The use of predictive and prescriptive analytics for procurement activities, such as spend analysis, risk assessment, and market intelligence, is set to explode over the next two to three years, according to new research by The Hackett Group.
In the consulting company's most recent report, "Closing the Enterprise Analytics Talent Gap: Building the Essential Skills for Insight-Driven Businesses," analysts Joel Bresser and Erik Dorr write that 63 percent of procurement executives believe there will be mainstream adoption of advanced analytics within the next 12 to 24 months. Twenty-one percent believe that there will be limited adoption.
The vast majority (79 percent) of procurement executives surveyed by Hackett say that improving their capabilities in analytics, modeling, and reporting will either be highly important or critically important in the years ahead. Yet many are not confident in their companies' current ability to perform this type of complex analysis and reporting. For example, 63 of procurement executives say that they are not analyzing and quantifying their operational risks, risk drivers, and operational impact and exposure. Similarly, 44 percent say that they are not continually monitoring procurement-process execution status and they are not analyzing and predicting operational performance variance. Finally, 39 percent say that they are not using analytical tools to support their procurement planning/budgeting and forecasting processes.The need to retrain employees
These findings suggest that companies will need to quickly find or develop procurement professionals with skills that will help them succeed in the new digitally enabled world. Hackett has identifies six necessary skills and competencies:
1. Data savvy: Employees will need to have knowledge of analytical tools and methodologies. They must be able to process data, extract relevant information, and translate analyses into actionable plans.
2. Business acumen: Employees will need to understand key business drivers, priorities, and demands. They will need to be able to identify problems and prioritize alternatives.
3. Strategic mindset: It is important for companies to have employees who can develop strategic frameworks and visions. They should be able to anticipate market changes and outline the company's future direction.
4. Relationship management: Procurement employees of the future will need to have advanced interpersonal skills that will help them positively influence decisions made by line-of-business employees. They should be open, approachable, and collaborative.
5. Creativity and innovation: Procurement employees will need to be able to recognize new patterns and create categories.
6. Agility and change orientation: In the face of the fast pace of today's business environment, effective procurement employees will need to be comfortable with shifting priorities and be able to deal with ambiguity.
Currently, demand for these types of skills far outstrips supply, according to the Hackett report. As a result, companies will need to work on developing skills internally. For most companies, this will require a significant retooling of their training and development programs, according to the report. In many cases, it will be necessary to pursue nontraditional educational opportunities, such as embedding procurement employees into the business unit or line of business for a defined period of time so they see how the business operates and get to know the people involved. Similarly procurement executives should identify projects that will enable their staff to work closely with information technology (IT) partners so they can learn from them and better understand IT-related issues. It also may be beneficial to have business leaders make presentations about their markets and operations to procurement employees, perhaps through a series of webcasts.