and facilitate dynamic and efficient workflows to execute day-to-day transactions/business processes. are embedding AI into workflows. will invest in AI-embedded applications in the next 12–24 months. will purchase AI workflows. 78% 34% 42% 37% 32% Contract life-cycle management Contract initiation, authoring, negotiation, contract approval, contract execution, contract monitoring and management, contract renewal or termination, contract KPIs, contract repository, etc 31% Supplier assessment Supplier qualification, supplier selection, quality agreement, supplier assessment, supplier audit, supplier performance/QBR 28% Vendor/supplier management Onboarding, communication, master data management 27% Procurement operations Request orchestration, exception management, status visibility, etc 21% Order/invoice Invoice, AP reconciliation, dispute management, dunning, payment processing n = 612; Source: IDC’s ServiceNow BB Digital System Workflows Survey 2024 — Final, December 6, 2024 40% Customer collaboration Key customer requirements for suppliers; stakeholder engagement: sales, marketing, customer success, product development, sourcing/ procurement; customer insights and analysis for trends/improvement 35% Supplier collaboration Both parties share: demand forecasts, inventory levels, sales/point of sales data; established standardized processes/workflows/systems; established KPIs/performance levels; performance review/QBR 35% Procurement dashboards/insight Sourcing events; supplier information/performance/management; procure-to-pay activities; AP issues, quality issues, contract management, contract renewal or termination, etc 32% Sourcing Supplier discovery, supplier recommendations, supplier qualification, supplier selection, negotiation, contract, SOW, purchase orders 6InfoBrief, sponsored by ServiceNow May 2025 | IDC #US53352525 Table of Contents The Digital Business Depends upon Orchestration and AI 89% Employees’ Pain in Completing Tasks Reveals Technology Issues and the Use of Bandages to Work Effectively The top 5 biggest pain points when performing or finishing job tasks of organizations are still using on-premises legacy applications. 76% of organizations are also using custom-built enterprise applications for many business process flows. Manual performance, metric, or KPI reports. . . . . . . . . . . . . . . . . . . Inconsistent data from one system to another . . . . . . . . . . . . . . . . Access to data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Process bottlenecks (waiting on others) . . . . . . . . . . . . . . . . . . . . . . . Forecasting and predicting the future . . . . . . . . . . . . . . . . . . . . . . . . . . Manual processes that must be done and reconciled to the technology systems . . . . . . . . . . . . . . . . . . . . . . . . . . 60% 59% 58% 58% 56% 55% Manual work I have to perform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50% 49% Not enough time to get everything done . . . . . . . . . . . . . . . . . . . . . . 46% Organizations have added bandages, but these don’t treat the root cause of using digital technology to decrease manual processes, improve transparency and real-time data use, enhance business performance with faster decision velocity, provide a composite view of technology systems and processes, and enable AI for employees. n = 819; Source: IDC’s ServiceNow BB Digital System Workflows Survey 2024 — Final, December 6, 2024 Not having the right systems to assist or do the work . . . . . . . 7InfoBrief, sponsored by ServiceNow May 2025 | IDC #US53352525 Table of Contents The Digital Business Depends upon Orchestration and AI Finance transformation is critical for all organizations, as is the addition of AI into finance and procurement workflows. Process complexity, too many repetitive tasks, and trying to orchestrate work across teams remain a concern, as organizations still don’t have the right tool sets, including AI, to solve these issues. Economic uncertainty and technology disruption are concerns, especially during times of market volatility, as technology’s coupling with AI is a critical assistant. Supply chain issues and talent shortages are on the rise; however, AI can help identify these problems faster. Finance Transformation with AI Is a Business Imperative Largest Concerns for Organizations n = 819; Source: IDC’s ServiceNow BB Digital System Workflows Survey 2024 — Final, December 6, 2024 Financial transformation Addition of AI to financial, procurement, or other workflows Economic uncertainty Technology disruption Talent shortages Trying to orchestrate work across teams Supply chain issues Regulatory changes Process complexity Repetitive/ mundane task volume 36% 34% 31% 31% 27% 27% 25% 25% 23% 23% 8InfoBrief, sponsored by ServiceNow May 2025 | IDC #US53352525 Table of Contents The Digital Business Depends upon Orchestration and AI Manual and Semi-Automated Workflows Are Inefficient and Create Bottlenecks Letter of Credit (LoC) Process Manual Business Process With Agentic AI Procurement Employee Supplier Finance Employee Agent Procurement Employee Modifies word LoC document Sends to supplier Receives and reviews information Sends to finance Reviews and notifies supplier and provides contract/SOW and onboarding begins Supplier responds with references and banking info Awards and signs SOW/contract Information reviews and approves supplier Creates and sends LoC supplier request Supplier responds with references and banking info Agent receives and sends through risk analysis Agent notifies system/ employee of approval Kicks off Third-party risk vendor/ agent approves Employee manages supplier and onboarding Enabling AI in procurement will help with: in automation, workflow routing, and task assignment in executing tasks in synthesizing information across data planes Source: IDC’s Modernization and Transformation: A Multitude of Software Pathways to Embrace, IDC #US53035025, March 2025 39% 38% 37% 9InfoBrief, sponsored by ServiceNow May 2025 | IDC #US53352525 Table of Contents The Digital Business Depends upon Orchestration and AI Finance Struggles with Financial GRC and Operations Which of the following areas need the most process improvements in finance? Orchestration and AI Can Assist Finance Organizations in Europe and the Americas Enabling AI for finance will help with: 44% are embedding AI into workflows.