Panel Debate: Is Digital Transformation Driving More Effective Procurement?

Last Thursday, I was fortunate to attend procurement consultancy Efficio’s evening gathering to discuss the results of a study it conducted in partnership with Cranfield University. The study explores the extent to which procurement leaders internationally are reconsidering their approach to procurement, owing to the emergence of digital technologies, the impact this is having on their organisations and the key barriers to successful digital transformation. A panel discussion followed, mediated by Simon Lipscomb (left in the above picture) and Pepper the robot. Included in the line-up of well opinionated heads of procurement and tech vendors was Jason Busch, founder of Spend Matters and procurement tech expert.

The survey results showed the extent to which businesses are exploiting technology and which digital processes are being adopted (or not) alongside it. Respondents were CPOs, CFOs and Procurement Managers across all sectors, pretty evenly distributed, from the UK, Germany and the US. Simon Whatson, Principal at Efficio, informed us that the idea behind the survey started in house, with the growing number of technologies it experiences alongside its customers, and what that means for their own processes. Thus embarked a further relationship with Michael Bernon of Cranfield University to take this study to a wider audience.

The evening got going with an overview of the results:

  • 78% believe digital procurement should be a boardroom responsibility
  • 48% are driven by FOMO (Fear of Missing Out) rather than a true understanding of the digital requirement
  • 74% think companies should expect transparent commercial arrangements from strategic suppliers in return for:
    • giving suppliers longer-term commitment - 69%
    • getting early engagement - 65%
    • procurement giving visibility of upcoming demand - 57%

Barriers to delivering expected benefits include:

  • 66% say poor vendor support for implementing new technologies
  • 64% say new technology is not supported by the right processes and skills
  • 72% say a lack of talent to harness the power of machines

Many of the questions and results would not be a surprise, like digital procurement being a boardroom responsibility or new technology not being supported by the right processes and skills.  One stat I particularly pondered was the FOMO stat; almost half of those asked being driven by the fear of missing out on tech rather than understanding if they need it. That’s a lot of money to spend on fear.

Another concern is that 72% felt they lacked talent to harness the power of machines.  That highlights the need to train teams based on what talent is lacking and to recruit based on a different set of criteria, or at least add the missing criteria into the weighted balance of role requirements when searching for candidates. Data science was deemed to be the deficient skill. Wikipedia tells me that is “an interdisciplinary field that uses scientific methods, processes, algorithms and systems to extract knowledge and insights from data in various forms, both structured and unstructured, similar to data mining.” I would agree that such skill needs to be more present in procurement. Technology typically provides the reports we ask of it, but are we getting all the reports we need? Are we interpreting the reports in the way we need to? Do we need different metrics, ones that will help make future predictions on our requirements, our costs?

The results of the survey certainly sparked debate amongst the panel, which was lively to say the least. Alongside Spend Matters CEO were the CPOs of KPN (Netherland’s version of BT) and HSBC, ISG head of procurement and supply chain, business leaders from Basware and Tradeshift and procurement technology director of CRH.

That technology hasn’t delivered what it promised for procurement was a view shared quite strongly by some of the panel. But the majority believed that tech will make the grade and there was positivity around how tech vendors are working to provide the right experience for the users, it’s just taking longer than it promised. Michelle Baker (KPN) received many murmurs and nods of acknowledgement when she described procurement as ‘an impediment’ to the business, a function which slows the business down. Finding the tech solution with the skilled team to support it, in order to help get procurement out of the way, was seen as being a sign of success.

Key takeaways included:

  • The biggest barriers to getting what we need from tech is not the tech itself but the talent and the skillsets needed
  • Don’t implement tech until you know it is needs-driven, not because of FOMO - understand ‘why’ you are making a tech investment
  • Don’t spend money on automating first - rethink how procurement should be done in your organisation and build the functionality around it

All in all, though it’s hard to share new ideas in business, in procurement, the Efficio event made for interesting information sharing and perspectives.

The study can be downloaded here

 

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