By: Andrea Brody, Chief Marketing Officer, BravoSolution

Did you know that companies devote an average of 16 full-time staff to the sourcing process for every $1 billion in spend? In The Hackett Group’s latest 2017 Sourcing Cycle Time and Cost Measurement Study, their research confirmed the reality that teams are stretched thin, and that half of all strategic sourcing time is spent in the supplier evaluation and negotiation phase.

Kurt Albertson, Principal – Procurement Advisory for The Hackett Group, explored the results of their comprehensive study during a live BravoSolution webinar session. In his live presentation, Kurt also engaged with the audience in a live Q&A and answered real-world questions focused on strategic cost measurement and why companies need to revisit their strategic sourcing solutions to enable procurement’s digital transformation.

Q: Is the objective to divert resource to strategic, or is it to raise the flag that procurement needs more resources across the board to enable appropriate resource focus at all spend areas?

A: One question we get a lot from our clients is: “There’s such a significant ROI associated with procurement. Why not make the business case that we should be investing in more resources? Isn’t there a pretty good justification for making more investments?”

I would agree with that, and I think a lot of procurement professionals would agree with that; in reality, there are certainly some organizations that are going to be understaffed. But in general, I think that true procurement is an administrative function, and that’s not where significant investments are going. It’s a very difficult journey unless you are shown to be understaffed, that’s just not how the “powers-that-be” look at it, so that’s why we’ve got to focus on the productivity side of it for the most part.

Q: Are there any similar studies about the role of procurement in enabling business-wide digital transformation? For example, what are the key roles executives require from procurement in enabling non-procurement digital transformation?

A: I think there are alignments between procurement and digital transformation, depending on the individual strategy of the organization, such as bringing new technology partners to the mix to help drive that market-facing strategy. We have to align with our stakeholder objectives. There is a natural alignment between being an information-based, big data analytics and insight procurement organization. Putting the right information in a usable format into the hands of our stakeholders enables faster decisions and helps drive that market-facing strategy.

Q: Does the technology-to-savings trend correlate to a broader business technology maturity and to efficiency and agility maturity? 
A: The technology-to-savings trends I previously discussed [in this webinar] were specific to procurement and is really about a holistic optimization of all the critical capabilities around Hackett’s Service Delivery Model, including process, technology, talent, governance, service placement, service partnering, and information. In general, at the enterprise level, I would suspect similar correlations apply for most well-established technologies.

Q: How large does a procurement organization need to be able to have the resources to have a digital procurement strategy? Is it realistic for procurement teams of two, three or four people to drive digital procurement transformation?

A: I am not sure that scale is essential here. Even a team of two or three should be thinking about the digital transformation concepts with respect to stakeholder alignment, partnering with internal and external partners around analytics and information. Larger organizations will have larger budgets for technology and smaller organizations may not be able to justify significant investments in technology, but many of the specific principles apply. We typically find that smaller procurement organizations only represent the centralized component of procurement, while much of the activity is decentralized within the business and functions.

Q: How much support is required from procurement on P2P (procure-to-pay) tools, or should this be restricted to source-to-contract tools?

A: From our perspective, procurement should look at this from an end-to-end perspective and support strategies across source-to-pay.

Q: How will Cognitive and Analytics affect the procurement space in the next three years? Which specific function will benefit more?

A: When combined with big data, cognitive and AI will help in the identification of supply risk, opportunities for sourcing/savings, identification of spend and savings patterns related to unstructured spend (e.g. non-PO), compliance to preferred contracts, and identification of particular contract attributes that are relevant for risk management and savings.

This Q&A session has been edited and condensed from the latest webinar from BravoSolution and The Hackett Group. To listen to the full presentation and access the 2017 Sourcing Cycle Time and Cost Management Study by The Hackett Group, click here.

Kurt Albertson is a Principal with The Hackett Group, and responsible for North American Strategic Advisory programs focusing on client relationships, business development, best practice advice, research and program delivery. Mr. Albertson works with over one hundred Global 1000 companies leveraging research and thought leadership to provide strategic direction and best practice business advice within the Procurement and Cash Disbursements space.