How Does UK Procurement Perceive the Impact of Automation, Digitisation and Trade Patterns?

On June 5th The Economist Intelligence Unit in conjunction with Basware published a new report called “What’s Now and Next for Finance and Procurement?” It asks how technology innovation and shifting global trade dynamics are challenging businesses. The firm surveyed more than 400 finance and procurement leaders (with a 50/50 split) across the UK, France, Germany and the US to find out about how automation, digitisation and trade patterns are affecting them and their firms and how they are preparing for the impact and future developments. The report also draws on in-depth conversations with heads of Finance, Procurement and digital innovation. Clearly the perceived impact of Brexit was also among the reactions from those surveyed.

To give some top-line results:

  • Almost one-quarter of respondents cite post-Brexit trade negotiations as the trend expected to have the greatest impact within the next two years.
  • Three out of ten respondents most concerned about Brexit expect business opportunities to decrease.
  • Many respondents expect trade dynamics to have negative effects, most commonly an increase in procurement costs (35%) and greater supply-chain complexity (29%).

The underlying theme of the results suggest that both finance and procurement feel the threat and opportunities of Brexit, emerging technologies and the shifting dynamics of global trade, just as keenly as the business leaders themselves, for it is their preparedness to deal with the impact of external conditions on financial resources and supply chain resilience that will influence their organisations’ ability to adapt and thrive.

The report looks in depth at three key impactors: automation, digitisation and trade. Overall, and rather encouragingly, the majority of respondents (64%) are confident in their ability to tackle them at senior level.

But let’s take a look at some UK-specific findings, unpicked from the research for Spend Matters by Matt Hanks, Country Manager (interim) UKI at Basware: “The research highlights the sheer scale of market dynamics facing finance and procurement leaders,” he says, “it’s encouraging to see the degree to which proactive strategies are being employed to mitigate trade complexities. For example, in the UK, the research shows that leaders have most frequently prepared for expected negative impacts of trade dynamics through internal control procedures (47% UK vs 39% others).”

“Against a backdrop of such uncertainty, we’d encourage organisations to gain visibility and control of their entire purchase-to-pay process. This will improve the ability to make informed decisions and stay agile. Many have already taken this step, according to the research, which shows that 34% of organisations in the UK (37% elsewhere) viewed mapping a strategy for integrating automated processes as a central step.”

“As well as an end-to-end automation strategy, we’re also seeing customers look at how a more flexible e-invoicing process can speed up supplier on-boarding and provide the agility to source alternative goods and services quickly should market conditions change.”

It is also worth noting that, within the UK statistics, 43% of finance respondents agree that greater automation and digitisation will allow for more focus on strategic objectives. Interestingly, this view was not shared by as many procurement executives, only 25% agree with finance on this. However, a larger percentage of procurement consider the biggest impact of automation and digitisation will be the reduced need for staff and increased process agility (35%).

It was generally agreed though, that of the automation trends over the next two years, the most likely to impact the organisation is automation of payments.

Survey Graphic

But it’s also interesting to note that while automation is seen as providing opportunities to slim down on workforce, 21% foresee increased demand for higher-value skills and therefore only 13% of respondents expect that automation will reduce recruitment costs.

In terms of the potential of digitisation for procurement, Nicolas Roux, head of procurement, SITA sees the biggest asset as gaining oversight of spending across the organisation -- a global overview of “the right price” for products sourced internationally. “Technology will help us in procurement [by] giving us a baseline for negotiation,” he says. And that “spending analytics is one of the areas where procurement will bring more value to the business.”

The greatest concerns for global trade cited by the research is post-Brexit trade negotiations, the US-China trade war (especially worrisome for the manufacturing sector) and national barriers to digital trade, including censorship, localisation measures and privacy regulation. Climate change features further down the list.

Organisations are gearing up for spending more on technology over the next two years, and operating smaller functions by upskilling and recruiting for the right talent. That and being prepared to consider alternative suppliers and markets, to spread risk, are the foremost actions for procurement. “What’s clear from the research and what we’re seeing in the market” says Hanks, “is that doing nothing is not an option.”

To read the report in full, with its drill down on stats, graphical representations, interviewee commentary and recommendations for finance and procurement, download the full report for free here:
What’s Now and Next for Finance and Procurement?

 

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