The 2024 ProcureCon CPO report is now available (registration required). Sponsored by Icertis, the annual report is based on a survey conducted by WBR Insights, the research arm of the ProcureCon conference series for procurement professionals. The report does not indicate how many respondents made up the survey responses.
The report indicates that the Chief Procurement Officer (CPO) has become a key influencer of company strategy. They also have a large hand in influencing the application of AI across procurement. The report is 18 pages in length and delivers a mix of data points, data visualisation and analysis.
The authors note that the role of the CPO has evolved. It notes the challenges, priorities and opportunities that they face. The respondents came from North America and were divided into ten industry segments.
Bernadette Bulacan, Chief Evangelist, Icertis, commented, “Especially in times of volatility and change, the organizational significance of the procurement department continues to grow, spanning contract creation and approvals to surfacing untapped savings, avoiding missed obligations, and ensuring ongoing compliance throughout supplier relationships.
“As the global regulatory landscape undergoes dynamic changes and businesses grapple with challenges like supply chain disruptions, inflation, ESG audits, and market volatility, the expectations of CPOs have never been higher. This is a pivotal moment for procurement leaders to assert their influence, steering the organization and shaping business-critical initiatives with AI technology, particularly in contract management.”
What is in the CPO report
After an executive summary and key findings, the report is divided into three sections.
- CPOs Are Now Strategic Decision Makers and Technology Champions Within the Organization. 46% of respondents claim their CPO now plays a bigger role in high-level decision-making.
- Procurement Leaders Are Focusing on Digital Transformation and Improving Process Speeds. 44% of CPOs have led AI adoption efforts in the past 12 months.
- Procurement Leaders Play a Significant Role in Sustainability Decisions. 86% of procurement leaders are spearheading sustainability initiatives.
After the conclusion, there are four key suggestions for CPOs and procurement teams to take away. The report provides a deeper explanation for these suggestions.
- Invest in Digital Procurement and AI Technologies
- Incorporate Sustainability into Procurement Practices
- Develop a Concrete ESG Strategy
- Balance Cost-Effectiveness and Responsible Procurement
The report is well laid out and an easy read. Having read through the report, Enterprise Times also asked Bulacan some questions about the findings.
Business leadership and focus
While there is a growing importance for CPOs across the businesses, their focus has become more strategic and visionary.
The top three focus areas for 2024 were:
- Process Improvement – 43%
- Minimizing supply chain disruption – 37%
- Technology implementation or transformation – 35%
I asked Bulacan how these have changed since 2023, as the report did not offer any trend information. She replied, “In 2023, 72% of respondents cited the reduction of manual tasks from workflows as a high priority. However, this dropped to 27% in 2024 (report).
“Coupled with the 2024 focus on technology implementation (35%), this shift suggests that modern procurement leaders have made significant strides over the past year in identifying digital tools to optimize processes and improve operational efficiencies. Now they are focusing on more strategic initiatives that impact the bottom line and reduce risks.”
Contract lifecycle management was identified by 27% of respondents as an area of process improvement. I asked Bulacan what other areas were mentioned.
She replied, “35% of CPOs identify the need for improved digital procurement platforms to address inefficiencies in electronic sourcing processes. Optimizing these platforms, alongside contract lifecycle management systems, creates the opportunity to enhance sourcing efficacy in support of more streamlined operations.”
The CPO is driving AI adoption
While the report was mainly quantitative, WPR Insights did ask respondents how and why the procurement office is driving AI adoption. AI will help deliver “more control on the availability of supplies,” according to one response. Another also believes their CPO, with expertise in digital operations, can help “procure favorable AI technology.” That denotes a level of experience that might not be common.
The respondents also highlight some other benefits that firms seek from adopting AI. It makes for some interesting reading. However, CPOs are becoming more involved. I asked Bulacan where these initiatives were sourced from, whether organically from the CPO themselves, the board or the CEO.
