Spend Matters welcomes another guest post from Richard Waugh, VP of Corporate Development at Zycus.
We recently published “Pulse of Procurement 2014,” an extensive survey of over 300 global procurement leaders to benchmark technology adoption strategies and highlight measurable business results achieved by top performing organizations. The study, conducted in Dec. 2013 and Jan. 2014, canvassed global organizations that consisted primarily of large enterprises, with 80 percent that reported revenues in excess of $500 million annually. Three-fourths were headquartered in North America. The vital signs – or key findings of the study – point toward continued healthy returns for procurement organizations investing in innovative and integrated procurement-focused solutions. A quick check-up from the study includes these leading indicators:
Top performers are moving past transactions to holistic processes. The study shows better than 50-percent penetration of most procurement applications, with the highest penetration for spend analytics and contract management at almost 70 percent and 65 percent respectively. Future investments are earmarked for the only solutions currently hovering below 50-percent penetration, which are supplier management and procurement process/performance management. Organizations are increasingly looking to expand their capabilities beyond managing PO, RFx, or even spend transactions to higher value added business process management – for instance category management, supplier performance measurement, or financial savings management processes – as evidenced by the fact that approximately one-third of all respondents cited plans to invest in these emerging applications, higher than any other solutions across the Source-to-Pay spectrum.
Most procurement organizations want to see a “specialist.” Although nearly two-thirds of respondents currently use either a homegrown or an incumbent ERP system’s applications for procurement, almost the same number plan to invest in “Best-of-Breed” procurement-specific solutions. Nearly one in three favor an integrated procurement suite.
More saving = more doing. Survey respondents that reported higher cumulative procurement generated savings were much more likely also to report higher technology adoption rates than their counterparts at lower savings thresholds. While reported technology adoption is higher across the board for the highest savers – those with greater than 20 percent in cumulative savings – than for all others at lower savings tiers, the difference as compared to the lowest tier (below 5 percent) - is most striking. Not only do the top savers report an almost 10-percent higher adoption among procurement staff, among which 63 percent are using the tools, but they also outnumber the lowest savers by a two-to-one margin when it comes to adoption amongst other functional groups. Nearly 50 percent of end-users/stakeholders engaged with the procurement technology platform.
Time is what you make of It. The fact that survey respondents reported shrinking sourcing cycle times for simple categories by almost one-third to just over five weeks, yet cited less of an impact for complex categories with just a 7-percent reduction to a little more than four months, seems to indicate an anomaly. After all, both types of sourcing projects should benefit equally from the cycle time compression afforded by the e-sourcing tools. The disparity likely points, however, to procurement organizations re-investing the productivity dividend they have realized by automating labor intensive bid preparation tasks, to spend more time analyzing bids to determine optimal award scenarios for higher value events.
One version of the truth trumps second opinions. When asked about their future procurement information needs, procurement leaders are seeking a single, integrated view of key data. This doesn’t mean simply internal, historical views. Rather, they want data that combines an historical perspective with more predictive forward-looking analytics that integrate external supply market intelligence as well. As one respondent sees it, they are looking for solutions that “provide a single tool/technology solution that is truly integrated across the entire sourcing and procurement process which is easy to implement and use.”
To download a free copy of the complete “Pulse of Procurement 2014,” click here.