August 4, 2015

World-Class Procurement Spends 17 Percent Less; Are Well on Their Way to Becoming Client-Focused Service Providers

  • New world-class performance research details how top procurement orgs are reinventing the stakeholder experience

MIAMI & LONDON, August 4, 2015 - World-class procurement organizations now deliver services at 17 percent less cost than typical companies while offering improved effectiveness, largely by becoming more customer-centric, according to new research from The Hackett Group, Inc. (NASDAQ: HCKT). A key differentiator is the superior ability of world-class procurement organizations to gain a deep understanding of the needs of their business, react more quickly to changing requirements, and drive higher overall value and greater stakeholder satisfaction, the research found.

A public version of this research, entitled "The World-Class Performance Advantage: How Procurement Organizations are Reinventing the Stakeholder Experience," is available, with registration, at this link:

"Our research finds that world-class procurement organizations have made major strides in terms of finding ways to become true client-focused service providers," said The Hackett Group Global Procurement Advisory Leader Chris Sawchuk. "They have increased the scope of their spend influence, the savings they are able to capture, and the value delivered beyond hard-dollar savings, in part by emphasizing on-demand analytics and market intelligence, and realigning their service portfolio.

"As typical procurement organizations strive towards these same goals, success will hinge on their ability to market themselves in new ways to build awareness. They need to learn how to speak the language of the business, change how they're viewed, build trust, and gain permission to take on higher-value work over time."

World-class procurement organizations excel at cost reduction and deliver services at 17 percent lower cost than typical companies, while requiring 26 percent fewer staff, The Hackett Group's research found. At the same time, they operate at dramatically higher levels of effectiveness, delivering superior stakeholder satisfaction, in part because they have successfully transformed into truly customer-centric organizations.

The Hackett Group's research identified an array of procurement strategies and capabilities most strongly correlated with high performance and success of the procurement organization. World-class procurement organizations continue to invest in activities that elevate their role to that of a trusted advisor, moving beyond the traditional role of procurement as a gatekeeper. Delivering greater value is key, and procurement organizations that are viewed as a true business partner report 68 percent higher savings than those viewed as gatekeepers, reflecting higher effectiveness at both cost reduction and cost avoidance.

World-class procurement organizations become deeply embedded in their stakeholders' teams, the research found. Procurement organizations that have improved stakeholder alignment report 28 percent higher savings than those that don't. World-class procurement organizations also commit dedicated resources to act as a liaison between procurement and the business nearly twice as often as typical organizations, and are better prepared to adjust alignment between procurement's goals and stakeholders objectives as requirements change.

To achieve world-class performance, The Hackett Group recommends that procurement organizations take a structured approach to improving the customer experience, focusing in four areas. First they should identify and understand key stakeholders, and segment their internal customers based on attributes such as importance and level of influence within the organization. In addition to seniority, issues such as language, culture, and even personality should be taken into account. Next, procurement organizations can develop formal customer satisfaction surveys tailored to key stakeholders, taking care to use a variety of ad-hoc and structured approaches to gain deeper insights.

Procurement organizations should also analyze the results of customer satisfaction surveys, and ensure that stakeholders understand their feedback is being valued and utilized. Finally, procurement can improve their level of customer service by taking a holistic view, and by implementing self-service tools to answer common inquiries and provide real-time visibility into order status.

The Hackett Group's World-Class Procurement Performance Advantage Research is based on an analysis of results from recent benchmarks, performance studies, and advisory and transformation engagements at hundreds of large global companies.

About The Hackett Group, Inc.

The Hackett Group (NASDAQ: HCKT) is an intellectual property-based strategic consultancy and leading enterprise benchmarking and best practices implementation firm to global companies. Services include business transformation, enterprise performance management, working capital management, and global business services. The Hackett Group also provides dedicated expertise in business strategy, operations, finance, human capital management, strategic sourcing, procurement, and information technology, including its award-winning Oracle EPM and SAP practices.

The Hackett Group has completed more than 11,000 benchmarking studies with major corporations and government agencies, including 93% of the Dow Jones Industrials, 86% of the Fortune 100, 87% of the DAX 30 and 52% of the FTSE 100. These studies drive its Best Practice Intelligence Center™ which includes the firm's benchmarking metrics, best practices repository, and best practice configuration guides and process flows, which enable The Hackett Group's clients and partners to achieve world-class performance.