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Survey Says: Procurement is Braced for Digital Transformation

A new report from University of Mannheim Business School in Germany and SAP Ariba reveals a procurement landscape that’s ready for digital transformation and change, but not quite sure how to get there.

If you were wondering where the typical chief procurement officer (CPO) stood on the digital transformation spectrum, a new study from the University of Mannheim Business School in Germany and SAP Ariba has at least some of your answers.

In their new 2019 CPO Survey, the two organizations paint a picture of a procurement landscape where some frontrunners are already taking charge when it comes to emerging technologies and digital transformation. Others are in the early stages of making these moves, and still others are sticking with a “wait-and-see” approach to these new innovations.

“Procurement organizations continue to evolve from a clerical back office function to a strategic business function that orchestrates supply networks, drives innovation and growth, aligns business operations with companies’ ethical and social values, and manages risk,” the organizations point out in a press release, “even as markets and technologies continuously change.”

The Key Findings
According to the survey, the university and the technology provider took the pulse of 466 different procurement executives. Through that effort, they found that:

  • 82% of CPOs believe digital transformation will affect procurement more in 2019 vs. last year.
  • 83.9% consider digitalization important to improving procurement performance.
  • 28% of CPOs rated their digital maturity as “better” or “much better” than their competitors.
  • Less than 15% of respondents are leveraging machine learning, 3D printing, or prescriptive analytic solutions.
  • More than 80% of participants are generally not risk-averse and are highly entrepreneurial.
  • Organizations are taking a wait-and-see approach to adopting emerging technologies.
  • Key goals for digitalization include automating processes, improving data quality, achieving cost savings, and improving compliance.
  • Just 65% of respondents are leveraging cloud solutions.
  • Predictably, budget restrictions, analytics/data insights, and the persistent talent shortage are the largest roadblocks for procurement function performance.

“While the adoption of mature technologies is moderate, the adoption of emerging technologies is dismal,” the reports points out. “However, certain industries have a significantly higher adoption of industry-specific emerging technologies.”

5 Steps to Success
Knowing the difficulties that procurement organizations face when implementing advanced technologies, the University of Mannheim and SAP Ariba suggest these strategies for organizations just starting down this path: 

  1. Investigate opportunities to embrace the wave of digital innovation and transformation.
  2. Evaluate new and emerging technologies like smart contracts, Artificial Intelligence (AI), predictive and prescriptive analytics, machine learning, chatbots, and robotic process automation. “They are the wave of the future,” the organizations write.
  3. Fund improvement opportunities through procurement efficiency and sourcing projects to overcome budget roadblocks by leveraging relationships and exposure to key financial stakeholders.
  4. Develop a talent management strategy to advance roles, skills, and knowledge.
  5. Consider investments in analytical tools, data, and information to advance the capabilities and know-how of procurement and sourcing professionals.

“Despite the roadblocks—budget restrictions, lack of analytics and data insights, and talent shortage—procurement leaders understand the urgency and importance of digitalization,” says SAP’s Dr. Marcell Vollmer in the press release.

“And, it will be important for them to continue to look for ways to bring intelligence to spend management, evaluating new and emerging technologies and embracing innovations,” Vollmer continued, “to elevate procurement’s role in driving revenue and innovation and not just cost savings.”

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