“Procurement is at the point where they’re trying to figure out next steps on digitization, and it will be an immediate priority for everyone in the next couple of years.”Gordon Donovan Vice President of Research – Procurement and External Workforce at SAP
As Gordon Donovan, Vice President of Research – Procurement and External Workforce at SAP tells it, he has “the best job in procurement today.”
Gordon’s job is to essentially read, synthesize, share, and create value and meaning out of every single piece of procurement, workforce, or supply chain research that is published. It’s an intellectually intensive role, but, as he shared with me in this podcast episode, one that he not only enjoys immensely but that also provides him with a comprehensive view of the challenges, trends, opportunities, and forces impacting procurement. In the episode, Gordon shared the most recent findings from SAP’s 2024 Economist Impact Report, but he engaged in a wider conversation about the current and future state of procurement.
Here, in Gordon’s own words, are some of the key insights the vast body of research and data are telling us procurement should be aware of:
Confidence In Procurement Is Up, But So Is Global Uncertainty
“I think overall confidence levels in procurement have risen in the last two to three years, and this is both a good thing and a possible problem. We have the ‘in case of emergency’ break-glass moment for procurement, and it’s a good thing, right? Because we’ve shown that we can do that. But the problem is we don’t know when things will start to settle down. Let’s be clear, it probably won’t be until after November, and we also have a whole lot of other different things going on that will impact the rest of the world.”
Digitization is Priority #1 for Procurement
“Digitalization came up very strongly in this year’s Economist Impact Report as an immediate priority. Other research says the same thing. The big question is how does procurement embrace technology? How does procurement take this technology and deliver it in a way that’s going to deliver the value that was thought of?
Pretty much every category of spend over the last couple of years has gotten significantly more complex. It’s gotten harder. That’s for a number of different reasons, and workload has also gone up. But, headcount, shockingly, has not gone up, or if it has, it’s not going up at the same rate as everything else.
So now a lot of organizations are thinking about how technology can help them solve this.”
Procurement Still Has a Ways to Go In Their AI Journey
“It’s clear that many organizations are still at the early stage in AI. What my research tells us is that procurement, in general, is in the ‘late majority’ of technology, being quite risk averse about it. They’re thinking, ‘show me where it works, show me where it’s been done before, show me where it’s been done in my industry or country. The confidence that the business has in procurement I don’t think has ever been higher. So, that’s the thing now for procurement leaders to think about – how do we take that and move digitization forward.”
Procurement Has Valuable Insights, but They’re Not Always Acted On
“Research from the Economist Impact Report tells us that 84 percent of business leaders say that the insight procurement brings is really valuable, but only 64 percent are saying it’s effectively applied. So, there’s opportunity in that 20 percent delta. That was one thing that jumped out at me as interesting. It could be a communication problem, it could be an influencing problem, or it could be a contextual problem. It’s going to be different for every organization.”
A Growing Number of Centers of Excellence
“I do see centers of excellence getting more and more popular. More people I talk to are saying they are setting them up, and that could be a forerunner of how they’re going to transact in the future. … What we need to do is to advise on the right way to do it, to manage at a higher level.”
Trending Focus Areas for Procurement
“We need more suppliers, so supply diversification, I think, is something that is really big right now. There’s a short-term focus on digitization, and looking at sustainability and sustainability drivers of compliance largely. Yes, we’ve got to manage cost and we’ve got to manage more broadly risk. And then when we look at the longer term, we start thinking about more specific risks like supply diversification, multisourcing, reshoring and nearshoring. All those things sit together.”
