Back to Hub

Deloitte Global CPO Survey 2023 — A focus on digital maturity and how to get there

07/24/2023 By

Image by Mirko Grisendi from Pixabay

The 10th edition of the Deloitte Global CPO Survey, which analyzes the responses of about 350 senior Procurement leaders from more than 40 countries, has been released and is available for download.

“Given that few businesses intend to expand the size of the Procurement function any time soon,” it says, “and despite the significantly increased expectations placed upon it, Procurement chiefs have a difficult time ahead.” So this report, which was produced in conjunction with Spend Matters chief research analyst Pierre Mitchell, is brimming with insight and advice for procurement leaders on how to rise to the escalating demand for Procurement to enable growth, mitigate risk and drive significant and unprecedented levels of value during a period of top Procurement talent shortages (owed in part to years of underinvestment and development).

Part of the solution lies in digitalization. So while this year’s report places a lot of emphasis on operating model set-up and talent management, we wish to highlight the ‘Digitization’ section because Procurement has a clear imperative to build agility and resilience into supply chains. The report looks at how leading Procurement organizations are effectively delivering across the broader value proposition that seems to get broader every year.

Digital maturity

Although Procurement doesn’t directly influence the enterprise’s digital strategy, it is heavily impacted by its own need to digitize to fulfill the broader enterprise goals.

Happily, nearly all CPOs in the survey understand the power of digitization and cite it as the second most important priority after (unsurprisingly) supplier collaboration. When asked how CPOs would spend additional budget, the ‘Followers’ in the survey said their first choice would be hiring more FTEs, whereas the leaders or ‘Orchestrators of Value’ (who have more fully implemented automation) cited analytics as a priority investment (with external intelligence second).

Digital transformation is still a work in progress. As the report states, “Many CPOs we speak with either cite confusion and paralysis with where and how to get started, or worse still, have tried and failed to yield the benefits of the promised land that digitization offered.”

So it’s interesting that the report looks into which tech is predominantly being deployed and which is delivering the most value. Given the previous statement of tech priorities, it’s not surprising that analytics and RPA are at the top of that list. It frames analytics as “transcending descriptive business intelligence tools (e.g., for visualizations and dashboards) towards AI/ML-based predictive/prescriptive analytics.” ‘Orchestrators’ are applying these two technologies at about three times the rate of ‘Followers.’

A word on analytics

Our analysts would agree that Analytics are core to Procurement; they serve to deliver better decisions and business outcomes. The high amount (84%) of CPOs citing spend/savings analytics as being impactful is not surprising in an economic downturn when spend discipline and value creation are critical. It’s also unsurprising to see that under the current risk environment, 80% of CPOs cite Enhancing Risk Management as a business priority, shooting ‘supply risk analytics’ up the priority agenda, from 35% in 2021 to 51% today.

Despite the high number of mentions for analytics, analysts note that “more sophisticated analytics are needed to model risk, total cost and, when paired with more advanced supply network intelligence, discover, predict, plan, capture and protect supply value.”

So given the appetite for digital, what’s preventing successful uptake?

The biggest barriers to successful digitization according to the report are lack of data quality and lack of budget — poor integration comes next. “Perhaps most worrying,” it states, “is that technology funding (measured as a percentage of total procurement budget) dropped from 13.2% in the 2021 study to 10.9%.”

So there is clearly room for a strong role for Procurement professionals to play in accurately defining the value proposition that the technology is intended to solve and helping tackle the budget issues through a stronger and more compelling business case.

AI in Procurement

No Procurement survey would be complete today without a nod to AI – and the Deloitte CPO Study reserves a standout section dedicated to its attention.

While Procurement has come a long way over the past decade, it notes, “developments in AI, and the speed at which it is advancing, are going to disrupt our lives in ways we cannot even fathom yet … AI will help us make better, more data-driven decisions.”

But for now, the report outlines the use cases that will benefit the most:

  • Enhanced demand forecasting
  • Global sourcing insights
  • Spend classification and enrichment
  • Automated ordering
  • Invoice data extraction
  • Contract data extraction
  • Contract lifecycle management
  • Automated compliance monitoring

Advanced Analytics, however, is still cited as being the most ‘impactful’ development in the near term: “By ingesting and analyzing vast amounts of data, AI tools can help procurement professionals identify trends and patterns that are otherwise impossible to tease out, thereby enabling more informed decisions from supplier selection to contract negotiation … through the use of AI, procurement can proactively identify and mitigate risks.”

In terms of technology architecture, the report offers in-depth accounts of a number of use cases, including:

  • Active/strategic stakeholder engagement beyond tactical intake management.
  • Ruthless automation of P2P and supply chain execution supporting an autonomous driverless organization.
  • Category management is the core engine for scaling processes.
  • Supplier management and enablement layer between all enterprise functions and third parties of all types.
  • Supply chain risk management for more granular intelligence to orchestrate supplier risk and compliance workflows.
  • Data-driven performance management and transformation processes and tools that employ advanced analytics.

The road ahead

As well as steering operating model configuration, investment in talent and a more aggressive approach to digitization, the leading procurement functions (Orchestrators of Value) have had to address the need to lead the transformation itself. Change is never easy, and there are many barriers to improvement — but the report outlines clear insights for CPOs on how to make transformation happen while protecting the value and taking ESG considerations into account. It concludes with expectations for the global business environment and has developed 10 questions for CPOs to consider when thinking through where they are and where they want to go next.

The full report can be downloaded here.

Join our Webinar on August 15

Following the results of the 2023 Deloitte CPO Study, Spend Matters will be holding a live discussion titled “React Less and Orchestrate More,” joined by Aaron Addicoat, Senior Manager, and Ryan Flynn, Principal, of Deloitte.

Please join us on August 15 by registering here.

And in preparation for the discussion themes, please take a minute to participate in our LinkedIn poll here.