Research: World-Class Procurement Organizations Embrace Digital Transformation

World-class procurement organizations now have 18 percent lower operating costs than typical companies, and operate with 28 percent fewer staff, while generating more than twice the return on investment, according to new benchmark research from The Hackett Group, Inc.

Digital business transformation is one key enabler to how world-class procurement organizations achieve greater efficiency, effectiveness and higher ROI, the research found. World-class procurement organizations understand the opportunity that digital technologies present to transform service delivery, reduce errors, and free procurement staff for higher-value work.

“For many years, world-class procurement organizations achieved dramatically better results than their peers by focusing on process optimization,” says Hackett Group Principal and Global Procurement Advisory Practice Leader Chris Sawchuk.

“Technology has long played a role in helping these top performers standardize, simplify, and streamline their operations. But today, world-class procurement organizations are focusing much more broadly on digital business opportunities to maintain their performance advantage.”

Sawchuk adds that they understand that cloud, mobile, and other digital business tools can allow them to truly transform the way procurement functions, including forecast and plan more accurately, collaborate with suppliers more effectively, and improve the experience for their customers.

“In just the past couple years, we have seen world class procurement organizations shift towards a complete digital experience for their business users, including a true move to a paperless environment and the ability to work from anywhere on any device,” says Hackett Group Principal, Sourcing and Procurement Practice Leader Robert Derocher.

He notes that the “Amazon effort” on procurement is real and we are seeing it play out with our clients. As a result, companies are implementing new, integrated source-to-settle technology platforms, primarily in the cloud, and adopting new capabilities that enable the agility required by their customers and the marketplace.”

The Hackett Group's research revealed a total of five strategies used by current world-class procurement organizations to achieve superior results: embrace digital transformation; reallocate resources from transactional focus to value adding; leverage analytics-based decision making; adopt stakeholder/customer-centric service design and delivery; and re-skill the procurement function.

A public version of the research is available on a complimentary basis, with registration, at this link: http://bit.ly/29xMzWk). World-class procurement organizations are those that achieve top-quartile performance in both efficiency and effectiveness across an array of weighted metrics in The Hackett Group's comprehensive procurement benchmark.

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