Hackett’s 2015 Procurement Key Issues

Posted by Pete Loughlin in e-invoicing, e-Procurement, e-Procurement Software, Electronic Invoicing 06 Apr 2015

Last month, Hackett, the authority on P2P, published their 2015 Key Issues study, an annual review of the priorities facing procurement organisations.

The headline results go like this:

Procurement leaders are planning to focus their transformation efforts in three areas this year to achieve the biggest enterprise impact in the coming year:

– Cultivate procurement’s role as a trusted advisor

– Invest in next-generation training and development

– Harness big data

Site LogoThe first is a perennial issue. It remains one of the persistent issues facing many procurement leaders – getting the rest of the business to understand what they do. Training and development is, quite rightly always on the agenda and big data – well, this is one of our biggest opportunities. The first challenge is to understand what big data is then we need to understand how to leverage it. It’s like the early days of the internet – it was obviously something important but at the outset it was not entirely obvious to most people why.

But so far, so what? These headlines aren’t especially revealing and you don’t really need a survey to come up with such truisms. It’s when you look a little deeper that the real insights are revealed.

Last week I met a couple of Hackett people, Julian Calvert and Nicholas Walden, to get into a bit more detail and they shared some interesting insights on the contrast between the US and Europe.

Apparently, European companies reported an estimated 2% decrease this year in procurement operating budget. In contrast, North America is predicting a 2.7% increase. And European companies are more focused on innovation in 2015 than other respondents. The most interesting difference according to Calvert is the placement of innovation in the very bottom right quadrant of the survey results i.e.. highest priority lowest ability to address.

But I’ve spotted something else in the survey results that reveals something very revealing. There is a slide in the survey results titled “The adoption level and value of source to pay tools”. At the bottom left-hand corner is supplier networks. In contrast, e-procurement and e-invoicing are at the top right hand corner. This is saying that supply networks are seen as low value and are adopted only at a pilot stage while e-invoicing and e-procurement are seen as high-value and fully adopted. This appears to be a contradiction but to understand what is being said requires some further interpretation.

Hackett’s respondents are generally large, global businesses. This chart is saying that while businesses have adopted source to pay tools and see them as having value, the execution has been poor. In other words, the technology is in and has been for years, but the levels of deployment are still fairly low. This confirms what I see every day – fully implemented but poorly executed source to pay tools and increasingly I see businesses going back to basics in order to leverage their technology investment to deliver business benefit.

  • Huub van Kesteren April 7, 2015 at 2:20 pm /

    The human factor is one that might be the most difficult to manage. It’s not only a matter of process and technology, people are important as well to successfully transform businesses.

  • Hackett Hacks April 28, 2015 at 7:58 pm /

    Unfortunately, the Hackett data in procurement or AP cannot be trusted – although they have some charming consultants, you are dealing with very small sample sizes and an informed sort of fiction as to what is really happening in the market. Hackett do tell a good story, just not one based in market data…

  • Pierre Mitchell April 29, 2015 at 2:15 pm /

    Hey “Hackett Hacks”, stop hiding under a pseudonym and make statements based on actual first-hand knowledge. I used to work there and know the data quite intimately – as well as the other offerings in the market. Although the data is a backward looking rolling collection of the benchmarking studies they run (and it does tend to be large companies as Pete mentions), I would prefer a few hundred strong data points (based on a fairly strict and detailed methodology that lets you compare apples-to-apples) than a thousand data points of crappy data and flawed methodologies (e.g., dividing cost of procurement by number of POs to get cost per PO – or dividing cost of finance by the number of invoices to arrive at cost per invoice). By definition, their lagged population will not be on the cutting on the cutting edge, but is a very good snapshot of reality. Pete’s comment on supplier networks is case in point. Practitioners don’t share common definitions of it, and it indeed constantly ranks very low, even though supplier enablement/integration is clearly important. Practitioners implement eProcurement and eInvoicing, not supplier networks. The latter is properly viewed as a means to an end.

    Trust me, I’m no Hackett zealot, and left for a few reasons, but benchmark methodology and data quality are certainly NOT those reasons! That said, I think would better serve themselves if they did publish sample sizes on their research.

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