Procurement may be living in the Paleolithic analytics era, but there is hope for the future. Deloitte’s latest CPO study suggests a material interest in general technology learning and investment, as well as a focus on near-term objectives in regards to analytics and visibility. Specifically:
“Technology remains a high priority for CPOs with seven out of 10 respondents planning some or heavy investment in technology over the next year. With recent economic performance so positive, it is perhaps no surprise that Procurement is expecting to be given further permission to invest ... According to this year’s results we can expect to see a reprioritization of data analytics in 2014. This is back after being the most popular area of CPO investment in 2011. We have seen the nature of analytics solutions change in those three years, becoming more multidimensional, dynamic, and insightful. However, for the majority there still appears to be some way to go.”
Speaking of analytics, where are firms today? As I previously noted, they’re in a rear-facing perspective (at least 75% are). Looking ahead, as Deloitte suggests, a “move from hindsight to insight, and on to foresight will be a key enabler of better business partnering. Procurement will be enabled to make a meaningful contribution to decision making, whether that is the identification of strategic opportunities, earlier identification of risks, or more proactive management of suppliers. Data quality remains the key barrier to generating actionable insights, but similarly, there is a recognized talent gap, with these skills and experiences less prevalent in many Procurement teams.”
I’d add that it’s not just a data and skills issue. Procurement organizations need to address such areas (both technology and non-technology) as master data management, supplier information management (supplier management data), commodity risk management, FOREX, linkages with sales planning, and many, many other areas as they fight to “up” their analytics capability. Simply licensing a front-end BI tool and sending a bunch of folks a Cognos workshop ain’t gonna do it.
The full Deloitte report can be downloaded via this link (along with the cool embedded videos). Also read earlier posts from this series: