Editor’s Note: Over the next few weeks on CPO Rising, we’re publishing some “best of” 2021 articles as we reflect on the year and prepare for the new year ahead.
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.
Procurement visibility, process, and data intelligence capabilities are frequently a prelude (check out last week’s article on the topic by clicking here) to a discussion on technology adoption across the Source-to-Settle spectrum. This is because these capabilities tend to mirror the corresponding technologies that automate and enable them. When these capabilities are sub-par within a procurement operation, a lack of technology is typically a primary reason.
Conversely, the successful users of procurement solutions prove year-in and year-out the value that technology can help scale a procurement operation and maximize its impact and performance. Another driving force for CPOs and their teams to continue to invest in technology is the fact that procurement teams, on average, are becoming more proficient in using the technology.
That the global pandemic has required a majority of businesses to institute “work from home” mandates is another argument for a fully automated procurement operation. Against that backdrop, the procurement technology market has been very strong (although the trend towards more, smaller investments has emerged during COVID-19). Nonetheless, overall adoption rates remain generally uninspiring. CPOs indicate that they plan to increase their investment in technology solutions over the next two to three years. This would drive current adoption levels well past 50% for all core applications and into the 75% or 90% range for most. It is worth noting that historically, procurement leaders have been unable to fully convert their technology investment plans into action. Although there are significant opportunities available for procurement organizations to adopt some or all of these tools in the near future, the pace of adoption should continue to be incremental rather than meteoric.
One emerging trend is the high interest in investment in supplier management solutions (which include supplier performance, risk, and information management). Additionally, the adoption of optimization-based sourcing tools has risen sharply over the past two years, becoming a more standard tool for sourcing teams.
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.
