Deloitte’s 2016 CPO Survey Points to Investment in Tech

Deloitte Global CPO Survey 2016 kavzov/Adobe Stock

Cost reduction is a main area of focus for procurement executives due to less optimistic economic and financial outlooks, according to the recently released 2016 Deloitte Global CPO Survey. However, the study pointed out that a growing number of companies are adopting innovative procurement technologies to increase efficiency in these uncertain times.

This is the fifth annual CPO report from Deloitte, which surveyed more than 320 senior procurement leaders from companies in 33 countries — the largest sample size yet. Most of the procurement executives were located in Europe (179), followed by North America (93). The majority of procurement executives said they are now investing heavily in innovative technology solutions. Specifically, 70% said they were investing in self-service portals — up from 43% from last year’s Deloitte Global CPO Survey. Forty-five percent said they were investing in cloud-based computing (compared with 26% in 2014), 42% said they were investing in mobile technologies (23% in 2014) and 16% were investing in social media technology (up from 6% in 2014).

Spend analysis continues to be the main focus for technology investments, with 38% of executives saying this area is most likely to receive investment over the next 12 months. Contract management came in second place, with 37% of procurement executives saying this area would receive the most investment in the next year. Thirty-percent pointed to e-sourcing tools, 29% identified supplier relationship management technology and 24% said requisition-to-pay solutions would be a top focus for technology investments this year.

CPOs in North and South America (identified as the “Americas” region in the Deloitte report) are also the most likely to invest in innovative procurement technology, according to the survey. Americas CPOs are also investing in spend analysis technology specifically compared with their global counterparts (49% of U.S. CPOs versus 38% globally). Cost was also identified by American CPOs as the top priority when selecting new technologies. Cost ranked higher than ease of user adoption, integration and performance. Other CPOs around the globe ranked integration as the No. 1 priority for new technology.

Lack of Digital Strategies

Despite the growing interest into procurement technologies, the majority of procurement organizations do not have a clear digital strategy in place. Sixty percent of procurement executives said they lack such a strategy, while 40% do have a plan in place to cover technology solutions, such as digital reporting or cognitive analytics. Of those without a digital strategy, 38% said procurement was “exploring options for digital enhancement.”

Additional Survey Findings

The top priority for CPOs in 2016 is cost reduction, according to 74% of executives in Deloitte’s survey. Forty-six percent identified new product/market development as the top priority, while 45% said increasing cash flow and 43% said organic expansion.

The talent gap is proving to be a growing problem for CPOs. Sixty-two percent of CPOs said they do not feel their team has the skills and capabilities necessary to delivery their procurement strategy. This is up from the 57% in 2014 and 48% in 2013. There is a disconnect, however, in what procurement organizations are spending on training their team members — about 30% of survey respondents said they spent less than 1% on training budgets. This has grown significantly in recent years. Back in 2012, just 3.2% of CPOs said they were spending less than 1% on training budgets.

Overall market optimism has also taken a hit in the last year. Nearly 30% of CPOs in North and South America expect financial prospects to worsen in the next 12 months, the Deloitte survey showed. Globally, 23% of CPOs have these pessimistic views of the market. Additionally, 63% of America’s CPOs feel economic uncertainty has increased in the last year.

Economic uncertainty has risen significantly since 2014 as well. About 18% of CPOs in the 2014 Deloitte survey were uncertain about the economy. That spiked, however, to 44% in the most recent survey.

Another finding was that a growing number of CPOs are involved in risk management and mitigation than before. A quarter of CPOs said they were involved in risk management in 2015, compared with the 22% in 2014 and 16% in 2013. Despite the increase, Deloitte pointed out that overall CPO involvement in risk is still low.

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