Mind the digital skills gap
Technology has the power to revolutionise procurement, but procurement leaders need to ensure they have sufficient digital literacy for this power to be realised
Despite the promise of technology, in many organizations the opportunity it brings to procurement for transformational change has been largely squandered until now. In fact, the majority of those working in procurement have not experienced the true value of digitalization at all; they’ve only scratched the surface.
The digital skills needed for procurement
The transformation of procurement systems and processes through technology is actually a top priority for leaders in the industry. Despite this, our research found that 35% of senior industry professionals believe these technologies are not supported by the right processes and skills. A further quarter (24%) say there’s a false expectation of technology in the field, while 15% think a lack of adequate talent prevents procurement from realizing the power of smart machines.
In our view it is this last factor, the procurement digital skills gap, which often gets too little attention. We believe it can be split into two, namely the lack of skills required to do strategic tasks that technology cannot perform and a lack of digital literacy that undermines investments in the technology itself.
Let us start with digital literacy. Historically, those working in procurement haven’t been particularly tech-savvy, simply because they haven’t needed to be. For example, many don’t know the basics of how software is built or what something simple like a relational database is. This makes knowing how to purchase and implement a coherent ecosystem of tools and technologies that will deliver value in the future, a real challenge.
It is therefore incumbent on procurement leaders of tomorrow to educate themselves on how different technologies work at a basic level. This helps ensure that they can make the right investment decisions for the future as well as have the correct expectations on the value that technology will bring to their organization. Without the right investments or expectations digitalization will almost certainly fail.
It is incumbent on procurement leaders of tomorrow to educate themselves on the digital terms they are using and how the technology works at a basic level
The people impact of procurement’s digital transformation
But that is not the only danger. As technology becomes increasingly prevalent in procurement, many traditionally manual tasks are being digitalized, freeing up time for more strategic, value-adding work.
But it is crucial for procurement leaders to understand and plan for the impact of this digital transformation on their people before making these technology investments. Take the data cycle as an example. For an insight to be created from data, the data first needs to be acquired and then analyzed.
Many organizations spend most of their time on these two tasks and employ people who in many cases are good at doing them given the infrastructure they have at their disposal. But these two tasks are simply business overheads and add no value to the organization on their own. Even the generation of an insight doesn’t add value unless it is acted upon. After acquisition, analysis and insight, action is the fourth and only part of the data cycle that adds value.
Technology can play a huge role in minimizing the time spent on data acquisition, analysis and generation of insights. This in turn frees up time for the value-added action step to occur.
The problem with an organization going down this route without planning for the impact on its people is that they may not have the softer skills or strategic capability to actually capitalize on the freed-up time.
Procurement’s missing skills
It’s these missing skills that could be the difference between transforming procurement and confining it to a small space driven by outdated habits. Herein lies a big opportunity for procurement. Those working in procurement should seek to reinvent themselves to ensure their skills profile will be relevant to the future organization.
To do this, from the get-go a procurement function needs to understand how it will be measured in future, decide what kind of technology it requires to succeed, understand the impact of that technology on its people and identify those who can be trained with new skills or look to recruit these skills externally.
But to transform procurement, leaders must ensure they have identified the right skills, training and roles necessary to harness technology. Without understanding the digital skills gap within their workforce, they risk missing out on the value-adding benefits on offer.
Procurement is now starting to address this. 76% of respondents in our research say they have taken steps to address the talent pipeline shortages and skills gaps in their procurement function.
Find out more about the new, digital skills tomorrow's managers need access to in order to fully realize the potential of technology by downloading the full research report, "The Human Factor: Strategic procurement and the leaders of tomorrow"