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CPOs’ Support For Innovation Surprises The Market


Deloitte’s latest research on procurement technology trends is out. The verdict: Surprisingly, procurement seems to be back on track for going digital.

According to Deloitte Global and North America Sourcing and Procurement Lead Brian Umbenhauer, the 2016 survey of trends among the chief procurement officers of the world is one of reflection.

“With five years passed since we first polled procurement’s global leaders, we saw an opportunity to delve into not only the historical development of the function but also to cast our minds forward to what the future could hold for procurement,” he said in his introduction to the report.

Externally, Greece’s ongoing troubles, China’s continued performance weakening, dropping oil prices, rising dollar value, a potential Brexit and the Federal Reserve’s anxieties amid slowing job growth are just some of the situations impacting the CPO, from outsourcing to risk mitigation.

Coupled with internal factors — like pressures from CFOs to reduce operating costs — the CPO today is facing monumental challenges but also the opportunity to rise as a strategic part of the overall enterprise, Umbenhauer explained.

Indeed, 74 percent of CPOs surveyed cited cost reduction as their top priority this year. According to researchers, technology is playing an increasingly prominent role in this goal, but there is still much progress to be made in the adoption of technologies within the procurement department, Deloitte found.

According to the research, 70 percent of CPOs said they are now targeting their customer engagement and experience efforts through self-service portals — i.e., online portals. Mobile technologies were cited by 42 percent of executives as a key strategy for customer engagement, just shy of the 45 percent that said the same of cloud technology.

About 40 percent of CPOs said they have a clear digital strategy, which includes efforts like digital reporting and data analytics, for their processes.

Still, that means 60 percent of executives don’t have a defined strategy in this regard, and that number, to some, is just too high.

“Digital solutions should be embraced by CPOs and harnessed to greatly improve the function’s accuracy, speed of execution and reverence to the greatest business challenges,” the report concluded.

When compared to the prominence of digital strategies in 2014, 2015 figures saw a significant jump across the board.

For instance, today, 45 percent of CPOs are harnessing cloud technologies — less than half — but that’s still an improvement on the 26 percent that said the same just one year prior.

Between 2014 and 2015, CPOs cited a 19 percent increase in the use of mobile technologies and a 10 percent increase in the use of social media efforts to boost their performance in the organization, researchers found.

The difference in investment of new technologies between 2014 and 2015 was also significant.

Researchers found a 27 percent increase in the number of CPOs investing in digital, self-service portals for their customers. This year, CPOs are likely to funnel the majority of their investments into spend analytics, cost management and eSourcing solutions, researchers found.

Looking ahead, consolidated spending is the most commonly cited focus for CPOs this year, followed by increasing supplier collaboration and increasing competition. Cost reduction will remain key, especially as the number of CPOs that are experiencing a resurgence in procurement risk grew this year.

“While much about both the function and the organizations it serves may appear the same as five years ago when this survey first began, much has also changed,” Deloitte concluded in its report. “Foremost among this is the role the digital revolution has played in changing the way we interact with the world we live in.”

“Procurement is effectively positioned to join the digital revolution,” the report continued.


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