Study finds companies over-estimate their level of procurement transformation

Date Posted: 01/05/2019 Category:
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Study finds companies over-estimate their level of procurement transformation

Date Posted: 01/05/2019 Category:

A new study, ‘Executing a Successful Procurement Transformation’by US market research firm, Forrester Consulting, has found that most companies are over-estimating the maturity of their digital procurement transformation implementation. The research used a ‘digital maturity index’ that evaluated the structure, strategy, process, measurement, and technology used in each of the companies participating in the study. It polled over 400 procurement, supply chain, and finance leaders. 

The survey found that just 16% of them had an advanced level of digital maturity in procurement, an achievement that granted them an appreciable competitive advantage over their rivals. 65% described themselves as advanced, although the study found them not to be. Commenting on the findings, spend analytics and spend management expert, David Khuat-Day said: “Procurement leaders have the opportunity to deliver a true competitive advantage for their organizations. Digital transformation is critical to success, but requires a realistic assessment of current maturity, a clear vision for each stage of the journey and the right technology.”

Obstacles to digital procurement differed between companies, although it was clear that technological suitability had to be based on current needs and future objectives. Companies embarking on digital procurement transformation initiatives often faced lack of executive support and insufficient budgetary allowances, while firms that were more advanced in their transformation endeavours often struggled with poor integration across their systems. The more advanced businesses were more likely (60%) to have plans to implement a complete ePurchasing suite.

A significant problem was the tendency to make ill-informed choices in selecting technology. 82% of respondents had, as a result, already switched or were considering switching tech providers. The main reasons for doing so were poor user adoption (27%) and poor supplier onboarding services (30%). Onboarding technology suppliers rapidly emerge as a crucial issue, yet only 17% of the organisations surveyed in the study had been able to onboard new suppliers in under a month. 59% reported that onboarding had taken one-three months per supplier.

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