Almost all (95 percent) of the buyers responding to a new survey said they believe digital transformation will fundamentally change the way procurement works over the next two to three years. What’s more, two-thirds of the procurement organizations surveyed report they have a formal strategy in place for digital transformation—up from one-third of respondents last year.

 

The flip side of the coin is that even though procurement organizations have made significant progress not only in creating a digital transformation strategy but also in getting the resources and competencies they need to implement that strategy, the survey by The Hackett Group also found that procurement teams still need to create a vision for how they are going to manage digital transformation. Although significant improvements have been made, only 66 percent of the surveyed procurement teams had a strategy, and just 48 percent said they think the organization has the competencies or capabilities to cope with digitalization.

 

For procurement organizations, digital transformation involves applying technologies—such as robotic process automation, artificial intelligence, cloud-based applications, advanced analytics, data visualization and mobile computing—to change how processes, such as procure-to-pay or request for quote, are conducted. Procurement leaders expect to rely on digital transformation to help them achieve an array of critical objectives in 2018, including cost-cutting, improving agility and improving their ability to serve as a trusted advisor to the enterprise, according to the Hackett report, “The CPO Agenda: Expanding Procurement’s Influence Through Change and Innovation.”

 

“Last year, procurement leaders told us that digital transformation was a priority, but most simply didn’t have the strategy and resources in place to move forward,” says Chris Sawchuk, principal and global procurement advisory practice leader, The Hackett Group. “This year, that gap has closed significantly. Momentum is growing. More organizations are planning for digital transformation and more are in a position to do something about it.”

 

A Supply Management article reports that, speaking at the Procurious Big Ideas Summit in London, Sawchuk gave procurement leaders advice for managing digital transformation. He said that there are many key steps for preparing for digital transformation, but chief among them is for executives to realize that even if the organization isn’t ready for digital transformation, it’s vital to create an environment where everyone is aware of—and understands the potential for—digital technologies.

 

Procurement executives and managers also must recognize that digital transformation is not just about technology. “We have to transform our talent—the skills—because there are things that we are doing today that are going to go away,” Sawchuk says.

 

Next, leaders need to focus on creating comprehensive skills coverage across their team, not just on each individual member’s skillset, Sawchuk says.

 

“We can’t create supermen,” says Sawchuck. “Procurement organization leaders need to ask themselves, ‘How do I create the best balance in the organization, understanding I probably can’t get it in any single individual?’”

 

Two other key strategies, Sawchuk says, are for procurement organization leaders to create a failure-tolerant culture within the organization, and to not just paint a vision for digital transformation, but to also outline how they and their teams will get there, Supply Management reports.

 

What are your thoughts on digital transformation’s impact on procurement? Does your procurement organization have a formal strategy? Are the necessary competencies or capabilities for digitalization in place?