GAINING THE ADVANTAGE IN CHALLENGING TIMES

WHY BUSINESSES NEED TO DIGITALLY TRANSFORM

PROCUREMENT NOW MORE THAN EVER

ALL Spend, ALL Suppliers, NO Compromises

Introduction

If we’ve learnt anything from 2020, it is that we can’t predict the future. The emergence of
COVID-19 sent shockwaves through supply chains, and saw businesses become much more
reliant on procurement teams to help mitigate the impact. For some teams, this was easier said
than done. A lack of digitalisation in procurement hindered their ability to find solutions.

In fact, new research from Ivalua shows seven-in-ten (70%) UK businesses say that the need
for digital transformation in procurement has increased as a result of the COVID-19 pandemic,
while 84% believe greater digitalisation would have enabled them to more effectively mitigate
the impact.

For businesses that have digitalised procurement, COVID-19 caused much less disruption. A
McKinsey study of “resilient” and “non-resilient” organisations found companies who had moved
further and faster before, during and after times of crisis, significantly outpaced those who took
a reactive approach. In other words, even in turbulent times, businesses that have digitalised can
get ahead of the pack and achieve continued success.

The importance of procurement digitalisation goes beyond navigating the immediate effects
of COVID-19. It can help UK businesses resume and accelerate growth and gain a competitive
advantage. Effective digitisation can enable unique business processes and more effective
collaboration with suppliers and internal stakeholders. This can create new revenue opportunities,
unlock innovation and improve profitability. Digitisation also supports indirectly as it eliminates
manual, inefficient processes that hamper productivity, freeing capacity for more strategic
activities.

But currently, the state of digitalisation in procurement is lacking. According to the findings,
43% of UK businesses say that the rate of digitalisation within procurement is low. The risk in
the future is that many will be outstripped by more digitally-savvy rivals who are able use their
advantage to focus on adding value, accelerating revenue growth and improving business agility
to be prepared for the next crisis. Over the coming years, UK businesses need to move quickly
to digitally transform procurement and ensure they are not left behind. Our findings show that:

ALL Spend, ALL Suppliers, NO Compromises

 1 On average, UK businesses have digitalised just 43% of their procurement
processes.

2
The lack of digitalisation is hindering businesses from collaborating with suppliers
or identifying new revenue streams.

The most common barriers to digital transformation for UK businesses were their
3 suppliers (29%), their technology (20%) and their processes (18%).

This report is based on a study of 200 UK-based procurement, supply chain and finance
professionals at organisations with over 1,000 employees. It examines how a lack of digitalisation
is preventing procurement teams from gaining a competitive advantage, leaving them less able
to identify opportunities to innovate, collaborate and identify new sources of revenue.

© 2020 Ivalua 2
Many organisations have made no progress
digitalising procurement processes

While businesses recognise the need to digitally transform, the reality is many still have a long
way to go. Over a third (34%) of UK businesses believe that procurement digitalisation is stagnant
and hasn’t progressed in the last 12 months. On average, UK businesses have digitalised just
43% of their procurement processes, which is making it difficult for them to gain a competitive
advantage.

The most digitalised tasks were transactional processes like invoicing (55%), purchasing (42%)
and budget management (33%), yet even these figures show significant room for improvement.
UK businesses are further behind in digitalising strategic processes such as spend analysis
(32%) and risk management (26%). Clearly, there is significant room for improvement for those
that want to make informed decisions to identify cost savings and revenue opportunities.

Worryingly, most businesses have not digitalised supplier onboarding (89%) or sourcing (84%)
processes. Identifying and bringing on new suppliers is critical for businesses looking to identify
new opportunities to collaborate and innovate, so digitalising the process should be a top priority.
This is particularly true in times of crisis, as one of the biggest challenges UK businesses faced
in reducing the impact of COVID-19 was identifying alternate suppliers (30%).

Still a long way to go in procurement digitalisation

of UK businesses say
procurement digitalisation On average, UK businesses

34% is stagnant and hasn’t

progressed in the last 12 43% have digitalised just 43%
of procurement processes
months

33% budget
55% invoicing
management

42% purchasing

The most heavily digitalised processes are invoicing (55%), purchasing (42%)
and budget management (33%)

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 % of UK businesses who
Procurement process
have digitalised

Invoicing 55%

Purchasing 42%

Budget management 33%

Spend analysis 32%

Risk management 26%

Supplier management 20%

Spend management 20%

Contract management 17%

Sourcing 16%

Onboarding suppliers 11%

© 2020 Ivalua 4
A lack of digitalisation is preventing
procurement from adding value

Many UK businesses feel a lack of digitalisation is holding them back; 43% say that the rate of
digitalisation within procurement is low, and 46% say they are frustrated by this.

Eight-in-ten (81%) UK businesses say a lack of digitalisation is preventing them from collaborating
with suppliers and internal stakeholders, while a further 83% believe it is preventing them from
innovating and executing on new revenue streams and opportunities. More than two thirds
(67%) of UK businesses say that the lack of digitalisation limits their ability to gain rich insights
into spend and suppliers. Without the ability to collaborate or execute on opportunities to drive
new revenue streams, businesses stand little chance of getting ahead of the pack.

However, when it comes to digitalisation, UK businesses face a number of challenges. The most
common obstacles to digital transformation for UK businesses were their suppliers (29%), their
technology (20%) and their processes (18%). This shows that collaborating with suppliers to aid
transformation is still problematic. But, as supplier visibility continues to be vital to innovation
and identifying revenue opportunities, it’s not a problem that businesses can afford to leave
unsolved.

