In Procurement Digitalization the Cloud Is King

SDA BOCCONI SCHOOL OF MANAGEMENT, IN A RESEARCH SUPPORTED BY SAP ARIBA AND ACCENTURE, HAS ANALYZED DIGITAL PROCUREMENT STATEOFTHEART IN ITALIAN LARGE COMPANIES

Milan, 13^th June 2019 - Procurement is one of the functions most affected by digitalization, as well as a crucial one for companies and a key sector for employment, with over 50,000 employees in Italy. A group of SDA Bocconi School of Management scholars led by professor Giuseppe Stabilini together with professor Paolo Pasini, in cooperation with SAP Ariba and Accenture, has developed a state-of-the art picture of Italian digital procurement by surveying more than 100 Chief Procurement Officers (CPOs) in large companies (or Italian branches of MNEs) with revenues in excess of €400mln. The results have been released this afternoon.
 
«It turns out that digitalization is a hot topic, but companies still have a quite long way to go», says professor Stabilini. «When asked which new technologies they are introducing, CPOs, in 74% of the cases, answer data analysis and visualization technologies, that is mature technologies». The runner-ups, mobile technologies (33%), predictive analysis (32%), decision automation (31%), and robotic process automation (19%) can be considered emerging technologies, with the remaining innovations including: machine learning, blockchain, virtual reality, the internet of things (IoT), natural language processing, chatbots, image recognition, and 3D printing are being introduced by just a few of Italian companies, early adopters in innovation. Additionally, one-in-five companies are implementing digital procurement processes without introducing any new technology.
 
«The delay in the adoption of the most innovative technologies», says professor Stabilini, «is only in part due to companies’ unreadiness. Some technologies are too specific, as 3D printing, or still up and coming in Italy, as the blockchain».
 
The main motivation behind digitalization is cost reduction (85% of respondents), but product (or service) quality improvement and innovation, as well as risk reduction are widely cited. The “digital procurement” project in 67% of the cases introduces a completely new operating model, adding value in efficiency and effectiveness. Only in 12% of the cases the aim is to optimize procurement department structure.
 
Vertical software, specifically designed for procurement processes, is used by half the companies, with the rest almost evenly split between ERP and custom software. The cloud (59%) is establishing itself as the principal hosting platform, with on-premises software used by 41% of the companies. «The adoption of the cloud», comments professor Stabilini, «overcomes some integration and maintenance issues experienced in the past and gives a boost for the introduction and dissemination of new technology applications».
 
Company organization is considered the main hurdle to procurement digitalization (around 50% of the digital procurement projects), followed by the uncertainty in the returns on investment and by possible technology integration issues. «The digitalization journey», professor Stabilini concludes, «is strictly connected with change management, skills and people. Clearly not just a technological improvement».

by Fabio Todesco