Ardent recently completed its sixteenth annual CPO-themed market research study, “The State of Procurement & the CPO”, which is part of an ongoing dialogue that my team and I have had with Chief Procurement Officers (CPOs) and other procurement leaders for more than a decade. Over the next few weeks, we’ll be discussing the results from this year’s study in a series of articles on this site. If you’d like access to this report, make sure to register for our newsletter with a business email address.
Using Data to Become More Agile and Intelligent
CPOs and procurement organizations have seen a gradual yet accelerating shift towards becoming more data-driven, more intelligent (i.e., more informed by data analysis and empirical evidence and less by “gut feeling”), and as a result, more agile. The procurement teams that adeptly connect their tools, resources, and expertise to support the evolving needs of the business will succeed above all others. It is Ardent’s long-held view that agility will define the next wave of procurement success. And in 2021, a fair number are on their way with more than a quarter (27%) of respondents in this year’s survey rating themselves as highly agile, while 61% believe that they are somewhat agile. Unfortunately, these figures have barely changed in the last three years.
The need to develop systemic agility within the procurement function does not mean that activities like spend analysis, sourcing, and procure-to-pay become any less important. To the contrary, executing efficiently and effectively are critical to procurement’s success now and in the future, particularly as CPOs continue to gain additional responsibilities and attempt to place more spend under management. Agility should not be pursued at the expense of core capabilities; all areas must be sharp and competitive. Leading enterprises and functions can multi-task and layer in new elements upon their strong foundations (which is what makes them leading); procurement departments must do the same. They must also become more intelligent by leveraging their data.
Resourceful and innovative CPOs have adopted a data-driven approach to executing sourcing, buying, and risk management decisions. They are performing “Moneyball”-type analysis and starting to leverage AI-driven predictive tools. Although the methods and tools are still early in their development, it is clear that procurement’s “Big Data” has the potential to become the next major catalyst for the profession.
Given this, data-driven intelligence is no longer an aspiration, it is a necessity in today’s competitive landscape. Procurement departments, their operations, culture, systems, and the way in which they transform knowledge into strategies and those strategies into performance, must keep pace with their rivals.
If you are interested in learning more about the key procurement and CPO data collected in our annual research study, consider listening to Ardent’s brand new “Procurement Rising” podcast series. Click below to listen to new episodes. The podcast is also available on Apple, Spotify, Stitcher, Google, or wherever you get your podcasts.
