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About the Author
Marisol Buczynski Buchanan, CEO of Premikati, Inc. is passionate about procurement, specifically in the SMB space. She has been involved in the procurement industry in either strategic or executive roles for almost two decades. Most recently, Marisol and Premikati, have shaken up the industry by offering a version of Ariba Guided Buying and Invoicing to SMBs - providing access to the same robust software as large enterprises that is easy to implement, scalable, and best of all, simple to use. Marisol also serves as part of SAP Ariba’s Partner Advisory Board for the Procurement as a Purpose Workstream as well as sitting on the National Small Business Association Leadership Council. In her free time, Marisol is a self-taught chef and avid gardener.

Why SMBs Have Typically Been Digital Laggards in Procurement

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While essentially every company could benefit from digital transformation — whereby they adopt digital technologies and processes to improve everything from customer experience to IT efficiency — many organizations have yet to fully embrace this change. In particular, small and medium-sized businesses (SMBs) typically lag large enterprises (LE) in digital transformation, particularly for procurement functions.

 

SMB Roadblocks

 

The reason why SMBs lag larger competitors often relates to the size of an enterprise. For example, a survey of mid-sized business IT professionals, conducted by Spiceworks and sponsored by CenturyLink, found that the top roadblocks to digital transformation include:

 

  • Budget
  • Limited time and staff
  • Competing IT priorities
  • Resistance from end-users and internal decision makers
  • Limited skill and expertise

 

As this list indicates, some of the top roadblocks are tied to the resources that an organization has. And in general, larger companies have more resources. As such, digital transformation becomes more attainable as budgets increase and when employees aren’t as stretched for time.

For procurement, a lack of resources means that SMBs often cannot invest in the technology necessary to obtain visibility into spend and streamline buying processes. Procurement activities at many companies tend to be decentralized and manual, leaving organizations without the insights needed to improve in this area.

 

Still, these challenges are by no means limited to SMBs, it just tends to get easier as companies gain more resources. A global survey of procurement and operational leaders at companies of varying size, conducted by the University of Applied Sciences Würzburg-Schweinfurt with support from SAP Ariba™, found that 83% of respondents think digital transformation will be impactful but only 5% already have highly automated processes. Similarly, the survey found that data/analytics quality is the largest roadblock to more efficiency, followed by budget restrictions.

 

How SMBs Can Improve Digital Transformation in Procurement 

 

While finding the budget and convincing internal stakeholders to adopt procurement technologies may be difficult, change can be cost-effective in the long run.

 

For example, research from The Hackett Group finds that digital transformation helps typical procurement groups reduce process costs by 30%. The research also finds that top procurement groups have lower labor costs and staff levels than their peers, and they improve efficiency by standardizing and automating routine tasks.

 

This means that SMBs don’t necessarily need to add additional employees to keep up with competitors, but they can instead leverage technology and digital processes to become more efficient with the resources they do have.

 

Fortunately, procurement technology is also becoming more readily available for SMBs, whereas in the past, procurement platforms tended to be priced at a level that only large companies could afford. Now, SMBs can implement systems that allow them to move from using paper-based supplier catalogs or ordering from disparate websites to centralized marketplaces. Doing so enables employees to find all the items they’re looking for in one place online, much the way they shop for items in e-commerce marketplaces like Amazon and eBay in their personal lives.

 

By centralizing purchasing activities, SMBs then get the added benefit of gaining visibility into their spending, particularly the small tail spends purchases that would otherwise be hard to track. Doing so enables companies to find cost savings such as by identifying unnecessary spend and implementing cost controls so that employees stay within budget.

 

Digital transformation in procurement doesn’t have to be overly complex, but by moving purchasing activities onto centralized platforms, SMBs can gain the insights and set the controls they need to improve efficiency. Moreover, SMBs can link digital procurement activities into the rest of their digital transformation, such as by sourcing digital-minded suppliers that can provide added value to other functions.

 

Premikati is currently offering a free one month trial of the Premikati Marketplace for SAP Business Exchange members – learn more here.