Procurement’s data problem

A recent report from Globality found that 82% of procurement leaders acknowledge their indirect spend is not well managed and that cost savings is being left behind as a result. Even more, that report, 2023 Research Insights for CFOs, noted that 8 in 10 requests for proposals are still taking place via email and/or spreadsheets.

Now comes a separate report from SpendHQ that may add some context to that earlier report. SpendHQ released a survey last week in which 75% of respondents said they doubted the accuracy of procurement data they present. The result is that 79% of non-procurement executives – the ones controlling the purse strings – are only somewhat or not at all confident in using procurement’s data to make strategic decisions.

Further, 79% of respondents said their procurement teams do not have dedicated management software to track and manage their performance, with 74% still using spreadsheets, similar to the number Globality report found in its report.

Procurement clearly has a (big) data problem.

“Procurement teams must do more to build and maintain influence within their organizations, including removing the dependency on spreadsheets to become more efficient,” says Pierre Laprée, chief product officer of SpendHQ. “By using the right technologies, such as spend intelligence and analytics, along with embracing procurement performance management as a general approach to enterprise collaboration, procurement can show finance and other key stakeholders reliable and indisputable data and become a trusted business partner.”

The survey was a joint effort between SpendHQ and Procurious. SpendHQ said the report, From Insights to Impact: Driving High-Performance Procurement, offers insights on gaps in procurement performance and data management and how procurement can transform its reputation and drive true value and impact.

Bad data, or just a lack of confidence?

Among the eye-opening insights from the survey is that 91% of large organizations said they have a senior executive overseeing procurement performance, and 38% of procurement teams present their priorities to the C-suite for guidance, with 25% setting their own guidance. But, with three-quarters of respondents doubting their data accuracy, it is leading to a lack of confidence in the process, and potentially leading to poor decision-making.

Collaboration is key, but while 67% of respondents said they collaborate regularly or often with finance, and 60% do so with supply chain, logistics and IT or operations, there are still disconnects between other departments. Forty-three percent never or rarely collaborate with manufacturing, and 39% never or rarely collaborate with sales and marketing. 

C-suite executives believe procurement is aligned to their company’s overall vision at a higher rate than procurement teams do, 56% to 49% very aligned. However, procurement teams are concerned about having the right amount of data to accomplish goals such as ESG.

Forty-six percent of procurement teams said they don’t have enough ESG diversity data, 39% say their data is disconnected from sourcing and spend decisions, and another 39% lack plans to use ESG data to improve outcomes (39%).

Additionally, 29% of teams have a sub-optimal approach for consolidating separate project tracking and reporting on a periodic basis, while 14% say they’re highly fragmented, decentralized, and inconsistent in their planning, tracking, and reporting.

A majority of procurement teams are reporting to executive leadership (63%) or board of directors (14%), with the most common KPIs reported being negotiated savings (71%) and realized cost savings (71%). Risk and continuity (53%), sustainability (43%) and supplier diversity (23%) and other metrics reports.

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