How prepared is procurement to adapt to new technology trends?


Thanks to previously unimaginable advances in technology, we are seeing a previously unimaginable growth in the amount of new information available globally. By the year 2020, it is estimated that around 1.7 megabytes of new information will be created per person every second. This amounts to 53.6112 terabytes per person in a year. The data currently out there is estimated to exceed 4 zettabytes and only 0.5% of this data is currently being analysed.


These numbers are almost too big to fathom – it’s not hard to see why Big Data is the buzzword for businesses worldwide. However, there are mixed results when it comes to what companies actually do when it comes to Big Data. Analyst Bernard Marr estimates that around half of Big Data projects fail and only 4% of companies are set up to properly benefit from their data.


We see the same story across other technology trends. Our recent research into technology and the procurement function found that Procurement is still slow to adopt the big technological trends that are shaping business – both in terms of expertise and investment.


Procurement teams need to play a fast game of catch-up and embrace technology.



By the year 2020, it is estimated that around 1.7 megabytes of new information will be created per person every second.



Procurement:The late-adopters


Like the friend who gets into the latest health-kick just as people are moving to the next one, procurement is often late to the party when it comes to technology. Historically procurement was considered a reactive function, often hindering technological developments rather than enabling progress. If your function has a one-track mind (savings, savings, savings!), a fundamental shift needs to happen so procurement becomes a proactive facilitator of technology use in their organisation.


A lot of the issue comes down to CPOs and their lack of technological awareness. Most believe that their companies are immune to the enormous transformations occurring within the industry. When the head of your team doesn’t see much value in staying up to date with technological advances, the rest of the function isn’t going to push to adopt trends early on.


There is some justification for this slow uptake. Replacing or implementing new systems can be very costly, both in terms of budgets and time. When procurement thinks about technology, it’s generally P2P or ERP systems, both of which can cost the company millions to put into place. If a new CPO comes into the company and wants to swap from Ariba to Oracle, the process is going to eat away at budgets and will cast a shadow over any other requests for technology spend.


Senior vs junior priorities


One of the issues preventing technological progress is the misalignment between senior figures in the company and their junior staff. CPOs like trends that can lead to lower head count whilst buyers are more interested in market-based technology that can help them do their jobs better. Needless to say this can lead to tension within the team as junior staff seek to become more efficient at their jobs while their senior counterparts look to remove them.


The interesting take-away from our research is the increasing importance that senior staff give to the more cutting-edge changes. Big data, artificial intelligence and automation are all afforded greater degrees of importance from senior staff members. (see graph 1.).


Buyers, perhaps because of their closer connection to operations, are wary of potential changes brought by additive manufacturing and advanced materials compared to their managers. However, it is interesting to note that these areas are subject to limited knowledge levels from within companies. If these areas are as important as category managers believe, CPOs should invest more time with their junior staff who may be better able to identify trends and spot gaps in internal capabilities.



Procurement Technology Levels of importance

CPOs should invest more time with their junior staff who may be better able to identify trends and spot gaps in internal capabilities


Current lack of knowledge


During research for our Technology and Procurement: A Vision of the Future report we discovered that there was a disappointingly modest view on the level of understanding of key technology trends. Further, in almost all areas we found that procurement professionals had a dim view of their colleague’s knowledge levels. In nearly all detected areas, there was only a limited degree of knowledge within the company.


During our research we asked companies to assess their current levels of knowledge in all areas of technology, giving themselves a rating out of 10. When the results are averaged out, not a single trend was given a rating higher than 5 and across the board the level of knowledge is exceeded by the views on importance.


Big data has the highest knowledge differential, that is, the difference between trend importance and team knowledge, despite having the highest level of team knowledge (see graph 2.). The high team knowledge could reflect existing emphasis on big data projects, however the differential provides a good illustration of why almost half of big data projects are predicted to fail. It further emphasises the significance of Big Data and consequently the importance of training opportunities.


Procurement technology Knowledge differential

Change your ways


The issue that arises when you’re “behind the times” with technological advances and in a “late-adopter” rut, is that you’re in a race with a moving target. If you don’t catch up quickly, you risk falling further behind.


Procurement can use technology to get itself out of the back office and into a seat at the table. The function needs to reposition itself as the leader of the technology revolution and get in at the early stages of technological shifts within the organisation. By being more optimistic, investing more resources and becoming an early adopter, procurement can drive more value. Fail to adapt and you may well find that there is no food left on the table. While you stand still, your competitors will be making advances in leaps and bounds towards the next phase of technology – leaving you in the dust.



The function needs to reposition itself as the leader of the technology revolution...


DITx 2017 is crafted with both senior executives and thought leaders in the procurement field in mind. Whatever stage of development your business has reached, our agenda will help you establish an end-to-end intelligence strategy to drive better performance and add value through advanced analytics. View the latest agenda to learn more, or register your place today.


This article is a piece of independent writing by a member of Procurement Leaders’ content team.