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Reality Of Procurement’s Digital Disruption ‘Disappointing,’ Say Analysts

With the procurement function now a critical component of strategic corporate growth, procurement executives have earned a seat at the business leaders’ table and are now taking part in conversations surrounding the overall digital disruption of the enterprise.

New research from eProcurement solutions provider Jaggaer suggests there are a few cutting-edge technologies in particular that have an opportunity to disrupt the procurement function for the better. But that doesn’t mean digital transformation is guaranteed: In fact, according to the company’s survey, the vast majority of businesses are lagging in adoption of digital procurement tools.

In its “Digital Procurement: Just Hype or the New Standard?” report, Jaggaer surveyed 168 businesses in conjunction with the Austrian Association for Supply Chain Management, Procurement and Logistics. While most companies surveyed said they have at least begun to digitize their procurement processes, 83 percent are not using some of the most innovative tools to their full potential. They include blockchain, chatbots and robotic process automation — three technologies that analysts say could have big implications for procurement digitization.

Businesses today are certainly using digital tools for procurement: Jaggaer’s research found more than half of companies surveyed say they are using SRM, eSourcing and eProcurement tools. Significant percentages of companies surveyed also report plans to adopt newer technologies too, including Big Data analytics, predictive analytics and digital assistants.

Unsurprisingly, manual processes continue to stick around even as procurement teams begin to integrate new tools. More than a fifth of businesses surveyed, for example, told researchers they are still using paper and faxing for procurement processes. Only 2 percent said their procurement departments are fully digitized with smart technologies.

“New technology is going to completely revolutionize the daily routine in procurement,” said Jaggaer EMEA Managing Director Thomas Dieringer in a statement. “By implementing modern procurement software, more than half of all procurement organizations have already taken the first big step toward digital end-to-end processes, automation, data consolidation and using KPIs for strategic decisions.”

“The results of the survey show that many companies are already better equipped for digitalization than they may realize,” Dieringer continued. “The next step is to link data more effectively and use it more intelligently. This will open up many new opportunities for procurement that will give organizations a strategic advantage.”

Jaggaer’s report emphasized that “digital transformation” is a broad term that means different things to different people. But analysts did pinpoint a few technologies that could be particularly disruptive in procurement.

Blockchain, while a divisive tool that remains in its early stages, could overhaul the way supplier contracts, invoices and other procurement-related documents are stored and transferred, Jaggaer noted. But the real value of the technology, the report said, exists in its ability to safeguard data, which promotes trust between trading partners — a crucial element of successful procurement strategy, said Jaggaer. Today, only 13 percent of companies said they are exploring blockchain technology for their procurement functions, the survey found.

Chatbots, meanwhile, are a bit further ahead in their disruption of corporate finance. In 2017 alone, the industry saw the launch of several chatbots designed for financial management and accounting purposes; according to Jaggaer, the technology could soon finds its place in procurement too. As natural language processing capabilities improve, chatbots could support guided buying by recognizing buyer behavior and preferences, while still ensuring adherence to company spend and supplier policy and contracts.

The artificial intelligence (AI) on which many chatbots operate has broader implications for procurement too, said Jaggaer, with these tools able to offer guided sourcing, supply chain management and other types of operational support.

Today, however, many companies have yet to integrate these tools.

“While the expectations for new technologies in procurement are high, the reality of the situation is often disappointing,” Jaggaer concluded in its report. “Many of these technologies are still in their early stages and lack sufficient input and  feedback from real-world implementations.”

More “first-movers” — early adopters of these technologies — continue to implement and explore these solutions, but the process is slow, analysts added, and limited budgets continue to strain businesses’ ability to add tech. Before they can fully embrace these disruptors, however, companies must ensure their data is ready.

“No technology can operate without complete and accurate data,” Jaggaer said. “Therefore, before taking the next step toward digitalization, companies first need to invest time and effort into streamlining their data processes.”


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