Procurement Budgets Battle the Need to Digitalize Operations

By Dennis Bouley

July 05, 2018 at 8:34 PM

Budgetresized.jpgAccording to a recent Hackett Group research study, 95% of procurement executives indicate that digital transformation will change the way procurement services are delivered within the next two years. The percentage of organizations with a formal strategy for digital transformation more than doubled year over year, from 32 percent to 66 percent, and the number of organizations indicating they have the resources in place to handle the transformation also rose sharply, to 46 percent.

Most are convinced that gaining access to more data, and then converting that data into better decisions will emerge as a key factor in maintaining corporate competitiveness. “In an era where data is the new currency, digital transformation efforts must be able to use it for competitive advantage,” said Constantine Limberakis, Hackett Group senior research director of the Procurement Executive Advisory Program. “The future of procurement will be dictated by how it can best use this data to improve insights and predict future outcomes,” he said.

The study found that procurement executives expect dramatic growth in the use of mainstream and emerging technologies over the next two to three years with data being the major theme. Broad adoption of master data management is expected to grow by a factor of 3.8X with advanced analytics growing by 3.2X, and data visualization adoption expected to more than double. This year. just over 30% are piloting AI influenced projects involving cognitive computing and virtual assistant technology.

Will budgets enable digital transformation?

While to push in on to accelerate digital transformation of procurement operations, budget projections don’t seem to reflect an aggressive posture of innovation. Procurement budgets are expected to fall by 0.3 percent this year.  Taking into account an expected 3.6 percent growth in revenue in 2018, this creates a significant productivity gap that procurement organizations must overcome, which will make it challenging to invest in digital transformation efforts.

Many organizations are at a crossroads trying to balance between the risk of integrating new technologies with the fear of being left behind if they don’t act and invest quickly enough. A wrong decision could result the creation of a gap vis-a-vis competitors that could be difficult to overcome.

The Hackett research sums up four areas where procurement organizations must improve in order to remain relevant:

  • Alignment of skills and talent to changing business requirements;
  • Improvement of procurement performance and business value measurement;
  • Enhancement of supplier relationship management;
  • Better category management. 

The degree of digital transformation implemented will be an important factor in determining how quickly procurement organizations achieve improvement in these four areas.

To access a complimentary copy of the complete report entitled “The CPO Agenda: Expanding Procurement’s Influence Through Change and Innovation,” register at the following link:


The Hackett Group (NASDAQ: HCKT) is an intellectual property-based strategic consultancy and enterprise benchmarking and best practices digital transformation firm supporting global companies, and offering digital transformation including robotic process automation and enterprise cloud application implementation. Services include business transformation, enterprise analytics, working capital management and global business services. The Hackett Group also provides expertise in business strategy, operations, finance, human capital management, strategic sourcing, procurement and information technology.

Tags: procurement budgeting procurement digital transformation procurement investment procurement strategy
Category: News Article

Dennis Bouley


Dennis Bouley is Editorial Director of and special advisor to MediaSolve Group, a strategic B2B marketing services firm focused on helping companies and institutions leverage the web and social media to achieve business goals. He spent 18 years at Schneider Electric as Managing Editor of Global Publications, and was responsible for cross-division management of the corporation’s white paper and customer success story processes. Prior to that, he spent 10 years working for IBM managing both small and large accounts. He holds a Bachelor of Arts in Journalism from the University of Rhode Island and holds a Certificat Annuel from the Sorbonne in Paris, France. 

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