Procurement Lacks Tech Prowess

Few procurement organizations are applying digital technologies anywhere near optimally, and in fact many are actually regressing, Deloitte report ...
David McCannApril 18, 2018
Procurement Lacks Tech Prowess

Digital technologies may be taking over a broad swath of corporate processes, but the procurement function is lagging far behind in that respect, according to a new Deloitte report.

A meager 3% of chief procurement officers (CPOs) said they believe their staffs possess all the skills required to maximize the use of digital capabilities, according to Deloitte’s global survey of 504 CPOs.

Other findings were similarly dismal:

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  • A mere 4% of CPOs judged that procurement has a big influence in achieving their organization’s overall digital strategy.
  • Just 6% of CPOs perceived that procurement’s digital strategy will help them to fully deliver on their objectives and improve enterprise value.
  • Only 18% of CPOs said they even have a digital procurement strategy supported by a complete business case.

“Few organizations appear to be progressing at the rate that their C-suite executives consider necessary for achieving overall goals,” Deloitte laments in its survey report.

Most distressing of all, procurement organizations actually seem to be regressing, in terms of the perceived business impact of various aspects of technology on the function.

For example, in Deloitte’s 2017 CPO survey, 64% of participants said analytics will have a strong impact on procurement over the following two years. In the new survey, only 54% said so.

The pattern of perceived declining impact was registered for many other technology areas as well: renewal of strategic tools for sourcing and supplier management; renewal of operational tools, such as for e-procurement; ERP platform renewal; digital technologies like mobile and social media; cloud computing; and cybersecurity.

In only one technology area, robotic process automation, did CPOs foresee an increasing impact on the procurement function. Even there, however, just 25% of survey participants said they’re using RPA at all, even for just a pilot program, and only 21% said the technology is under consideration. For 54% of CPOs, RPA is not even on the radar screen.

In fact, across 12 specific technology types — including collaboration networks, advanced analytics, visualization, artificial intelligence, sensors, crowdsourcing, blockchain, and others — in no case did more than 34% of CPOs report current usage.

As a result, missed opportunities abound. “Applying digital technologies to the procurement function will enable strategic sourcing to become more predictive, transactional procurement to become more automated, supplier management to become more proactive, and procurement operations to become more intelligent,” Deloitte writes.

What’s causing the slow pace of leveraging digital technologies? Almost half (46%) of respondents cited insufficient data integration, while 45% cited poor data quality. Between 20% and 30% of CPOs pointed to limited endorsement and priority among senior stakeholders, capabilities of analytics resources, limited knowledge of data technology, poor systems adoption, and availability of data.

“Although there are challenges and barriers to the adoption of technology, some organizations are scaling their digital plans,” Deloitte allows. “Digitally maturing organizations are often better at planning a long-term digital strategy, investing adequately, attracting talent, and developing a digital culture.”

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