When Oxford Economics partnered with SAP on a global research program about the future of procurement, we faced the challenge of saying something really fresh. People have been talking about the ways procurement must change for so long now that the predictions and prescriptions have become familiar. You know the words; sing along: More strategic, highly collaborative, technology-enabled… All true, but not really headline news.
This is a future with a lot of history. In fact, our mission was to build on the seminal Vision 2020 report created in 2010 by Ariba, an SAP company, which first spelled out many of the ideas we now take for granted.
Adding a different perspective
Our solution to the freshness problem was to field not one but two surveys—one of 500 senior procurement executives and the other of 500 non-executive procurement employees in 18 countries around the world.
This approach allowed us to go beyond the typical executives-only perspective to provide an unprecedented, holistic view of where procurement is today on its journey into the future, how far along it will be in a few more years, and what it must do to get where it needs to go. We also conducted live interviews with top procurement executives from large companies across different industries to tease out best practices and case studies.
One key finding produced by this unique approach is that these two groups see the future in very different terms, with senior executives much likelier than practitioners to expect procurement to maintain its current structure—or to maintain its current structure while becoming more strategic and absorbing other functions—while the rank-and-file are more likely to say procurement will be completely absorbed into other areas of the organization or will consist of a smaller team performing only core functions. Executives and practitioners also differed on topics including the strategic role of procurement and the use of procurement data to drive strategic decisions across the organization—execs are less bullish on both counts—and on the pace of automating procurement processes.
Whether the folks with a high-level view or those with ground-level experience have the truer picture of their own company’s future remains to be seen, but the truth is that procurement will evolve in different ways in different places. Where business needs and C-level support drive change, the function will become increasingly strategic, while in other industries and cultures it will remain in a more tactical role. As Mike Merlin, vice president, procurement at casino-business giant Las Vegas Sands Corp., told us, “You’re going to have some companies that are going to continue to evolve and other companies that frankly will just keep cutting the POs.”
The way things really work
The surveys—crafted in close collaboration with SAP’s industry experts—yielded a lot of insights on procurement as it is done today and will be done in the near future. We didn’t just identify trends; we looked at how they are playing out in the real world—for example, the impact of increased collaboration with suppliers on daily workflow for practitioners, or the political realities of implementing a strategic procurement plan across an enterprise.
You can see an executive overview of our research program here. In the weeks ahead, we’ll also release a series of shorter papers dedicated to close analysis of specific themes, including collaboration, operations, technology, and talent. And you can hear our researchers speak with executives and experts as we continue our run of topic-specific webinars.
Key statistics from our surveys
- 63% of procurement execs say future looks familiar or increasingly strategic; just 49% of practitioners agree.
- 50% of procurement practitioners say the function will shrink or be absorbed into business units; just 37% of execs agree.
- Procurement has a more strategic role in the organization, say 66% of non-executive procurement staff, 56% of execs.
- Procurement owning the supplier relationship is a top trend, say 61% of procurement execs and 55% of non-exec staff.
Edward Cone is the technology practice lead and deputy director of thought leadership at Oxford Economics, where he has overseen research programs on topics including cloud computing, the Internet of Things, and global talent trends.
For more future-focused business strategies, see How to Adapt Your Products to Emerging Markets.