A “staggering disconnect” between procurement teams’ ambitions for transformation and their ability to execute means they must seek the insights, technology, and partnerships needed to “think and act ten times bigger than their current capacity,” according to Matthias Gutzmann, founder of Digital Procurement World, previewing a study October 9 at the company’s DPW Amsterdam 2024 conference.

DPW’s first “10X Procurement” study is based on input from more than 200 global international procurement leaders, and portrays an industry at a critical inflection point, the authors say. It was conducted in collaboration with Professor Remko van Hoek from the University of Arkansas.

"Procurement can be expected to look very different just 12-18 months from now," said van Hoek. "Our study found that procurement leaders are planning a transformative leap forward in digitization of strategic sourcing and supplier relationship management, moving beyond the traditional focus on P2P (peer-to-peer) automation."

Among other findings, the study concluded that the adoption of artificial intelligence (AI) is set to grow 187% in the next year, but only 20% of teams currently use AI at scale.

“Technology is advancing at the speed of light – but procurement leaders are struggling to drive change at the same rate,” said Gutzmann. “There’s a disconnect between the ambition to transform and the readiness to make it happen. The 10X Procurement study shows that while procurement is on the brink of something groundbreaking, teams are ill-equipped to harness that potential.”

Read More: Procurement’s Need for Digital Transformation in the Spotlight at DPW 2023

Part of the problem is what procurement technology providers surveyed described as a widening skills gap, citing a 30-35% shortfall in critical capabilities such as change management, openness to AI, and digital acumen, threatening the success of efforts to harness new technologies to streamline and automate existing processes, while looking for new ways around old problems.

Another issue is the under-utilization of technology. Although adoption of AI and other technologies is rising, only 20% of respondents are adopting or scaling AI within their procurement functions. Further, procurement processes remain only 50% automated on average.

DPW predicts that 2025 will see a concerted drive towards a digital revolution in procurement, forecasting a 187% increase in AI adoption, signaling a shift from operational technologies to more strategic, relationship-driven solutions.

But, as ever with significant change, there’s a culture lag holding businesses back. “While many procurement teams boast clear roadmaps for digital transformation, the culture required to embrace and sustain this change remains underdeveloped,” the report says. Respondents rated their organizations' readiness to drive the kind of sweeping transformations required to stay competitive as low.

Organizations that put too much emphasis on cutting costs put themselves at a disadvantage compared to companies that emphasize agility and resilience consistently, the report concludes.  “There is an urgent need for procurement to redefine success metrics and shift away from rigid cost-saving goals toward more innovative, relationship-driven strategies that drive more resilience,” the authors say.

A report detailing the study's insights will be available after the event, which ends October 10, at dpw.ai.