Although digitalisation is the number-one priority for CPOs going into 2019 (after cost savings), according to Procurement Leaders’ CPO challenger guide 2019, just 7% of procurement chiefs recognise a digital project as their proudest career achievement.
To help CPOs improve their functions’ performance in this area, Procurement Leaders has taken up a mission to demystify digitalisation. For this, we have spoken to many of our members about the achievements and the problems they have faced while digitalising their functions.
From those conversations, three themes emerged:
These will guide Procurement Leaders throughout 2019 in the delivery of services around this strategic imperative.
One challenge CPOs face is deciding what they want to achieve with digitalisation.
Some projects will create a return on investment (ROI) for procurement. Investing in a process automation robot, for example, would enable the function to analyse spend data at speeds with which no human can compete, saving hours of work and improve efficiency.
Other initiatives, such as platform-enabled supplier collaboration, will deliver ROI for the whole business. But there is no ‘right’ or ‘wrong’ type of digitalisation. So long as procurement chiefs can express the ROI of their projects in ways their stakeholders will understand, they will secure the buy-in needed to see those projects through to completion.
Through conversations with members, Procurement Leaders identified that demonstrating ROI is one of three areas that require CPOs’ attention. These represent things procurement chiefs must ‘get right’ if they are to exploit digitalisation to maximum effect.
As well as carefully tailored messaging, they will need a digitalisation action plan. Such a plan should be long-term, realistic and goal-oriented. The flaws in strategies designed with certain tools in mind may be exposed by advances in technology, which will stall progress, while unrealistic plans will be prone to overpromising and underdelivering.
Finally, procurement chiefs must recognise that they must firmly establish digital capabilities and cultures within their teams to fully realise their digital ambitions.
Many CPOs believe that throwing a six-figure salary at a data scientist and putting them to work will help them meet their digital objectives. This is wrong. Hiring for such a role without equipping the rest of the team with the requisite supporting skills will be a useless and expensive experiment. A data-savvy team will comprise the following roles: