Automation as the Next Big Disruptor?

Headlines from ISG/SIG Procurement Research Show Upward Trajectory

Recently ISG and the Sourcing Interests Group (SIG) partnered to conduct a survey on the nature of the procurement organization today and in 2012. While the survey will remain open until May 15, a number of preliminary insights have emerged from the research, which was presented at the Sourcing Summit in Savannah on April 1. Here are the Top 5 takeaways thus far:


1. Respondents believe that systems will be significantly more integrated in 2012. Organizations that learn to better utilize technology are likely to achieve higher efficiency and effectiveness while reducing costs. Generally, migration away from unique approaches and toward greater industry standardization can provide better potential for integration. Established procurement tools such as Ariba, Emptoris, Ketera, Iasta, Oracle and SAP continue to add functionality and integration.

2. The move toward more balanced globalization in procurement. While currently about ¾ of surveyed organizations report that 20-30 percent of their procurement is conducted offshore, the majority of organizations indicate that they will be in the 30-60 percent range in 2012. The implication of this shift is that there is a need for increased skills in managing global teams and also for integrated service delivery comprising internal and sourced components.

3. Use of procurement outsourcing will double. Sixteen percent of respondents are currently outsourcing 10 percent or more of procurement capability, and 31 percent plan to outsource by 2012.

4. There are significant gaps in supplier management versus other areas of procurement in terms of both tools and oversight. Supplier management remains approximately 70 percent more decentralized than outsourcing management and is a minimum of 60 percent more decentralized than any other vendor life cycle activity.

5. Procurement shared services is different from other shared services. According to our research, self-described “Procurement shared services” organizations show a dramatically low use of service level agreements and chargeback mechanisms with their internal client organizations. These two traits are among the bellwethers of a traditional shares services definition.