CPO surveys reveal the pulse of Procurement. What challenges is the function facing? And how can we face them, according to experts at Deloitte?
The Deloitte CPO Survey 2017 is finally here! And it is an even more interesting read than last year’s CPO Survey 2016. Deloitte surveyed many more people than last year, so the report contains the results of 480 Procurement leaders from 36 countries. The report is a fascinating insight into the current state of the function, and some parts are very sobering. So what is the average CPO thinking in 2017? And how do they want procurement software to help them?
What Are CPOs Thinking?
Deloitte paints a picture of Procurement that is hopeful about its progress but also apprehensive about coming economic challenges. The top priorities according to CPOs are:
- Cost reduction (79%)
- Managing risks (57%)
- New products and markets (52%)
- Increasing cashflow (48%)
The desire to reduce costs and manage risks seem to be a natural product of a more uncertain economic and political environment. Deloitte also attributes this to pressure from “defensive strategies being implemented by Chief Financial Officers”.
58% said that they had experienced improved savings performance on the previous year. More encouragingly, 72% the CPOs felt that they were in a “fair” situation in their strategic role. The aspiration for more is obvious - as 86% would like an “excellent” situation.
Some Bad News
Without doubt, the most sobering part of the report is bad news about talent. 60% of CPOs don’t think that their teams have the skills needed to deliver their Procurement strategy. More specifically, the most severe skills gaps are in the roles of contract manager and category manager. For both roles, about 20% of CPOs consider the skills gap to be large and between 40 and 50% consider it to be moderate. Deloitte points to continuing low investment in new talent and training.
The Way Forward: Combining Talent With Digital
Deloitte has several suggestions for alleviating the talent depression. What really stands out is that Deloitte clearly sees procurement talent and digital procurement as going hand-in-hand. It recommends that CPOs “create a digital culture” and invest heavily in “digital and analytical acumen”. One part of this is retaining the loyalty of millennial talent that more often have the required digital skills to use technology to its maximum potential. Deloitte notes that few CPOs have a plan for this in place yet.
Digital procurement solutions and talent development have to be deployed together to fill the looming capabilities gap. 62% of CPOs surveyed thought that the skills gap in key analytical capabilities was moderate to large. It can be no coincidence that 65% of CPOs foresee procurement technology making the biggest impact in analytics in the next two years. They especially see it making an impact in analytics for negotiations, process efficiencies, market intelligence and supplier portfolio optimization.
CPOs will need to find, train and retain talent that can get the most out of digital analytics. They will also need to overcome the top barriers to effective application of data in digital procurement. 49% are held back by the quality of data and 42% by lack of data integration. Data quality can be improved in investing in Master Data Management. While not known for being an exciting topic, Master Data Management enables Procurement organizations to use analytics and is a must-have for any organization hoping to deploy digital procurement. Secondly, data integration can be greatly increased with software integrations built to integrate - especially with ERP systems.
To read more about state-of-the-art digital procurement, download the Virtual Procurement Center of Excellence whitepaper by Sourcing Innovation expert Michael Lamoureux.