Archive: February, 2015

Predictions for 2015

In January the great and the good publish their predictions for the year ahead. I’ve read a few and find them to be a mix of observations and wishful thinking with little explanation.

There are many factors that affect procurement but I think they boil down to the underlying political and economic environment, developments in IT and a profession that continues to evolve. With this in mind I’ve come up with my own predictions for 2015.

Political and economic

The World Bank expects developing countries to see an improvement in growth this year after a disappointing 2014. It cites low oil prices and continued low global interest rates. I think this means that some buyers will be able to negotiate lower prices for goods, particularly where oil is a major component. The managed slow-down of the Chinese economy is already having a negative impact on commodity prices. This is good news for some buyers, however, as wages continue to increase, China will become a less attractive manufacturing destination.

IT systems

IT systems continue to improve which will give procurement the opportunity to automate more transactional activity and make greater use of spend analytics. This is nothing new; procurement professionals have wanted to rid themselves of the drudgery of processes orders since the purchase order was invented. I think we’ll see more sophisticated workflow from the likes of SAP/Ariba, Oracle and Zycus. We will also see a greater use of eProcurement tools such as those offered by Scanmarket, Curtis Finch and Bravosolution. Competition in the market for spend analytics will drive innovation and reduce costs enabling greater adoption. I hope to see Rosslyn and Spend360 give the big players a run for their money.

Evolution

Adam Smith observed that the division of labour resulted a qualitative increase in productivity. I think this means that in 2015 we will see an increasing amount of procurement being outsourced which will reduce headcount and deliver great savings (assuming the outsourcers share the benefits of economies of scale with their clients).

And finally, if procurement can demonstrate that they understand the insights that big data offers and free themselves from transactional activity then there will be the opportunity to shift the agenda away from savings to risk management and a more strategic role.

Have a good 2015!