She replied, “CPOs recognize the impact that AI will have on the procurement function and how it will benefit their jobs as procurement and supply chain professionals. They also recognize the significant implications of AI to address challenges spanning from contract creation and approvals to surfacing untapped savings, avoiding missed obligations, and ensuring ongoing compliance throughout supplier relationships.
“The expectations of CPOs to impact revenue and compliance have never been higher. Their influence over the vendor ecosystem has positioned them as a power player in shaping business-critical initiatives with AI technology to help their organizations grapple with challenges like supply chain disruptions, inflation, ESG audits, and market volatility.
“Beyond the procurement function, CPOs are also acutely aware of the transformative impact that AI will have on the entire enterprise. They must be diligent in making smart purchases to ensure the AI technology meets business strategy and creates a competitive edge.
“As they take on a central role in decision-making around procuring AI, they must also build new skill sets around buying AI technology and how it will support the enterprise. For example, CPOs not only need to become experts on the technology, but they need to understand vendors, assess ROI, manage expectations, and navigate regulatory and compliance requirements specific to procuring these AI tools.”
Digital Transformation
One of the stranger questions within the survey was taking a look at the state of procurement strategy planning for 2024. The survey was conducted between September and October 2023.
The responses reflect this, with only 40% saying that planning was well underway and 9% indicated it hadn’t started. The authors viewed this as a “delay in planning”, but it may have more to do with the timing of the survey.
Of greater importance were the priorities for CPOs in the next 12 months. The top three responses for high and medium priorities were:
- Enhancing the speed and efficiency of source-to-pay activities (high 46%, medium 48%) – 94%
- Reducing operational costs (high 53%, medium 38%) – 91%
- Proactive monitoring and mitigating of supply chain risks (high 46%, medium 44%) – 90%
As CPOs look to make investments in their procurement technology stack. 32% are considering digital transformation to reduce manual data entry. In addition, 28% are looking at process orchestration across systems. 27% are looking at data enrichment. Only 13% are looking at AI implementation. The question on AI implementation is whether leaders expect it to be included within the other technology stacks.
On data enrichment
I also asked Bulacan what was meant by data enrichment and how Icertis would enable it.
She replied, “Poor quality or insufficient data are major challenges in evolving procurement from a cost center to a source of value for the enterprise. For example, quality data regarding discounts and rebates committed to in the contract helps maximize cost savings, impacting the bottom line.
“Or data about a contracting party, like insights into a vendor’s historical performance against contractual obligations, such as delivery times and quality assurances, ensures reliable supplier selection.
“By applying AI to the enterprise data contained in contracts and integrating that data with core systems across the business, Icertis equips procurement teams with the visibility needed to manage complex contract portfolios and effectively take a preventative role in mitigating risk, cutting costs, and surfacing unique insights.”
Enterprise Times: What does this mean?
There were some omissions in this report that the authors possibly should have considered within their set of answers. Neither cybersecurity nor organisational resiliency were mentioned. Other surveys frequently highlight the former as a key focus and priority for many teams. With third-party supplier risk becoming increasingly talked about, it is an omission that they will hopefully correct in next year’s report.
For further insight, I also asked Bulacan whether she would add a fifth suggestion that procurement leaders should consider. She noted, “As emerging technologies continue to redefine the workplace and professional landscape, and industries embrace AI, procurement departments will benefit from rethinking their strategies to source top talent, retrain existing employees, and attract the next generation of procurement professionals.
“Enhanced training and upskilling programs will ensure that seasoned procurement experts stay agile in this digitally driven age so they can continue to champion technological innovation and transformation within the company.
“Concurrently, these initiatives will also appeal to the rising cohort of tech-savvy procurement professionals — merging traditional skillsets with modern innovation. In addition to upskilling procurement professionals — from buyers to category managers — in digital processes and technology, procurement leaders will need to hone in on the strategic aspects of procurement that are core to humans and continue to invest/upskill in those areas as well.”
There was also little in the way of analysis by industry or country. With only North American respondents included, there is no indication of whether there are similar views elsewhere in the world. There are some shortcomings in this report as a result of the question set. However, it throws up some interesting trends.
WCC and Icertis look at the state of commerce and contract management
