Digitalisation is a necessity within procurement, however according to a report from Deloitte, the level and pace of digitalisation across procurement functions is lower than expected and needed. Deloitte performed a survey among CPO’s across different industries and countries. Their findings: Only 4% of procurement leaders believe that procurement has a great influence in delivering their organisation’s overall digital strategy and only 6% of the procurement leaders believe that their digital procurement strategy will help them to fully deliver on their objectives and improve enterprise value. Only 18% of procurement leaders have a digital procurement strategy supported by a complete business case.
The study also shows what CPO’s think the effect of digitalisation will have on their operations. 66% of procurement leaders expect that vendor management, sourcing and buying, and business planning and strategy development will undergo the largest changes due to digital technology over the next five years. Having said that, 18% of procurement leaders also indicated that business planning and strategy development (including spend analytics and research) is the least likely to change.
When thinking about the shift towards more robotics and automation, the importance of data grows. How good is the quality of data in your ERP and other platforms? Is your vendor master data reliable enough? Do you know the vendors in your system? Another important finding in the report is; data transparency is a key outcome of the digital transformation. Digital procurement solutions enable better data-driven insights through analysis of previously unavailable data, leading to more effective use of resources, efficient operations and better-informed decision making. Procurement officers globally recognise the strength of better data-driven insights: 50% of respondents indicated that they are proactively leveraging intelligent and advanced analytics for cost optimisation, and 48% process efficiency improvement.
Over 45% of procurement leaders believe lack of integration and poor-quality data are key barriers to the effective application of digital technology in procurement, and the problem is accentuated by a reduction in stakeholder endorsement and prioritisation.
Although there are challenges and hurdlesto the application and adoption of technology, some organisations are scaling their digital plans. Digitally maturing organisations are better at planning a long-term digital strategy, investing adequately, attracting talent and developing a digital culture. Additionally, it is critical to implement digital strategy in an agile manner and scale small experiments into enterprise-wide initiatives.
All insights and numbers have been taken from The Deloitte Global Chief Procurement Officer Survey 2018.