Even though digitization in procurement has been proven to lead to greater efficiency, reduced costs and increased employee productivity, companies remain hesitant when it comes to deciding which software to use. PwC's Digital Procurement Survey 2024 shows that the level of digitization in procurement has hardly changed noticeably since the COVID-19 pandemic. However, respondents are still aiming for a digitalization rate of 70% by 2027. There are many reasons for the slower development towards digitization in procurement. Concerns and reservations about a new solution are slowing down the decision-making process. Even the upstream decision for or against software in general is difficult for companies. Especially in procurement the question of software should be approached more openly. After all, procurement – as a hidden champion – can make a decisive contribution to the company's success with its numerous levers. Read more about why companies still have reservations and which concerns we hear when talking to our potential customers.
1. ROI & costs: digitization in procurement must pay off The main task of procurement is to save costs. At first glance, this is not possible if additional costs are incurred in this area, for example in the form of an investment in new software. The first reservation is therefore self-explanatory: There is great concern that software will not pay for itself and will not achieve the desired ROI. Decision-makers fear wasting money without clear gains in effectiveness. The ROI calculation may be somewhat simpler in the first year, but in the second year at the latest, in view of increased service fees, the software represents a monetary burden. In addition, some software solutions only promise soft savings (e.g. “60% increase in effectiveness”), which makes the ROI calculation more difficult and is often not sufficient for internal argumentation.
We’re talking hard savings: ivoflow guarantees you an average return on investment of 30%
Finally, a thorough evaluation of amortization also requires consideration of the existing IT infrastructure and system landscape. Which systems have redundancies? Which tools can be eliminated as the functions are combined in new software?
2. Implementation and acceptance of digital solutions in procurement There is something to the proverb “Better the devil you know than the devil you don't.” If something is unfamiliar to us, we tend to be hesitant, less open-minded and prefer the old, familiar things. We often experience this in conversations when it comes to digitization projects in procurement. Companies are fundamentally afraid of insufficient software usage – and are therefore already a big step ahead of others, as they have at least recognized the problem. There can be several reasons for underutilization of software in the context of digital transformation:
• Inadequate change management: Depending on the size of the company, it is advisable to have a dedicated team or person who takes on the change management for digitalization projects and ensures that all stakeholders are involved accordingly. After all, different mindsets, age groups and skill levels need to be equally involved.
• Poor onboarding & launch management: Companies should ensure that sufficient internal resources are available to support the go-live of the software and onboard users accordingly. A train-the-trainer concept is recommended here. Tip: When selecting a service provider, consider how mature the launch management is and whether it includes an appropriate training concept for users.
3. Digitization in procurement only with proven tools? Experience shows that companies like to go with the crowd and tend to rely on proven and established solutions on the market when it comes to digital transformation. This is problematic insofar as there is often no consideration of whether these – often more expensive – products are the best solution for the company's use case. Furthermore, this decision is often dominated by the IT departments. This is where the well-known silo mentality comes into play: make sure that you include procurement in the selection of digital tools.
4. Fear of redundancy Discussions with interested parties often reveal a fear of redundancy: Companies fear the emergence of various small island solutions. To counteract this, a holistic approach is required that considers not only individual tools and systems, but the entire organization to create synergies. However, there is also another extreme: the software is not rolled out everywhere for financial reasons. This inevitably leads to isolated solutions for each individual area.
5. Further reservations about digitization in procurement Companies are afraid of becoming too dependent on one tool. Instead of finding a tool that matches the requirements and needs of the company, companies tend to align their business processes with the tool. This carries the risk of excessive dependency and should therefore be avoided. Finally, companies often report unsuccessful software implementations from the past, which ultimately led to frustration among users. There can also be various reasons for this, such as problems with the link to the ERP system.
Digitization projects in purchasing: first-hand experience When talking to new customers, it is important for us to provide thorough information. We involve our customers right from the start and clarify any understandable reservations. Our aim is to integrate our products seamlessly into our customers' existing IT infrastructure. It is therefore essential to consider and understand the system landscape in its entirety. As a rule, our deployment team is therefore also in contact with a contact person from the digitalization/IT department. Our satisfied customers are our most important advertisement. Would you like first-hand information and to talk to one of our customers about ivoflow? We will be happy to put you in touch with the contact person.
