Another year has rolled by leaving the same writing on the wall, only this time it’s louder and clearer: Digital transformation has well and truly arrived at procurement’s doorstep.
But up until now, it has merely received a lukewarm welcome.
In 2019, that could change. The winds of digital transformation are slowly but surely turning the wheels of procurement and savvy procurement teams are beginning to acknowledge its benefits. This is evident from how procurement teams are beginning to perceive digital transformation.
Consider this: A recent Hackett Group study titled, 2019 Procurement Key Issues, has revealed that digital transformation is a critical goal for a majority of procurement departments in 2019.
That’s because over the years digital transformation has moved its way up the ladder in the procurement department. In 2018, more than 90 percent of procurement professionals said they believed digital transformation will fundamentally shift the way procurement services are getting delivered within two to three years, according to a Hackett Group survey. Compared with 2017, this is more than a 10-percent increase.
Remarkably, the percentage of organizations that have a formal strategy for digital transformation more than doubled in the last two years, from 32 percent in 2017 to 66 percent in 2018. In the same period, the number of organizations indicating they have the resources to handle the transformation also increased, from 25 percent in 2017 to 46 percent in 2018.
This is a clear indication that in 2019 the gap between the promise of digital transformation and leveraging it to its full potential will narrow.
At the same time, the gap between CPOs who haven’t yet embraced digital transformation and high-performing procurement organizations that have already gained a first-mover advantage will widen. They’ll have a lot of ground to cover to keep pace with the latter.
But what’s triggering this uptake?
Digital transformation: Coming of age in 2019?
This progression is piggybacking on technology’s influence on consumers and their expectations, and sometimes, technology itself. Today, artificial intelligence-based apps are automating repetitive tasks like invoicing (e-invoices), thereby freeing up resources for innovation. The power of analytics in risk assessment and spend analysis will help procurement teams save costs and make informed decisions. This will give CPOs a seat at the business strategy table.
It comes as no surprise then that procurement leaders believe advanced analytics adoption will attain close to 60 percent impact growth in the next two years, according to the Hackett Group’s findings.
And the Internet of Things (IoT) – machines connected to the internet – will also have an impact. In warehouses, for instance, IoT-connected devices will keep track of deliveries. This, in turn, will help procurement teams track the individual performance of suppliers with greater accuracy. It will also help in gathering real-time feedback from customers, which can enhance customer experience and provide a competitive edge.
This is significant because, year-on-year, customer focus improvement and product/service portfolio innovation have featured in the list of top-three major initiatives in 2018 and 2019.
That will have an impact on the adoption of procurement technologies like e-procurement, e-invoicing, contract lifecycle management, and supplier relationship management in order to better customer and stakeholder experience. According to the Hackett Group’s study, between 2019 and 2021, these technologies will see significantly increased adoption as more CPOs realize the need and the potential of digital transformation.
But in order to get there and meet customer and business expectations, today’s Procure-to-Pay processes (P2P) need to be agile and have the ability to streamline user experience, according to the Hackett Group.
How can procurement teams do that in 2019? What are the trends shaping procurement in 2019? What challenges will they face?
In the webinar Hey Nineteen: Procurement’s Playbook for 2019 you’ll get the answers to these questions. On January 29 at 1:00 pm, join esteemed experts Chris Sawchuk, Principal and Global Procurement Advisory Practice Leader, The Hackett Group; Brittany Muirhead, Director, Procurement Strategy, Brookdale Senior Living Inc.; and Richard Waugh, VP, Corporate Development, Zycus.
This webinar, presented by Zycus in association with SIG, will feature the findings from The Hackett Group’s 2019 Procurement Key Issues survey and a case study presentation that highlights how Brookdale Senior Living has leveraged assisted sourcing as part of its digital transformation journey.
Find out what procurement heads like you need to do to help your team and business achieve their goals this year.
Zycus is a leading global provider of procurement solution suites across the Source-to-Pay cycle. Our product portfolio includes applications for strategic procurement, such as Spend Analysis, eSourcing, Contract Management, Supplier Management, Financial Savings Management, Project Management, and Request Management as well as operational procurement applications like eProcurement and eInvoicing. Our spirit of innovation and passion to help procurement create greater business impact is reflected in the hundreds of procurement solution deployments we have undertaken over the years. We are proud to have as our clients some of the best-of-breed companies across verticals such as Manufacturing, Automotive, Banking and Finance, Oil and Gas, Food Processing, Electronics, Telecommunications, Chemicals, Health and Pharma, Education, and more.