RPA, Advanced Analytics, other Digital Tools
Can Help Typical Procurement Orgs Cut Process Costs by 24 Percent;
World-Class Procurement Can See 35 Percent Process Cost
Reduction
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:
http://bit.ly/2vFh3iW.
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 tremendous.”
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
The 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 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 world-class
performance.
More information on The Hackett Group is available at:
www.thehackettgroup.com, info@thehackettgroup.com, or by calling
(770) 225-3600.
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version on businesswire.com: http://www.businesswire.com/news/home/20170810005132/en/
The Hackett GroupGary Baker, 917-796-2391Global Communications
Directorgbaker@thehackettgroup.com
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