Procurement Leaders See Significant Impact from Cloud, Analytics, Robotic Process Automation, Cognitive & Mobile Computing, B...
March 21 2017 - 9:30AM
Business Wire
The Hackett Group’s Key Issues Research
Identifies Four Key Areas Procurement Can Focus on to Enable
Digital Transformation
While procurement leaders are almost universally aware of the
potentially dramatic impact of digital transformation on the way
they deliver services, few are confident that they have the
necessary strategy, talent and competencies in place, according to
new Key Issues research from The Hackett Group, Inc. (NASDAQ:
HCKT). The result is a gap between procurement’s transformation
agenda and enterprise-level digital transformation priorities, and
the risk that this gap may widen.
The Hackett Group’s research identified four key areas
procurement can focus in to enable digital transformation:
improving the stakeholder experience; orchestrating a
procurement-as-a-service portfolio; setting a foundation of
analytics-driven insight; and leveraging technology to accelerate
transformation.
A complimentary version of the research is available for
download, following registration, at this link:
http://www.thehackettgroup.com/research/2017/social-media/key17pr/
The Hackett Group’s research showed that nearly 85 percent of
all procurement organizations believe that digital transformation
will fundamentally change the way they deliver services over the
next three to five years. The use of cloud-based applications,
advanced analytics, robotic process automation (RPA), mobile
computing and big data are also expected to grow dramatically, the
study found. Yet only 32 percent of procurement organizations
currently have a formal digital strategy and only 25 percent have
the needed resources and competencies in place today.
The research also found very high levels of exposure to a broad
range of business risks and sharp projected increases in these same
risks over the next two years. The top four areas of projected risk
– cyber-security, intensified competition, disruptive innovation
and access to critical talent – are all related to structural
transformation of the business, which in today’s world is
inevitably digital in nature and driven by technology
innovation.
Adding to these challenges are resource constraints. The study
found that procurement operating budgets are expected to grow by
less than one percent in the coming year, requiring procurement to
prioritize and self-fund their goals of improving agility,
responsiveness and customer-centricity and supporting enterprise
digital transformation.
“The gap between awareness and capabilities in digital
transformation is not unique to procurement. We’ve seen similar
results in finance, HR, and even IT,” said The Hackett Group
Principal and Global Procurement Advisory Practice Leader Chris
Sawchuk. “Yet it is disconcerting to see that many procurement
organizations are simply moving ahead in this critical development
area without a comprehensive plan or the requisite talent. This is
simply not a recipe for success.
“Procurement has been focused on agility for several years now,
and today, digital transformation is clearly a strong way to enable
that, while at the same time improving efficiency and
effectiveness,” said Mr. Sawchuk. “But procurement leaders need to
make sure they are aware of the technology that’s out there,
understand which ones they want to focus on first, and build a
foundation on which they can move forward.”
The Hackett Groups research detailed four areas that digital
transformation of procurement organizations should focus on:
Improving the Stakeholder Experience – Top-performing
procurement organizations have already unearthed most of the
significant opportunities for cost savings and efficiency gains,
and many are now focusing on improving the stakeholder experience
as a way to create additional value. Raising stakeholder
satisfaction is a strong strategy to help procurement gain
organizational permission to take on higher level work. The Hackett
Group’s research identifies three areas strategies that are key to
success in this area: build an omni-channel and personalized
stakeholder experience; measure value beyond savings; and segment
the stakeholder community to find the right service level mix.
Orchestrating a Procurement-as-a-Service Portfolio - An
“as-a-service” portfolio refers to streamlining the buying
experience and creating an organizational model that permits
procurement to be closely aligned to its primary stakeholders so it
can react quickly to changing requirements. To achieve this, The
Hackett Group recommends that procurement take the following steps:
develop a well balanced portfolio of sourcing and purchase-to-pay
service offerings; rebrand the procurement organization to increase
awareness and influence; and optimize use of centers of excellence
and placement of resources globally.
Setting a Foundation of Analytics-Driven Insight - As
procurement’s role matures from transactional facilitator to
trusted business advisor, a key enabler is proficiency with “big
data,” next-generation analytics that offer an unprecedented
ability to quickly model massive volumes of structured and
unstructured data from multiple sources. To take full advantage,
The Hackett Group recommends that procurement organizations: invest
in training for analytics, center of excellence and special
projects teams; deliver new forms of market intelligence, in part
by using third-party category intelligence reporting services; and
mitigate risk through predictive forecasting.
Leveraging Technology to Accelerate Transformation -
Technology is at the heart of any digital transformation. To ensure
a successful transformation, The Hackett Group suggests that
procurement should: find the right mix of suite versus niche
software solutions; build flexibility into the roadmap to take
advantage of emerging technology; and help improve technology
sourcing for the company.
According to The Hackett Group Senior Research Director Patrick
Connaughton, “Working with some of the top procurement
organizations in the world, we’ve clearly seen that the results of
digital transformation can be truly exceptional,” Connaughton
explained. “We’ve seen many procurement organizations enable
source-to-pay with an integrated technology suite. The combination
of cognitive computing with advanced analytics can dramatically
improve effectiveness in risk forecasting and modeling. Robotic
process automation is clearly a powerful technology that
procurement can harness to improve efficiency. Social media offers
some truly innovative ways to collaborate more effectively with
suppliers. And these are just a few of the more popular areas where
procurement organizations are choosing to move forward.”
The Hackett Group’s 2017 Procurement Key Issues research, “The
CPO Agenda: Keeping Pace With and Enabling Enterprise-Level Digital
Transformation,” is based on results gathered from executives from
more than 180 large companies in the US and abroad, most with
annual revenue of $1 billion or greater.
About The Hackett Group
The Hackett Group (NASDAQ: HCKT) is an intellectual
property-based strategic consultancy and leading
enterprise benchmarking and best practices implementation
firm to global companies. Services include business
transformation, enterprise performance
management, working capital management, and global
business services. The Hackett Group also provides dedicated
expertise in business strategy, operations, finance, human capital
management, strategic sourcing, procurement, and information
technology, including its award-winning Oracle EPM and SAP
practices.
The Hackett Group has completed more than 11,000 benchmarking
studies with major corporations and government agencies, including
93% of the Dow Jones Industrials, 86% of the Fortune 100, 87% of
the DAX 30 and 52% of the FTSE 100. These studies drive its Best
Practice Intelligence Center™ which includes the firm's
benchmarking metrics, best practices repository, and best practice
configuration guides and process flows, which enable The Hackett
Group’s clients and partners to achieve world-class
performance.
More information on The Hackett Group is available at:
www.thehackettgroup.com, info@thehackettgroup.com, or by calling
(770) 225-3600.
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The Hackett GroupGary Baker, 917-796-2391Global Communications
Directorgbaker@thehackettgroup.com
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