Procurement 1014 Obstacles To Digital Procurement Transformations

Last Updated: 12 February, 2021

In today’s data-driven world, it’s important to shift away from paper-based processes and adopt automation technology. Procurement teams must complete a digital procurement transformation to remain competitive. 

The procurement process often involves multiple teams working in tandem. Successful digital procurement transformations are all-hands-on-deck initiatives that require company-wide support. If one team resists adopting a data-driven business mindset, they disrupt the entire transformation effort.

Various obstacles lurk, hidden on the road to success, and you must be prepared to avoid them. The good news? When you gain buy-in from all top stakeholders and decision-makers, the transition becomes exponentially easier. 

Many obstacles will be nothing more than minor speedbumps. However, you’ll encounter a few giant potholes that can derail all your hard work. But they don’t have to. As long as you’re prepared, you’ll navigate this transformation with ease.

KEY OBSTACLES TO DIGITAL PROCUREEMENT TRANSFORMATION

Below, we’ve laid out the four most dangerous obstacles to look out for on the road to a successful digital transformation. Be prepared for them and your transition will go smoothly. 

  1. Resistance to change
  2. Access to comprehensive data analysis
  3. Discomfort using data and technology
  4. Adopting a company-wide data culture

 

 

1. RESISTANCE TO CHANGE

Old habits can be hard to break. Resistance to change seems to be most common in middle management. This doesn’t appear to be the case for C-suite decision-makers. 

These mid-level managers are comfortable with current processes and see no desire to change how they operate. 

Disclaimer: We’re not making a broad generalization about middle management. Rather, we’re merely pointing out where this mindset is most prevalent.

Why is this an obstacle?

Unfortunately, this presents a major barrier to making the transition from traditional operating practices to digital ones. It’s common to see an “if-it-ain’t-broke-don’t-fix-it” mindset here. 

However, in most instances, these processes are indeed broken and end up killing competitiveness and squashing the company’s bottom line.

It’s hard to spot, but the obstacle preventing business-wide digital transformations is often middle management’s comfort level with current processes.

Misaligned priorities

Unlike middle management, top decision-makers understand the need to adopt digital processes and emerging, disruptive technologies to remain competitive. 

Recent survey data reports that three out of every four executives view emerging technology as vital to successful digital transformation. The challenge they face is a disconnect between their priorities and what’s actually taking place on the ground. 

Ironically, once a digital transformation is successful, those executives have a clear view of movements down in the trenches. 

 

2. ACCESS TO COMPREHENSIVE DATA AND ANALYSIS

CEOs and other executives expect their teams to deliver complete data and analysis around the results of their procurement efforts. They need to maintain a comprehensive view of performance to make informed growth decisions. Regrettably, they rarely receive it. 

Why is this an obstacle?

PricewaterhouseCoopers runs an annual CEO survey to measure executive sentiment on several variables. Their 2019 survey showed a gap between how complete data CEOs receive is, and how important it is to them. Here are a few key findings:

  • Data about risks to their business: 87% of CEOs say this data is critically important. Only 22% say the data they receive is comprehensive. 
  • Data around revenue forecasting and projections: 92% said this is critically important. Only 42% said the data they receive is comprehensive.
  • Benchmarking data around the performance of industry peers: 84% said this was critically important. A miserable 18% said what they received is comprehensive. 

PricewaterhouseCoopers: gap between data decision makers deem important and perceived reliability of the data available to them

Source: PricewaterhouseCoopers

An intractable problem?

How can businesses implement successful digital transformations when decision-makers have inaccurate data to base important decisions on?

The answer? It’s almost impossible because executives maintain skewed perceptions of what’s moving the needle and where the problems lie. 

Can this challenge be overcome? Yes, it certainly can. But doing so often depends on middle management to ensure the delivery of accurate data. Given the points made above, this can become an endless game of cat and mouse. Eventually, executives must be informed about the problem, and that responsibility often falls on procurement managers. 

They must present executives with statistics and actionable insights around the urgency and need to engage in digital transformation. It’s also on them to become internal champions for this transformation.

 

3. DISCOMFORT USING DATA AND TECHNOLOGY

New generations of employees are data-savvy by nature. That’s a given. And they are slowly moving into the board room, one of the various trends defining the future of procurement management. However, they’ll still represent a minority in the C-suite for at least the next decade.

Why is this an obstacle? 

Those at the top of the food chain are more likely to be wary of adopting new technologies. This makes sense, they didn’t grow up with mobile devices in their hands. At the same time, this poses a distinct barrier to completing a successful digital transformation.

Moreover, digital transformations often require CEOs and other top stakeholders to lead the charge. Regrettably, many are reluctant to do so, don’t know how, or simply don’t see the need.

Business leaders and digital solutions for procurement

Can you teach a seasoned leader new tricks? The short answer? Sometimes, but it’s not easy. Research points out that in most cases, you cannot. A recent Deloitte study indicates that two thirds of executives aren’t comfortable basing important decisions on their data. 

Instead, they rely on intuition to make important decisions. This is a problem. Why? Intuition is, by nature, subjective. Quantitative data, on the other hand, is always objective and thus more reliable. 

If top decision-makers won’t commit to fully supporting a proper digital procurement transformation, it’s unlikely to happen. 

Deloitte: 67% of executives aren't comfortable using the data available to them

Source: Deloitte

 

4. ADOPTING A COMPANY-WIDE DATA CULTURE

Again, it’s the elephant in the room: some decision-makers’ reluctance to trust data and force internal paradigm shifts. These individuals are unlikely to spearhead initiatives requiring all staff to adopt a company culture revolving around data and analysis. Unfortunately, as a result, they’re unlikely to lead their businesses to success.

Why is this an obstacle?

A successful digital procurement transition can only take place if the entire company is on-board. Businesses that embrace a data analysis culture see incredible growth. Those that do not, see growth stagnation. Unfortunately, many still have no desire to make the change.

Why is company-wide adoption so important?

Here, we let the data speak for itself. Deloitte recently surveyed over 1,000 business executives about their use of data analysis. Below are some key findings. 

  • 48% of companies with data analysis cultures significantly exceeded their revenue and business goals in the previous 12 months.
  • Those companies are twice as likely to exceed revenue goals in the future..
  • An astounding 88% of companies in which every employee is trained on data analysis exceeded set KPIs and business goals.

 

FINAL THOUGHTS

There’s no denying that procurement is permanently becoming a digital process. Progressive, forward-looking businesses that complete a successful digital procurement transformation are more likely to survive into the future. 

Unfortunately, those that don’t are much more likely to fade away. It’s a hard fact to accept, but it’s important to do so. We live in a digital world, so there’s no logical argument for resisting the digital onslaught that engulfs us. However, there are hundreds or thousands of reasons to embrace digital processes and automation technology.

If you haven’t yet, don’t worry. Count on us to help you along the way. We want to see your business continue to thrive into the future and beyond. And it’s far more likely to do so if you initiate a digital transformation. You can start by following the four steps listed above. 

Need guidance?

Don’t forget, we’re here to help you navigate this transformation and avoid the obstacles you’ll face along the way. Need some advice or guidance? Simply reach out to us and let’s chat. 

Or perhaps you want a head start in differentiating yourself from the competition. If that’s you, we encourage you to request a free demo today. We’ll answer all your questions, steer you in the right direction, and won’t oblige you to commit to anything. We’re just here to support your success, period.

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