Building the Case for Digital Procurement

The people behind the successful series of ProcureCon events, Worldwide Business Research (WBR), and whose Europe event goes virtual in July, also create a series of Insights Reports. ‘Building the case for digital procurement’ was researched and written in conjunction with procurement specialists, Proxima.

The report explores the challenges procurement teams face when trying to get buy-in from senior stakeholders for procurement technology. The majority of respondents to this piece of research, carried out in Q1 2020 and with 200 heads of procurement, indicated they find the procure-tech market confusing and hard to keep up with. So the report aims to demystify the tech landscape and help those CPOs who are struggling to make the case for digital procurement.

As Proxima’s senior vice president, client solutions, Simon Geale found: “In our survey, it was clear that CPOs are suffering from too many options and too much information, bringing confusion over clarity, which may be turning analysis into paralysis.”

“With so many choices,” the report says, “gone are the days of defaulting to a one size fits all ‘platform technology solution.’ There are now numerous different technologies and delivery methods available to CPOs which allow for very different strategies and approaches. Today, leading procurement functions are increasingly choosing best of breed solutions to fit their specific needs, and the needs of their internal customers.”

The research also suggests that this ‘choice’ of technology goes hand in hand with ‘customer-centric’ thinking to become the number one success factor behind successful transformation delivery.

Customer-centric procurement is defined as using a deep understanding of your stakeholders and their customers as the key to unlocking the potential of procurement. The importance of constructing transformation around the (procurement) customer is a clear takeaway from this survey. As is the need to look deeper into their problems and needs rather than accept at face value what an organisation thinks procurement should do.

Yet worryingly, and despite this recognition, nearly a third of respondents expect digital transformation to under deliver against stakeholder or corporate expectations. So the report taps into what can be done to raise expectations, and puts forward combining ‘customer centricity’ - or the ability to frame digital transformation to appeal to stakeholder needs - with the right technology as the answer.

To that, the report segments into four parts: The Customer Value Perception, Creating a Clear Objective, Setting for Success and Delivering Best of Breed. It takes the reader from business case through delivery by analysing succinctly the responses to key questions in each section, and draws out six takeaways from the answers:

  • 30% expect their digital transformation to be regarded as a failure
  • Only 15% can easily articulate the benefits of digital transformation to their organisation
  • 38% find ‘knowledge sources and external perspectives’ are the most valuable tools for repositioning procurement’s value proposition with customers
  • 50% struggle to sell the vision to the C-Suite (27%) or gain key stakeholder buy-in (23%)
  • 84% find the current digital landscape complex or hard to keep up with
  • 63% plan to move investments away from platform providers

Those final two points are telling:

In terms of tech investment over the next five years, 37% are considering platforms, 34% internally developed applications and 29% niche providers. When asked what respondents believe will be their vendor strategy for delivering digital transformation, 30% said they would use a service integrator to manage multiple, best-in-class solutions, which has overtaken working with a legacy outsourcing/BPO provider at 26%.

But of course you can’t make that tech decision without a clear view of what is available and what is best for your organisation. When asked whether they find the current landscape of digital providers (both software and services) to be complex or simple, 21% said it is too complex to manage, understand, and make smart decisions, 21% also said it is quite complex, and 42% acknowledged they find it hard to keep up with market trends. Only 16% find it is simple to manage, understand, and make smart decisions.

The report does not foresee the market becoming any less complex in the short-term, and advises CPOs to have impetus now and discover the options available. To get a handle on where to start, and to understand more about the market and where it is heading, you can download the report here.

 

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