CPO Rising 2023: Technology Adoption and Investment in 2023 - CPO RISING - THE SITE FOR CHIEF PROCUREMENT OFFICERS & LEADERS IN SUPPLY MANAGEMENT

Today, we feature our ongoing coverage of this year’s 18th-annual CPO-themed report, where my team and I continue our nearly two-decade-long dialogue with chief procurement officers (CPOs) and other procurement leaders.

The report is based on research by Ardent Partners and represents a comprehensive, industry-wide view of what is happening in the world of procurement and captures the experience, performance, perspective, and intentions of 341 CPOs and other procurement executives.

Our post today takes a look at procurement technology adoption trends and the achievable value in automation, followed by how these trends are shaping investment in technologies in 2023.

Technology Adoption in 2023

Procurement technology continues to be important to the leaders in the space and those that successfully deploy and use technology claim clear visibility, efficient, yet dynamic processes, and deep data intelligence as a result. When these capabilities are sub-par within a procurement operation, a lack of technology is typically a primary reason. eProcurement, which touches the most users internally, is the leading technology solution utilized by organizations (52%). Similar to 2022, eSourcing (and/or reverse auction) solutions (43%) followed eProcurement as the second-leading adopted technology. Business networks (40%) that integrate multiple procurement processes from supplier information management to e-catalogs align with supporting procurement’s reach across the enterprise.

The next few technology solutions are more tightly focused on specific processes. ePayables — accounts payable automation — (40%), automated spend analysis (39%), and automated contract management — repository — (39%) round out the most-adopted technologies in 2023.

Technology can unlock tremendous value for businesses and there are many forces driving CPOs towards automation, like the need to scale operations and best practices more efficiently and effectively and the opportunity to leverage value from big data. Nonetheless, procurement technology adoption and proficiency lag all reasonable expectations — this requires deeper analysis.

Tech Investment in 2023

The prioritization of digital transformation will translate into a high level of technology investment in 2023 with 57% of all procurement organizations purchasing new solutions. To fully execute a digital transformation and leverage the digital tools and automation for process efficiency and performance gains requires full adoption and proficiency.

A breakdown of top technology investments for 2023 reveals a focus on the upstream strategic sourcing areas that drive savings, efficiency, compliance, and risk management.

Contract Lifecycle Management: Procurement teams rely on CLM solutions to automate and streamline the contracting process from contract initiation to execution to renewal. Ongoing management throughout stages of the contract helps minimize potential risks and ensures compliance with any regulations stipulated therein.

Supply Risk Management: With a plethora of supply risks, business agility, flexibility, and continuity are table stakes. Globalization requires supplier monitoring across regions to ensure risk management protocols exist and to mitigate potential disruptions. Supply risk management solutions provide procurement with a proactive approach to risk.

Supplier Performance Management: Supplier performance has never mattered more. CPOs depend on supplier performance management software to automate supplier workflows and processes with quality at the core. The visibility achieved serves as another layer of risk mitigation.

eSourcing: Many procurement departments are utilizing an eSourcing solution in their buying process. Through an online portal, procurement teams can collect multiple supplier bids in their quest to select a preferred supplier. Not only does eSourcing create cost savings but reduces the timeframe to find and select a strategic supplier.

However, the mere deployment of technology does not solve major issues for CPOs. In fact, with only 14% of procurement teams reporting high adoption rates of technology and only 10% reporting that technology drives great value for procurement, it is time to rethink the overall approach to technology.

Next week, we’ll cover procurement performance. The unprecedented market shifts over the last few years led many enterprises to change how procurement’s overall performance is measured.