The sourcing and procurement industry is facing a daunting challenge. According to our Cognitive Sourcing Survey 2018, a substantial majority (85%) of senior executives involved in direct material spend agree that companies must devise a data-driven, digitally-assisted procurement strategy to match the competition and compete in the industry. Currently, a majority of these executives feel that their teams are not ready for this digital transformation.

One of the leading factors separating industry leaders from average performers is digital readiness. Digital readiness describes how prepared an organization is for a widespread digital transformation. Many factors contribute to whether or not an organization is ready to adapt to a digital change. Organizational structure, corporate culture, available skills and talent, and the digital environment are some of the most important.

Based on our research, there are three primary reasons why organizations are unprepared for this change:

Skills And Talent

A primary concern held by many executives is whether existing teams have the right talents and skill sets to adapt to new technologies. More than half (54%) of the executives we surveyed are not confident their teams are ready for the coming change. Companies can overcome this challenge, but it requires investing more in the assessment, training, and preparation of their professionals.

Sources of Insight

In an industry where the primary focus of investment (approximately 80%) is still enterprise sources of insight, many organizations have difficulty getting and interpreting data about their external environment. Even in cases where they have the necessary insight, they find it challenging to take concrete action on it.

Ideally, a world-class sourcing and procurement organization monitors at least 1.5 million data points affecting the supply chain annually. However, it is not usually access to data that holds struggling organizations back. What they lack is a system to generate insights from the available information.

Supplier insights and market intelligence are readily available, but they are fragmented, incomplete, or out-of-date. Organizations need to have a system in place that can turn this data into information to provide them with a 360-degree perspective of their operating environment.

90% of organizations are leaving valuable sources underused. These sources include:

  • Market intelligence on sub-commodities from third-party research, analysts and published indices.
  • Benchmark pricing for standard parts from distributors or third parties.
  • Community insights from peer companies engaged with similar commodity groups or strategic suppliers.
  • Contextual insights into supplier financial health, raw material input costs, foreign exchange, and news sources.

Tapping these sources is a big step for organizations moving ahead in their digital transformation.


Another factor preventing digital readiness is the use of outdated procurement toolsets. Excel continues to be the go-to tool for 61% of the organizations. Not just that, organizations are still using Excel-based data warehouses to aggregate enterprise spend history. While Excel was a transformational tool back in the 1990s, it has limitations and can’t compare to purpose-made sourcing software.

The usage of Excel leads to the proliferation of “silos of data and analysis.” These silos are challenging to integrate, impede collaboration, and require time and effort to manage. What’s needed is a comprehensive platform, a dynamic environment where information is on-demand and models can be created to test strategies and assumptions.

Digital readiness is an essential consideration in an organization’s overall digital transformation strategy.  Achieving readiness requires investing in training, managing sources of insight, and integrating systems holistically. Only then will they would be able to match up with best-in-class organizations that have already pulled ahead in the race.