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Procurement of targeted technologies, including Gen AI, helps close efficiency gaps and increase efficiency
Miami, February 16, 2024(BUSINESS WIRE) — Improving spending costs has become a top priority for procurement executives in the coming year as companies face concerns about their ability to continue growing revenue, high interest rates, fears of a recession and a recession. The potential for labor and skills shortages is high, according to The Hackett Group, Inc.’s (NASDAQ: HCKT) latest procurement critical issues research. Procurement leaders are also actively evaluating how generative artificial intelligence (Gen AI) can help them improve efficiency and effectiveness across a range of functional areas.
Hackett Group® It found that ensuring continuity of supply – last year’s top concern – fell to second place in this year’s rankings, followed by curbing inflationary price rises in third. Acting as a strategic advisor (priority No. 4) returns to the top five priorities for 2024, highlighting procurement leaders’ concerns about increased expectations for their function. Transforming procurement operating models (priority No. 5) is a top priority this year as executives consider the impact of evolving technologies, including generating artificial intelligence (Gen AI).
Procurement again expects an efficiency gap in 2024, as workloads are expected to increase by 8% in 2024, while budgets are expected to increase by only 1.6%. Procurement organizations are looking to leverage technology, including Gen AI, to fill some of the shortfall, and technology spending is one area likely to avoid potential cuts, with spending expected to increase 4.6%.
Data analytics and reporting top the list of planned improvements for 2024, followed by talent management. Data analytics is one of several improvement measures considered very important but with low maturity, making it a key area of development. Other key areas of development include category management, sustainable sourcing, third-party risk management and supplier relationship management.
Adoption of end-to-end core procurement technologies by procurement organizations is high and is expected to achieve double-digit growth through 2024 to support ongoing digital transformation efforts. The current adoption of supporting and emerging technologies is not as widespread as that of core technologies, and growth forecasts are more modest, ranging from 2% to 13%.
Although Gen AI is still an emerging technology, 28% of procurement organizations have already added it to their procurement technology solution portfolio. The most promising opportunities are in spend analysis and contract lifecycle management, where easy access to accurate data can greatly improve procurement staff’s efficiency. Category management is another area of Gen AI adoption, with 50% of respondents highlighting that they could foresee being able to bring together category-specific expertise, historical spend data, planned spend and supply market data to automatically create category strategies, This frees up resources. Free up time so procurement can focus on working more closely with business stakeholders.
A free version of the Hackett Group’s 2024 Key Procurement Issues Study, “The CPO Agenda,” is available upon registration at https://go.poweredbyhackett.com/886.
“Reducing expenditure costs has always been a top priority for procurement. But this year economic concerns have pushed it back to the top. In addition to a series of global economic challenges, companies are also concerned about their ability to grow revenue, so the focus on costs and “profit growth” is key. Many companies even want to make up for some of the increased cost of inflation to support profit growth.” said Chris Sawchuk, principal and head of global procurement consulting practice at Hackett Group. “Procurement teams expect to achieve higher levels of savings in procurement cost reduction and cost avoidance by 2024. But most procurement organizations have significant opportunities to drive value improvements from lean procurement cost structures. Hackett Group’s Benchmark Analysis Quantified this opportunity – digital world class® The procurement organization achieved nearly double the cost savings compared to its peers, while reducing overall procurement spend by 21%, representing a 2.5x improvement in return on investment. “
Amy Hillcox, senior research director of procurement and procure-to-pay consulting at The Hackett Group, said: “Supply chain disruption risk remains a top concern for many procurement teams due to ongoing geopolitical conflicts. Managing supply disruptions is critical to protecting revenue and profitability, Our research identifies critical capabilities for supply continuity, including supplier relationship management and third-party risk management, as key areas of development. Procurement must continue to build capabilities in these areas and conduct upfront risk monitoring more broadly. risk areas and continue to monitor and mitigate risk using real-time data and insights throughout the supplier lifecycle. Teams must also keep up with developments in digital tools, such as artificial intelligence and generative artificial intelligence, to maximize improvements across the supply chain visibility while leveraging market intelligence data from multiple internal and external sources.”
The Hackett Group’s 2024 Key Issues research is based on results collected from more than 375 senior executives in finance, procurement, supply chain, human resources, information technology and global business services at large and mid-sized companies around the world.
About Hackett Group
The Hackett Group, Inc. (Nasdaq: HCKT) is a leading benchmarking, research consulting and strategy advisory firm helping organizations achieve digital world-class® Performance.
Leverage our unparalleled intellectual property from more than 26,000 benchmark studies and our Hackett certification® A library of best practices from the world’s leading companies, including 97% of the Dow Jones Industrials, 89% of the Fortune 100, 70% of the DAX 40 and 55% of the FTSE 100, through our leading benchmarking platform Quantum LeapGet® With our Digital Transformation Platform, we accelerate digital transformation, including enterprise cloud implementation.
For more information about The Hackett Group, please visit: https://www.thehackettgroup.com/; email info@thehackettgroup.com; or call (770) 225-3600.
The Hackett Group, Hackett-Certified, the Quadrant logo, Quantum Leap and Digital World Class are registered trademarks of The Hackett Group.
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This press release contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements including, but not limited to, words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” or other similar phrases or variations of such words or similar expressions, indicate that there or future events or results anticipated or expected to occur are intended to identify such forward-looking statements. Forward-looking statements are not statements of historical fact and involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Factors that could affect such forward-looking statements include, but are not limited to, The Hackett Group’s ability to effectively market its digital transformation and other consulting services, competition from other consulting and technology companies it may own or develop in the future, similar products, The Hackett Group and the commercial viability of its services and other risks detailed in reports filed by The Hackett Group with the Securities and Exchange Commission. The Hackett Group undertakes no obligation to update this press release or any forward-looking statement contained therein.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240216990697/en/
contact method
Gary Baker, Director of Global Communications – (917) 796-2391 or gbaker@thehackettgroup.com
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