Digital permeates everything we do today. Old definitions of technology haves and have-nots are outdated; now it’s about the haves and have-mores. Have-more firms and industries do much more with tech, reaping tangible rewards not only in profitability and efficiency, but also winning strategic advantage as they blur industry boundaries to set new rules of competition.
Digital shifts profits around. Highly digitized sectors tend towards winner-take-all dynamics—yet most incumbent firms offer only ad-hoc responses, and half of those that make investments don’t see returns. Consumers are the big winners, leaving firms—and their workers—to navigate uneven returns, greater risk, and faster displacement.
But the opportunities for growth and productivity are still immense, because we’re only at the early stages. Sectors representing about 80% of the economy have yet to benefit from digital technology. That’s particularly the case in sectors that are more mature, where firms are smaller, or where competition is less intense.
Digital is the next natural evolution for Procurement, building on the eProcurement era that started in the early 2000s with the introduction of tools such as e-catalogues, the spend cube, and electronic RFX and reverse-auction platforms. Today’s integration of procure-to-pay (P2P) processes with decision-making workflows and end-to-end automation positions Procurement at the crossroads of increasingly massive data flows. Advanced analytics and automation create better, faster insights that dramatically increase the value Procurement can generate, with external resources and innovation bringing even more insights and capabilities to the business.
Digital transformation is one of the greatest opportunities for Procurement today, comprising three main requirements that together lead to a successful digital-based organization. The first requirement is the development of tools that support all of the main functionalities across the digital procurement landscape. Second, companies must ensure adoption by creating a high-quality user experience. The third and final requirement is to incorporate both today’s and tomorrow’s technologies, including automation, big data, and block chain.
We hope you find these articles insightful and thought-provoking, and we look forward to your comments and questions.
Digital procurement: For lasting value, go broad and deep
Too often, procurement digitization projects take too long, cost too much, and result in too little impact. A major reason is that companies focus too much on finding the right off-the-shelf solutions for single pain points. Paradoxically, to get the most from procurement digitization, leaders must raise their ambitions along with their skills. The most powerful way to realize the full potential of digitized procurement is through a user-oriented, end-to-end transformation of the entire source-to-pay (S2P) process. That goal translates into a single focus for procurement digitization: the user experience.
Procurement Department in 2025
The digital revolution is upending the way operations work across industries and geographies, and Procurement is no exception. Artificial-intelligence capabilities and advances in automation are changing not only how the Procurement department works, but also the value it generates for the larger organization. Are you ready for fully automated purchase-order management? Negotiations run by an autonomous AI? Or bots employing advanced-analytics capabilities to select and govern suppliers? The future is closer than you might think.
The era of advanced analytics in procurement has begun
Today’s most advanced Procurement organizations are already using advanced-analytics techniques to extract new value from historical purchase data. Negotiation tactics, vendor management, procurement strategy—all can be transformed when procurement organizations abandon heuristic approximations and instead commit to in-depth analytics of actual purchase histories. Insights that previously were easy to miss instead can reshape not only what Procurement does but how, providing significant savings to the organization.
Use procurement’s data to power your performance
If information is power, the procurement function occupies an enviable strategic position, sitting at the confluence of the massive flows of information that run between a company and all its suppliers and partners. Today, however, too few procurement functions are effectively tapping into those flows and using them to find and capture new sources of value. Gear up with the right technology and discover the next competitive advantage in the data you already have.
Long tail, big savings: Digital unlocks hidden value in procurement
Tail spend isn’t going away. But thanks to advances in digital technologies, companies can now proactively manage the complexities and costs inherent in this challenging spend category. Procurement teams that take advantage of these technologies now will transform what used to be a costly but unavoidable problem into a source of new value for their company.
More on digital procurement
New tools and technologies can help organizations with all three drivers of digital transformation. The first step is a diagnostic that helps assess an organization’s current state, identifying gaps to best-in-class and developing a prioritized roadmap for bridging them. The second stage, development of a high-quality user interface, can now incorporate advanced tools covering spend intelligence, category analytics, clean sheets, category-specific content, eRFX, and tendering analytics. Finally, a detailed automation assessment helps establish the potential automation possibilities using currently available technology.