Challenged with a dual focus on cost reduction and value creation, procurement departments will develop a sharper focus on analytics in 2020, according to a recently released study from The Hackett Group, Inc.
The firm's 2020 Procurement Key Issues research found that procurement departments are most concerned about improving cost efficiency in their operations, followed by reducing purchasing costs, and becoming a strategic advisor to their companies. The global study surveyed nearly 200 executives in finance, human resources, IT, and procurement at mid-sized and large enterprises.
"Companies are simply demanding that procurement deliver value in new ways. Economic uncertainty is pushing companies to be more agile, and procurement must do the same, becoming a more cost-effective and value-driven function," The Hackett Group Research Director Laura Gibbons said in a statement announcing the findings. "We also see digital transformation, including technology infrastructure modernization and analytics, as helping drive cost efficiency and value to the top of the procurement agenda."
The procurement function will need to close "critical capability gaps" in five areas in order to meet these and other challenges in 2020, the research also found: improving procurement's agility; becoming a trusted advisor to the business; aligning skills and talent with business needs; modernizing application platforms; and improving analytical and reporting capabilities.
Looking at analytics in particular, the study found that 50% of organizations are working on improving data quality and master data management on their way to developing better analytics capabilities. Investing in talent and analytics skills are also top priorities.
There are obstacles on the path toward improvement, however. The study found that organizational resistance to change is the top hurdle preventing procurement transformation, followed closely by a lack of critical skills among procurement staff.