Spend Cost Reduction and Risk Management are Priorities 1 and 2, Improvements in Data Driven Analytics And Digital Transformation are Also Key
MIAMI & LONDON, April 28, 2021 – In response to the business environment related to the global pandemic, spend cost reduction and supply risk management are back at the top of the procurement agenda, according to new Key Issues Research from The Hackett Group, Inc. (NASDAQ: HCKT). In 2021, the most popular initiatives for procurement teams are to improve data and analytics, accelerate digital transformation through the implementation of cloud-based suites and best-of-breed solutions, and pilot emerging technologies.
The full research, “2021 CPO Agenda: 10 Key Issues Procurement Needs to Act on Now,” is available on a complimentary basis, with registration, at this link: http://go.poweredbyhackett.com/2021prockeyissuessm.
Key findings from the research include:
Continued Instability Expected – 41% of survey respondents expect business conditions will stabilize by Q2 2021, but 36% believe it will take longer. (Page 3).
Spend Cost Reduction Back at the Top of the CPO Agenda – Business disruption has driven procurement to refocus on supporting critical business operations and tap the value from supplier relationships, resulting in a pivot towards spend cost reduction and capturing non-price value from supplier relationships as the top procurement priority for 2021. Continuing to further strengthen procurement’s role as a strategic business enabler and delivering in an agile way are further important priorities. (Page 4, 5, 10).
Increased Focus on Corporate Sustainability and Supply Base Diversity – Corporate sustainability made the top 10 list of procurement priorities for the first time in 2021, representing a broader focus on corporate social responsibility and an acknowledgement that sustainability generates business value through reduced costs, risk management and improved brand value. At the same time, diversity and inclusion rose by seven spots to become the number two enterprise initiative for 2021. For procurement, this has translated into increased focus on supplier diversity initiatives (Page 4, 5, 10, 13).
Supply Chain Risk Reduction a Major Priority – Supply assurance became a board level issue in 2020, and reducing supply risk to maintain supply continuity is Priority 2 for procurement in 2021, our research found. Procurement leaders are tasked with strengthening third-party risk management, monitoring a broader set of risk exposures at earlier stages of the supplier life cycle, and continuing to monitor and mitigate risks. Maximizing visibility and timeliness are key here, requiring proper digital tools and the ability to leverage market intelligence data from multiple internal and external sources (Pages 4, 5).
Increased Focus on Improving Data-Driven Analytics – Procurement leaders indicate the most popular initiative underway in 2021 is to address data, information, analytics and reporting. Significant growth is also projected in the adoption of modern tools for data visualization and advanced analytics and modeling tools in 2021 (26% and 25%, respectively). But among procurement capabilities, improving analytics and reporting was designated as having the lowest ability to address. Developing modern analytical capabilities is a complex process. Setting up a strong master data management program is the first – and one of the most critical – steps. Without access to extensive, trustworthy data, few reliable insights can be gleaned from its analysis. Developing a data driven culture and analytical skills is also essential for more effective decision making, and the use of predictive insights (Page 9).
Accelerated Digital Transformation – The global pandemic has pushed procurement beyond its natural hesitancy to adopt new technology tools. Procurement is rapidly shifting to adopt modern cloud-based systems, with both technology strategies of spend suites and best of breed solutions expected to grow significantly (by 29% and 22%, respectively) and it must now scale up these technologies. Adoption of advanced emerging technologies in procurement remain constrained, with both virtual assistants and cognitive computing/AI only expected to see an 11% growth rate, with few large-scale deployments. But procurement’s success will depend, in large part, on broader implementation and adoption of modern enabling tools (Pages 6-8).
Dramatic Shift in Enterprise Priorities Towards Digital Transformation – Enterprise digital transformation rose five spots to become the top enterprise initiative for 2021, followed by a focus on diversity and inclusion programs, which rose by seven spots. (Page 13).
The Hackett Group’s 2021 key issues research is based on results gathered from more than 300 executives in finance, HR, IT, procurement, supply chain, and global business services at a global set of midsized and large enterprises.
About The Hackett Group
The Hackett Group (NASDAQ: HCKT) is an intellectual property-based strategic consultancy and leading enterprise benchmarking firm to global companies, offering digital transformation including implementation of leading enterprise cloud applications, workflow automation and analytics that enable digital world class performance.
Drawing from our unparalleled IP from nearly 20,000 benchmark studies with the world’s leading businesses – including 93% of the Dow Jones Industrials, 91% of the Fortune 100, 80% of the DAX 30 and 55% of the FTSE 100 – captured through our leading benchmarking platform, Quantum Leap®, and our Digital Transformation Platform (DTP), we accelerate best practices implementations.
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