Low digitalisation is limiting collaboration and innovation

of UK businesses say that of UK businesses believe a lack of

81%
a lack of digitalisation is
preventing them from colla-
borating with suppliers and
internal stakeholders
83%
digitalisation is preventing them
from innovating and executing on
new revenue streams/new
opportunities

of UK businesses say that the

67% lack of digitalisation limits their

ability to gain rich insights into
spend and suppliers

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 % of UK businesses that face this
Biggest obstacles to digitalisation progress
obstacle

Our suppliers 29%

Our technology 20%

Our processes 18%

Our employees 13%

Our data 13%

None of the above 8%

© 2020 Ivalua 6
Digitalisation is no longer optional

In today’s turbulent landscape, businesses must digitally transform procurement so they can
identify opportunities to innovate, collaborate and grow revenues. Businesses understand this,
with the majority (88%) saying that digitalising procurement can help them to gain a competitive
advantage over less digitally-savvy rivals.

Businesses are now taking steps towards digitalisation; the top priorities in procurement
transformation plans are upskilling teams (62%) and using technology that can adapt to evolving
requirements (61%). This demonstrates that businesses recognise the importance of giving
teams the tools they need to identify these opportunities, enabling them to add strategic value.

Overall, businesses say the two biggest benefits for procurement digitalisation are improving
efficiency (54%) and reducing product and service costs (33%). The third most-cited benefit
of digitalisation identified by businesses was reducing their environmental impact (28%).
Sustainability continues to become a key differentiator, allowing for greater efficiency and waste
reduction, while turning being ‘green’ into a competitive advantage for eco-friendly businesses.
Businesses also identified improving innovation, identifying new revenue opportunities, and
improving collaboration as other benefits.

Digitalisation is key for gaining a competitive advantage

88% of UK businesses say digitalising procurement can help them

gain a competitive advantage over less digitally-savvy rivals

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Benefit of procurement digitalisation % of UK businesses that selected

Improving efficiency 54%

Reducing product/service costs 33%

Reducing our environmental impact 28%

Improving innovation 27%

Improving spend management 27%

Identifying new revenue opportunities 24%

Improving collaboration 22%

Improving compliance 22%

Improving risk management 19%

Improving supplier visibility 19%

Improving employee satisfaction 16%

Reducing reliance on certain suppliers 11%

© 2020 Ivalua 8
Conclusion

Procurement has become a much more strategic part of every business, but a lack of
digitalisation is preventing many teams from adding value and creating a competitive advantage.
UK businesses clearly recognise the importance of procurement digitalisation and the benefits
it can bring, but many have yet to transform procurement, which is limiting their ability to
collaborate with suppliers, drive innovation and identify new revenue streams.

One of the biggest issues preventing businesses from gaining a competitive advantage is a
continued reliance on manual processes. Not only do these processes waste money – previous
research calculated that inefficient procurement processes were costing UK businesses
£1.94m per year on average – they also stop procurement teams from focusing on the jobs that
matter. To create a competitive advantage, businesses need to reduce their reliance on manual
processes and instead give teams the tools and time they need to identify new opportunities for
the business.

To do this successfully, UK businesses need to take a smarter approach to procurement. Cloud-

based procurement platforms are key to enabling effective digital transformation, helping
organisations move away from managing processes over email, phone, or paper, to instead
capturing everything digitally. Whether it is by getting suppliers to sign up to digital procurement
platforms, or putting new tools in place to facilitate collaboration, business must overhaul their
technology and processes to make it easier for all stakeholders to cooperate. This will help
businesses identify opportunities to innovate, collaborate and grow revenues, giving them
the chance to build better products and service offerings that will differentiate them from the
competition. Those tools must also be nimble enough to support unique processes when teams
develop new business ideas.

By digitising procurement, businesses can create a single source of the truth, and an all-
encompassing digital view of procurement and supplier management. This complete view of
suppliers provides a solid data foundation from which businesses can create a competitive
advantage, helping them to soar past digital laggard competitors.

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About Ivalua

Ivalua is a leading provider of cloud-based Spend Management software. Our complete,

unified platform empowers businesses to effectively manage all categories of spend
and all suppliers, increasing profitability, improving ESG performance, lowering risk
and improving employee productivity. We are trusted by hundreds of the world’s
most admired brands and recognized as a leader by Gartner and other analysts.

Realize the possibilities at www.ivalua.com.

How can Ivalua help?

For years, Ivalua has been helping customers to go beyond best-in-class and build a true compe-
titive advantage. For example, US telecommunications company Sprint used the Ivalua platform
to digitalise its strategic sourcing processes, benefitting both the top and bottom line.

By streamlining processes, Sprint was able to strategically manage more spend. The platform
enabled better collection of sourcing requirements from the business, improving collaboration.
Ultimately, digitisation enabled $2B in annual cost savings.

In parallel, the Sprint team identified a significant new revenue stream; from optimising the
price received when selling used handsets. The flexibility of the platform enabled a high-volume
forward auction programme and generated over $1B in annual revenue.

Sprint also utilised other Ivalua features like spend analytics to mine for additional opportunities
across the supply chain and evaluate supplier performance, maximising value and gaining a
competitive edge.

Methodology

This report is based on a May 2020 UK study of 200 procurement, supply chain and finance
professionals in financial services, manufacturing, telecommunications, and retail organisations
with over 1,000 employees, conducted by Vanson Bourne and commissioned by Ivalua.

Contact +44 20 8068 9394 / info@ivalua.com ivalua.com

ALL Spend, ALL Suppliers, NO Compromises

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