Two thirds of procurement teams have no digital strategy

13 April 2017

Buyers doubt their business’s capacity to cope with digitisation changes that will affect the way procurement will deliver services, a survey has found.

More than eight in 10 respondents to Hackett’s 2017 Key Issues Study believe digital transformation will fundamentally change the way their services are delivered over the next three to five years.

Yet only 32% of procurement organisations currently have a formal digital strategy in place and only 25% believe procurement has the right resources and competencies to execute that transformation, according to the survey results. 

The survey canvassed executives from more than 180 large companies in the US and globally, most with annual revenue of $1bn or greater.

There is a gradual shift  towards innovation and growth, and away from defensive strategies such as margin protection, enterprise cost reduction and portfolio rebalancing, according to the study findings.

This year, some 9% more respondents than last year expected to move towards a growth-focused strategy from a defensive strategy.

This year, cyber security was ranked as the highest risk, overtaking intensified competition which was the biggest concern last year. Disruptive innovation also featured this year as a high risk.

This year cyber security was ranked as the highest risk, followed by intensified competition and disruptive innovation. Last year intensified competition took the top slot, followed by access to critical talent.

More than twice as many respondents as last year reported that they had digital transformation initiatives either planned or under way. The number of respondents engaged in initiatives related to analytics has seen a similar rise.

To close the capability gap, stakeholder experience should be improved, operating procurement-as-a-service and setting a foundation of analytics-driven insights, the report recommended.

With procurement operating budgets expected to grow by less than 1% in the coming year, only some of the highest-priority initiatives can be funded, it said.

“If procurement is to remain relevant in 2017, it must embrace the tenets of digital transformation. A lack of confidence by the business about its ability to execute digital transformation brings procurement both opportunities and challenges,” it continued.

“By addressing its own shortcomings in capabilities and resources, procurement can transform as a function. Procurement leaders should ask some hard questions to assure themselves that steps are taken to avoid being left behind,” the report concluded.

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