The value of digital automation and analytics to procurement

A new study from The Hackett Group has shown that leading procurement organisations that have…...

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A new study from The Hackett Group has shown that leading procurement organisations that have comprehensively optimised their technology architecture and ‘pulled the stops out’ on deploying automation technologies are able to achieve productivity advantages of as much as 68% compared to the more conventional procurement functions of their peers.

The study, entitled ‘Digital Continuous Improvement & Procurement: Value Creation at the Intersection of Smart Automation and Advanced Analytics’, concedes that this tech-enabled standard, lucratively productive though it is, nonetheless remains a significant challenge for the majority of organisations.

In order to ensure that such tech investment delivers, exceedingly intricate digital capabilities need to be harmonised.

However, the researchers found that a major area for the creation of new value arises at the crossroad of smart automation and advanced analytics (such as new digital tools for spend analytics, tail spend management, category management and strategic sourcing).

The result of this digital automation-analytics junction is a virtuous spiral of continuous improvement that facilitates the harvesting of additional value throughout the lifecycle of automated processes.

According to the study, this effectively amounts to the ‘next frontier’ of new value creation in the continuing process of digital procurement transformation.

Jimmy Lefever, the study’s co-author, noted that only 15% of procurement organisations participating in The Hackett Group’s survey reported having the requisite digital and strategic skills in place to extract value from the new tech.

Digital procurement transformation, Lefever maintains, involves more than technology: it also requires agility, customer centricity, and an openness to constant innovation on the part of procurement practitioners.

While digitalisation will likely drive a need for new technical competencies and “digital natives” among procurement professionals, Lefever said, there will continue to be a powerful need for specifically human skills such as building and sustaining relationships and strategising with vision.

He added that in terms of the technology, in the technology provider space, a larger emphasis has been put on developing intuitive user interfaces than ever before.


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