Advanced analytics has risen to the top in many industries right now, including both procurement and supply chain management. Defined by Gartner as the “examination of data using sophisticated techniques and tools to discover deeper insights, make predictions, or generate recommendations,” advanced analytics helps procurement departments conduct activities like spend analysis, risk assessments, and market intelligence.
If new research from The Hackett Group is on target, the use of predictive and prescriptive analytics for these procurement activities could explode over the next two to three years. Advanced analytics helps organizations improve financial performance, execute decisions as intended, and make better, faster decisions overall. To facilitate such improvement, organizations expect to increase mainstream adoption of advanced analytics and related tools in the near term.
“As digital transformation takes hold in organizations, executives increasingly are grappling with the new reality of how they will mine their companies’ massive quantities of data to improve performance,” The Hackett Group points out in Closing Enterprise Analytics Talent Gap: Building the Essential Skills for Insight-Driven Businesses. “If that seems like a tall challenge today, consider that we are still in the early stages of the digital revolution, and data volumes are expected to continue to grow exponentially.”
Consider these numbers: IDC projects that data creation will jump from approximately 20 zettabytes today to nearly 160 zettabytes in 2025. And, in its recent 2018 Key Issues study, The Hackett Group found that nearly 80% of executives said that improving functional analytical, modeling, and reporting capabilities for decision support was of high or critical importance.
Less Automation, Different Skills
As automation decreases the need for highly manual and task-oriented activities, The Hackett Group says organizations instead will need to create new roles and develop or acquire new skills: “These roles will require professionals to implement activities such as performing analyses, identifying and solving problems, serving as a business partner, mining data for new opportunities, and developing predictive models.”
Such roles include data architects, data scientists, digital partner behavioral scientists, and information security experts.
Here are six core competencies that The Hackett Group says procurement will need to be able to keep up with—or, stay out in front of—the analytics revolution:
- Data savviness—the ability to process and extract information, and to utilize analytical tools and methodologies.
- Business acumen—an understanding of key business drivers and insights into major factors, priorities, and business demands.
- Strategic mindset—the ability to develop strategic frameworks and visions, anticipate market changes, address challenges, and outline future direction for the organization.
- Relationship management—advanced interpersonal skills; high social and emotional intelligence; and the ability to positively influence decisions.
- Creativity and innovation—create diverse and novel ideas (or a novel combinations of ideas) and develop and recognize new patterns/categories.
- Agility and change orientation—be welcoming of change and comfortable with shifting priorities, all while being able to deal with ambiguity.
Advanced Analytics Tools Go Mainstream
Overall, 53% of executives surveyed expect mainstream adoption of advanced analytics tools within two to three years, up from about 8% today—an increase of nearly seven times, The Hackett Group reports, noting that the significant projected increases in mainstream adoption extend across multiple business functions (procurement included).
“While relatively few organizations have predictive or prescriptive analytics capabilities today,” it reports, “the finance, HR, and procurement leaders surveyed expect significantly increased use of predictive and prescriptive analytics tools across key functional processes within the next 12 to 24 months.”