Procurement functions in Ireland and the UK plan significant investment in digital transformation - says PwC’s latest Digital Procurement survey
Small and medium sized companies in Ireland and the UK plan on investing €500k each per annum to 2027 on digital transformation; improved financial performance of procurement functions is a key priority driving digitalisation; more focus is needed on ESG, upskilling and AI.
These are some of the key findings from the Ireland and UK segment of PwC’s latest Digital Procurement Survey canvassing views of around 1,000 procurement and business leaders in nearly 60 countries. The survey aims to establish the level of digital adoption in procurement functions and the key priorities and challenges faced by procurement leaders. This press release deals with the Ireland and UK segment results.
Irish and UK procurement functions are setting very ambitious digitalisation objectives with an average of 82% of procurement processes expected to be digitalised by 2027, higher than 70% for global peers and up from 36% currently.
Significant investment by procurement functions in digital transformation expected
The survey reveals significant spend by procurement functions in digital transformation in the coming years. Small and medium sized companies in Ireland and the UK each plan to invest €500k every year to 2027 on digital transformation in their procurement functions. This compares to €676k per annum globally. Large and very large companies in Ireland and the UK each plan to invest €1,728k every year to 2027 compared to €1,640k per annum globally.
PwC's survey shows that procurement leaders are highly ambitious to have best in class purchasing functions. They realise that purchasing and supply chain excellence is heavily dependent on their ability to take advantage of digital transformation. Automation, artificial intelligence and data help to optimise the use and allocation of scarce resources. However, the survey suggests a greater focus on data and AI is needed to make the strategic shift towards seamless and effective digital transformation. Priority also needs to be given to environmental risk monitoring.
Financial performance prioritised over ESG and skills
Improved financial performance of their procurement function is by far the top strategic priority (45%) driving digitalisation, slightly behind global peers (47%). However, digital transformation is also driven by a need for transparency and compliance with regulations: a fifth (20%) of Irish and UK procurement leaders see compliance and regulation as their number one strategic priority, compared to just 5% globally. 15% of respondents see better supplier sourcing as a key strategic priority, similar to global peers. Just 3% and 2% respectively see Environmental, Social and Governance (ESG) and talent retention & upskilling as their number one strategic priority.
Getting the business criteria right (definition and needs of project) is by far the most critical factor determining digital transformation success for 80% of respondents, ahead of global peers (70%). Other critical success factors include change management after the project goes live (Ireland and UK: 69%; Global: 54%) and senior executive sponsorship (Ireland and UK: 62%; Global: 57%). Vendor selection is an important success factor for less than four out of ten respondents (Ireland and the UK: 39%; Global: 42%).
Few are prioritising data analytics and GPT chat in their digital plans
The survey indicates that for most companies their digital procurement priorities include focusing on their core procurement systems (Ireland and UK: 44%; Global: 30%), contract management (Ireland and UK: 43%; Global: 28%) and risk management (Ireland and UK: 34%; Global: 25%).
However, just a quarter (25%) of Ireland and UK respondents say that they are prioritising data analytics compared to a third (33%) for global peers.
Emerging technologies including Chat GPT (Ireland and UK:10%; Global: 8%) and Blockchain
(Ireland and UK: 5%; Global:13%) are currently lower down the priority list for most companies.
The survey shows that the ambition to improve performance in the procurement function is accelerating digitalisation. To support this transformation, procurement functions must ensure that procurement professionals and users are on board with the right skills. The survey points to a greater focus needed on talent retention and upskilling to ensure all stakeholders can get the best benefits from the new technologies.
More focus is also needed on Environmental, Social and Governance as a strategic opportunity to foster supply chains that are both sustainable and uphold socially conscious practices.