Few companies have digitalized the way they purchase business-to-business (B2B) services, leaving considerable room to improve profitability and reach internal and external business goals, according to research from the trade association Sourcing Industry Group (SIG) and sourcing technology company Globality.
The groups surveyed more than 120 procurement leaders from around the world, the majority of which were director-level or higher in their organizations, for the report titled The Future of Procurement, Today: How Leaders Can Seize the Moment by Digitizing Procurement. They found that just 6% of organizations have “fully embraced” digital transformation in the way they buy services in the $16 trillion global services market. More than half of respondents said they are responsible for procurement spend in North America, and more than 40% said they are accountable for global spending, according to the report.
The study also found that just 15% of organizations believe they are either “best in class” or “industry leaders” when it comes to digital transformation of their procurement processes and operating models, and that 50% of global procurement leaders admit their companies are “laggards” when it comes to the digital transformation of their B2B sourcing processes and operating models.
The bottom line: Companies are leaving money on the table and failing to develop competitive strategies for the future, according to the authors.
“Organizations who take proactive measures to transform their current procurement processes and operating models will enjoy considerable competitive advantage in a rapidly changing market, both now and well into the future,” SIG Chief Executive Officer Dawn Tiura said in a statement detailing the survey results. “This study illustrates how companies further along that journey are able to focus on high-profile goals and initiatives such as supplier diversity and corporate social responsibility.”
Digital transformation in procurement can streamline operations and improve performance on many levels, the authors also said.
“The average Global 2000 company spends over $4 billion a year on services, and all of it can be spent smarter and better,” Globality’s Chief Revenue Officer Keith Hausmann said in the statement. “These findings highlight the need for companies to utilize the sophisticated, AI-powered technology that now exists to enable fair, competitive, and sustainable self-serve sourcing.
“Through digital transformation, procurement can create far more impact on a company’s profitability, as well as help enable its ESG agenda.”