|[August 10, 2017]
Hackett: Typical Procurement Orgs Can Substantially Narrow the Gap to World-Class Via Digital Transformation
Typical procurement organizations can substantially narrow the gap
between their cost levels and that of top performers, and top performers
can become even better by leveraging digital transformation, according
to new world-class procurement research from The
Hackett Group, Inc. (NASDAQ: HCKT)
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Typical procurement organizations can reduce procurement process costs by up to 24 percent by implementing robotic process automation, advanced analytics, cloud-based applications and other digital transformation approaches, according to new research from The Hackett Group. World-class procurement organizations can reap process cost savings of 35 percent through digital transformation. (Photo: Business Wire)
World-class procurement organizations now operate at 22 percent lower
labor costs than their peers, and have 29 percent fewer staff, while
demonstrating improved effectiveness and better performance across a
wide array of key metrics, The Hackett Group's research also found. For
a typical company with $10 billion in revenue, attaining world-class
performance in procurement can represent as much as $6 million in
potential annual functional cost savings. World-class procurement
organizations also generate more than twice the ROI of typical
procurement organizations, generating more than $10 in savings for every
$1 of procurement operating cost.
The potential cost take-out opportunity through digital transformation
of the procurement function is dramatic, the research found. Typical
procurement organizations can reduce procurement process costs by up to
24 percent by implementing robotic process automation, advanced
analytics, cloud-based applications and other digital transformation
approaches. World-class procurement organizations can reap process cost
savings of 35 percent through digital transformation.
A public version of the research, "Raising the World-Class Bar in
Procurement Through Digital Transformation," is available on a
complimentary basis, with registration, at this link:
The research also found that in addition to reduced cost and fewer
staff, world-class procurement organizations are significantly more
effective than their peers in how they operate and deliver services.
Transactions require discrepancy resolution two to three times less
often. Annual procurement staff turnover is also 45 percent lower, a
sign that staff are being given opportunities for professional growth.
The Hackett Group's research details six digital accelerators for
improving procurement's performance and supporting business strategy
over the long term, including: digital tools to enhance customer
engagement; robotic process automation to perform rules-based
activities; the use of big data and advanced analytics to drive insight
and bolster decision making; cloud-based applications; digital workforce
enablement to maximize productivity; and cognitive computing to simulate
human thought and augment the ability of procurement to run models, make
predictions, and analyze large data sets.
According to Christopher S. Sawchuk, a principal & global procurement
advisory practice leader for The Hackett Group, "Technology has always
played an important role in enabling performance, but procurement has
reached an inflection point. World-class can continue to reduce costs by
embracing digital technology, and typical procurement organizations can
leverage the same technology to catch up faster at less cost.
"Today, digital business tools are converging with employees and
consumers who are increasingly comfortable with new mobile technologies
and business models," said Sawchuk. "This has created tremendous
opportunities for procurement organizations to transform service
delivery, reduce errors, make information easier to access, and even
deliver a whole new class of services."
According to Robert Derocher, a principal at The Hackett Group,
"Cloud-based software tools in particular are emerging as strong
enablers of procurement activities. Supplier discover software, for
example, can reduce the time it takes to find and qualify suppliers by
over 30 percent. E-sourcing software can cut overall cycle time by 30
percent, with standard templates reducing data collection errors.
Contract lifecycle management software can also cut the time required to
find a contract nearly in half, and trim the number of lapsed contracts
by nearly 40 percent.
"Technology alone will not deliver results," explained Derocher. "It
must fit within a larger strategy, one based on a well-designed service
delivery model that looks at not just technology, but also processes,
information, talent and organizational redesign. But the promise of
digital, in the context of a well-rounded transformation effort, is
The Hackett Group's world-class procurement research is based on an
annually updated analysis of results from recent benchmarks, performance
studies, and advisory and transformation engagements at hundreds of
large global companies.
About The Hackett Group
Hackett Group (NASDAQ: HCKT) is an intellectual property-based
strategic consultancy and leading enterprise benchmarking
and best practices implementation firm to global companies, offering
digital transformation and enterprise application approaches including
robotic process automation and cloud computing. Services include
business transformation, enterprise
performance management, working
capital management and global
business services. The Hackett Group also provides dedicated
expertise in business strategy, operations, finance, human capital
management, strategic sourcing, procurement and information technology,
including its award-winning Oracle (News - Alert) EPM and SAP practices.
The Hackett Group has completed more than 13,000 benchmarking studies
with major corporations and government agencies, including 93% of the
Dow Jones Industrials, 87% of the Fortune 100, 87% of the DAX 30 and 58%
of the FTSE 100. These studies drive its Best Practice Intelligence
Center™ which includes the firm's benchmarking metrics, best
practices repository and best practice configuration guides and process
flows, which enable The Hackett Group's clients and partners to achieve
More information on The Hackett Group is available at: www.thehackettgroup.com,
or by calling (770) 225-3600.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170810005132/en/
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