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A procurement digital transformation survival guide for practitioners: How to embrace digital without getting lost on the way

02/05/2025 By

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Procurement has evolved from a back-office function to a strategic driver of innovation and value. While technology is at the heart of this shift, jumping on the digital bandwagon isn’t always as simple as plugging in some shiny new software.

Real transformation demands a mix of creativity, strategy and much patience. Change management isn’t a sidekick in this story; it’s the star of the show.

So, to support organizations and practitioners who are undergoing a transformation fueled by digital or are looking at launching such an initiative, Spend Matters will publish a series of posts and other content over the next few months that focuses on the digital transformation of procurement and change management.

Because such a critical endeavor is too often not entirely successful, our series will be a sort of ‘survival guide’ for practitioners and will cover:

  • Setting the stage: what digital transformation is and what it means for procurement; how to recognize the need; what are the unique barriers, pitfalls and lessons from failed initiatives.
  • Building the foundation: where to start; how to build a digital roadmap; the critical role of data; identifying quick and long-term wins; how to make the case for digital.
  • Driving organizational adoption: how to identify and engage key stakeholders, build coalitions to support the transformation journey; the psychological aspects of change, addressing resistance and building a culture of adaptability; aligning goals across teams.
  • Designing and implementing the transformation: addressing the gaps (people, process, technology); designing the organization; rollout options and strategies; skills allocation.
  • Making technology work for you: how to select the right technology; navigating the vendor landscape; avoiding the pitfalls in tech selection; how to build a flexible, scalable tech stack.
  • Measuring and sustaining success: defining success metrics and tracking ROI; adapting to emerging technologies and future trends.

Throughout our series you will hear from the Spend Matters analyst team, sharing their industry expertise and knowledge on the above-mentioned topics; from the tech providers on their customers’ wants, needs and challenges and from the practitioners themselves who will share their own experiences of conducting transformation projects via a series of case studies. To kick off this series, we would like to set the stage and position the ‘building blocks’ that subsequent pieces will explore further. Let’s start with a few definitions.

Digital transformation: What does it even mean?

We’ve all heard the buzzwords: digitization, digitalization and digital transformation. These terms are often used interchangeably, but they represent distinct concepts which are important to have in mind:

  • Digitization refers to converting analog information into digital formats, such as scanning paper invoices.
  • Digitalization involves applying digital technologies to improve existing processes, like implementing e-procurement systems.
  • Digital Transformation is a holistic approach that reimagines business processes, builds new value streams and integrates digital thinking into all aspects of an organization.

True digital transformation in procurement goes beyond automating tasks (or ‘doing more with less’). It is about redefining how procurement operates and aligns with broader organizational strategies.

The case for procurement’s digital transformation

As mentioned, the relationship between digital enablement and procurement performance (efficiency, effectiveness, innovation) is clear. For example, recent research from The Hackett Group showed that Digital World Class® procurement organizations:

  • Deliver superior business outcomes, with procurement return on investment being 2.5 times greater than that of their peers
  • Manage 21% more spend, achieve 2 times higher spend cost reduction savings and a 59% reduction in maverick buying
  • Excel at cost optimization, operating at a 21% lower cost compared to their peers

These ‘performance-enhancing’ aspects explain that procurement leaders have, over the years, placed ‘digital transformation’ as one of their top priorities. Deloitte, in its most recent CPO Survey (based on answers from 350 senior procurement leaders from more than 40 countries), indicates that it is the number 2 priority for CPOs:

The report also mentions that “nearly all CPOs understand the power of digitization.” A majority (55%) of leading organizations, what Deloitte calls Orchestrators of Value, consider it a top 3 priority. In contrast, only 36% of the ‘Followers’ have the same level of priority for their digital enablement.

In addition, and as illustrated by a report from the Economist (based on a global survey of 430 C-level executives across various organizational functions exploring how their businesses and industries are transforming procurement) the digital imperative is also fueled by the overall business climate (VUCA and ‘permacrisis’). For example, the Covid-19 pandemic played the role of accelerator or catalyzer. 53% of respondents identified pandemic-related disruptions as the main driver for their most recent digital initiatives.

Challenges in achieving transformation

Data from our 2021 research, involving more than 850 companies worldwide, shows that only 35% of companies achieve their digital transformation objectives, up slightly from 30% in 2020.” (source BCG)

Despite its potential, digital transformation (and not just in procurement) often stalls due to several obstacles and challenges. There are multiple reasons and we will come back to them in our series, but, at this stage we want to mention:

  • Misaligned focus: Organizations frequently mistake digital initiatives for simple system upgrades, neglecting the need to rethink (‘obliterate’) processes. Technology alone cannot deliver change without a clear purpose (or meaning or ‘why’).
  • Low adoption rates: Technologies like e-sourcing have been available for years, yet adoption among companies sits at around 60%-70%. And this can look even worse when considering the supplier side of the equation.
  • Resistance to change: Future users often resist new systems and workflows, especially when the benefits are not clearly communicated and when technology is seen as the enemy that will replace people.

These points clearly illustrate that ‘digital transformation’ is, in fact, ‘human transformation.’ It is also why the classic ‘People, Process, Technology’ framework starts with people and ends with technology.

The reports by Deloitte and The Economist both highlight that the most often-cited challenges and obstacles faced by practitioners are:

  • Lack of (or weak) ‘why’ (vision, ROI, etc.)
  • Conflicting priorities
  • Inadequate technology
  • Technological uncertainty (paradox of choice, market explosion and fragmentation)
  • Talent (capacity and capability)
  • Stakeholder support and buy-in (C-level and/or cross-functional)
  • Funding and budget

The good news is that all of the hurdles mentioned above (and more) can be overcome with a well-designed approach. Let’s explore these aspects.

Driving change with effective change management strategies

You don’t need a digital strategy. You need a better strategy, enabled by digital.George Westerman in MIT Sloan Management Review

In order to succeed, proper planning is required. Activities should focus on:

  1. Understanding the current state (the start)
  2. Defining the desired future state (the goal)
  3. Addressing the identified gaps (the journey)

And, as mentioned, the above applies to people, process, technology … and data. It means that some of the key deliverables and activities are:

  • A strong vision, business case and (project) governance: The purpose and benefits of transformation efforts to engage and align stakeholders, foster support and serve as a guide/reference for all decisions and reviews/committees.
  • Design for adoption: Goes beyond the traditional solution training and support for internal and external impacted people. It also includes process redesign, upskilling, external workforce integration, solution design/configuration and more.
  • Implementation: The roll-out strategy will define ‘where, what, how, when’ in terms of making the change happen and feedback loops for adaptations.

Change management encompasses all of the above (and more), and it is not just about teaching people how to use the new solution. It is as much about people and culture as it is about technology. Success depends on leadership alignment, effective communication and empowering teams to embrace the transformation journey.

Conclusion

Digital transformation is a powerful opportunity for procurement to rethink its role and deliver greater value. However, its success depends on more than technology. A thoughtful approach to change management, clear communication and a focus on adoption are essential to achieving meaningful results.

Counterintuitively, digital-first strategies are enabled and empowered by technology, but they don’t put it at the center of everything. Procurement leaders who embrace such an approach need to foster a culture of adaptability to ensure that their teams remain competitive in a landscape of constant change.