In our ongoing exploration of the evolving procurement landscape, we focus on an increasingly vital area for procurement leaders: digital transformation. According to the PwC 2024 Digital Procurement Survey, digital transformation is the second-highest priority for procurement teams, behind only performance, with 46% identifying it as a key focus.
This article examines the current state of digitalisation in procurement, the direction of travel, and key themes that will help businesses meet their digitalisation goals.
Current & Future Digitalisation in Procurement
The PwC survey highlights widespread adoption of digital procurement tools, with 92% of respondents using source-to-contract (S2C) solutions and 96% using procure-to-pay (P2P) systems. Despite this, procurement teams aim to increase digitalisation to nearly 70% for both transactional and strategic processes by 2027.
To achieve this, teams are shifting focus to invest in cohesive digital ecosystems incorporating the “plan-to-strategise” phase of procurement. The digital transition for strategic activities requires leveraging data and analytics capabilities to derive actionable insights that guide procurement strategies. This will play a crucial role, with survey respondents ranking data and analytics as the top priority area for digital investment.
The Critical Components for Enabling Higher Levels of Digitalisation
The success of procurement digitisation projects is contingent on solutions meeting team needs and adopting an efficient implementation approach. A PwC Director and expert in Procurement Digital Transformation outlined three critical areas to enable higher levels of digitalisation:
1. The “Deployment” Process:
- Deploying digital solutions has historically been time-consuming and resource-intensive, often leading to incomplete implementations. To accelerate time-to-value, there is a shift toward process-based improvements rather than custom builds.
- Next generation solutions like SAP Spend Control Tower and SAP Category Management move away from traditional deployment models, moving to function based improvements to adopt revised operating models, requiring less “build” and more focus on process configuration.
2. “Automation”:
- Automation is a key driver of procurement efficiency. The PwC survey found that 70% of respondents view efficiency gains as the primary reason for digital transformation. Advances in AI have significantly enhanced automation capabilities and are now an essential component in the digital procurement landscape, allowing procurement teams to focus their time on strategic activities.
- AI technologies such as data enrichment, generative AI for market intelligence, and curated data from sources like Beroe are transforming procurement. SAP’s Triple Crown approach integrates these capabilities to streamline category strategy creation and execution through automated sourcing channels.
3. “User Adoption”:
- User adoption, driven by user experience, is critical for successful digital transformation. A seamless user experience extends beyond intuitive interfaces to providing a platform that enables efficient and accurate task execution.
- Integrating automation capabilities, offering easily accessible analytics for insights, and creating a cohesive digital ecosystem to eliminate the need to switch between solutions are essential for streamlining tasks and enhancing user experience.
- SAP’s Business Data Cloud is the backbone for the use and creation of “agents” to evolve automation and UX to the next level. SAP’s co-pilot Joule is integrated across all of SAP solutions, allowing Users to articulate what they want to achieve, and the system then executes the desired outcome. SAP’s Intake Management solution enhances this further by allowing users interacting with multiple systems to be guided through a single pane of glass.
In summary, modern procurement is evolving toward becoming a best-in-class function driven by advanced technologies. By leveraging AI, data analytics, and automation, procurement teams can use “agents” that facilitate the desired outcome. The phrase “The best UX is no UX” is (finally) coming to life!
