Procurement digital transformation just around the corner, says study

Procurement professionals say they are already trailing robotic process automation (RPA), AI and blockchain technologies.

Almost all (95%) of procurement professionals believe digital transformation will fundamentally change the way procurement services are delivered within two to three years, according to a survey by consultancy The Hackett Group. 

Almost a third (30%) of respondents said they expect procurement processes to be transformed by digital activity in 2018.

The proportion of organisations with formal strategies for digital transformation has sharply increased year-on-year from 32% to 66%, with 46% of respondents saying they expect to have the appropriate resources in place to handle digital change.

Respondents said that only 8% of their staff were currrently involved in executing digital transformation initiatives, but predicted that 27% of procurement roles will be impacted by digital transformation in 2018/19.

When it comes to digital activity, 31% said they were already piloting artificial intelligence (AI), trialing technology like cognitive computing and virtual assistant technology. And 38% of procurement functions are engaged in pilots of RPA, according to the survey.

A third (33%) of organisations also claimed they were already trialing blockchain technology and 20% said they were piloting the Internet of Things.

According to The Hackett Group, use of RPA is expected to grow by 4.5 times in the next two to three years, while the use of blockchain is expected to grow by four times.

Constantine Limberakis, senior research director, Procurement Executive Advisory Program at The Hackett Group, said RPA and blockchain technologies had the potential to “help procurement yield new levels of data accuracy and intelligence”.

“RPA can help procurement teams dramatically improve process quality and focus more on strategic analysis and other activities that add value,” he said. “Blockchain can have a truly transformative effect, as it promises to revolutionise checks and balances between buyers and suppliers.”

However despite the investment in technology, procurement budgets are expected to fall by 0.3% in 2018. “This creates a significant productivity gap that procurement must overcome, which will make it challenging to invest in digital transformation efforts,” said the report. 

A separate piece of research by SAP Ariba found while 83% of respondents believe digitisation will profoundly impact their business, only 5% have highly automated processes in place.

SAP Ariba chief digital officer Marcell Volmer said digital transformation for procurement wasn’t without its challenges. 

“Within many organisations, insufficient analytics, poor data quality, budget restrictions and lack of talent are creating roadblocks,” he said.

“Over the next 10 years, companies will see more opportunity than they have in the past two decades combined. In embracing digital technologies and strategies, procurement can take the lead in maximising these opportunities  beyond delivering cost savings and process efficiencies, fuel innovation and market advantage.”

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