**London**: A new study by The Hackett Group reveals key technological initiatives for procurement departments by 2025, focusing on contract management, risk assessment, and the integration of Generative AI, all aimed at enhancing efficiency and promoting sustainable practices within organisations.
A recent study conducted by The Hackett Group has outlined a transformative agenda for procurement departments, highlighting significant technological advancements and initiatives planned for 2025. The findings indicate that procurement functions within organisations face challenges due to historically fragmented technology stacks, often resulting from mergers, acquisitions, and legacy processes.
In its 2025 Procurement Agenda and Key Issues Study, The Hackett Group identifies a predominant focus on service design and delivery projects, with seven out of the top ten initiatives relating to these areas. Notably, the introduction of Generative AI (Gen AI) and artificial intelligence (AI) technology ranks eighth among the planned initiatives, marking a notable shift towards technology-driven procurement solutions.
The report emphasises several critical areas for improvement within procurement:
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Contract Management: Enhancing contract management processes remains a top priority. Procurement teams can optimise spending and ensure supply continuity by adopting solutions such as SAP Ariba Contracts, which digitalise contract requests and streamline workflows. Such solutions aim to diminish reliance on manual processes while enhancing vendor relationships.
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Third-party Risk Management: Despite the importance of risk management, procurement teams have reported a lower technological maturity in this area compared to other functions. However, tools like SAP Ariba Supplier Risk help organisations manage supplier risks more effectively by providing data transparency and actionable insights regarding high-risk suppliers. This fosters the agility required for an adaptable supply chain.
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Generative AI and/or AI Technology: The study indicates that procurement teams are increasingly prioritising the development of AI technologies, with Gen AI taking its place among significant initiatives. SAP’s Business AI for Procurement offers companies tools to optimise spending, minimise risks, and enhance supply chain efficiency, demonstrating the potential benefits of integrating AI solutions into procurement practices.
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Sustainable Procurement: Although sustainable procurement ranks lower on the priority scale, the demand for environmental, social, and governance (ESG) considerations is rising. SAP’s Sustainability Management solutions assist organisations in aligning their procurement practices with sustainability goals by tracking emissions and ensuring compliance with human rights standards, thereby promoting a shift from traditional price-driven decisions to more sustainable choices.
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Supplier Performance Management: Finally, the management of supplier performance is acknowledged as a key area for improvement, albeit with technological maturity still lagging behind other functions. The SAP Ariba Supplier Lifecycle and Performance solution is designed to enhance supplier management, allowing procurement teams to access comprehensive supplier data for informed decision-making.
As procurement departments evolve, the study underscores the importance of leveraging appropriate technological tools to automate processes and improve data transparency, thereby enhancing overall efficiency. The Hackett Group’s findings suggest that procurement teams are poised to take advantage of SAP’s innovative solutions to navigate these transformative initiatives successfully.
Source: Noah Wire Services
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