Report reveals digital transformation trends in procurement
A new report by Ardent Partners, entitled "State of Source-to-Pay Digitization 2024: Navigating Supply Challenges, Embracing Innovation," has been released, providing insights into the current landscape of Source-to-Pay (S2P) technology. Commissioned by Ivalua, this inaugural report aims to establish a benchmark for companies operating within the procurement sector.
The report highlights evolving priorities for procurement departments, which have expanded to include not only cost and efficiency but also sustainability, risk mitigation, compliance, and cash flow improvements. Increased automation and enhanced decision-making through S2P solutions are touted as critical in addressing these responsibilities.
Widespread adoption of S2P technologies is evident. Electronic Payments (79%) and eProcurement (51%) technologies see higher usage, denoting a focus on transactional processes among procurement professionals. In contrast, only 17% of organisations currently utilise Big Data Management Solutions, and 15% employ Optimization-based eSourcing. These areas, however, show greater planned adoption in the future, pointing towards a concerted effort to tackle data management and visibility issues with suppliers.
Looking forward to 2024, 30% of survey respondents anticipate an increase in their technology budget for S2P operations compared to 2023, while 13% foresee a decrease. The findings also categorise some organisations as "S2P Innovators," who have shown significant benefits from using S2P solutions. These benefits include greater efficiency (57%) and improved productivity (49%).
Notwithstanding these benefits, the report identifies notable challenges hindering the full realisation of S2P technology's potential. Poor data quality and accessibility emerged as the primary barrier, cited by 48% of respondents. Integration issues also pose challenges, with 34% noting difficulties integrating S2P technologies with third-party systems and 33% facing issues within different S2P processes.
Despite a significant focus on the importance of data, only 10% of respondents prioritise data architecture, quality, and access when selecting procurement technology. Integration with back-end systems is also a priority for a mere 5% of those surveyed.
Vishal Patel, VP of Product Marketing at Ivalua, commented, "The disconnect between the need for high-quality data and the current reality of poor data management and process integration creates a significant hurdle for organisations aiming to extract the full value from their S2P technology. Without clean, standardised, and readily accessible data and the elimination of silos across S2P, automation is limited, as is the effectiveness of AI and analytics. The risk of missing the AI opportunity is too great for this problem to remain unaddressed."
Procurement leaders believe they are on the brink of a data-driven revolution, with 81% expecting data to have a massive or significant impact over the next decade. Artificial Intelligence is also anticipated to play a transformational or significant role in the next few years, with 74% of procurement teams expected to adopt AI technologies by the end of 2024, up from the current 28%.
Patel added, "Procurement leaders envision a future where procurement is fundamentally different, driven by data-powered insights and advanced analytics, but it will be crucial for businesses to bridge this data disconnect. By focusing on data as a strategic asset and building a clear roadmap towards a solid data foundation, businesses can position themselves to unlock the true potential of S2P solutions in the age of big data and AI for smarter procurement decisions, improved supplier relationships, and greater savings."
The report's findings are based on feedback gathered from 382 Source-to-Pay executives through surveys and interviews. These insights aim to facilitate a broader understanding of the current market landscape and underline the essential role of S2P leaders in enhancing business resilience and financial stability.
