As we head further into 2023, procurement executives are bracing themselves for yet another challenging year, marked by a unique confluence of unprecedented factors.
According to the recently released 2023 Key Issues Study by the Hackett Group procurement leaders are grappling with a host of risks, including a global economic downturn, high inflation, ongoing geopolitical turmoil, and talent shortages stemming from long-term demographic shifts.
The study found that approximately two-thirds of respondents across all business functions see the potential for an economic downturn or recession as the top risk for the year ahead. Additionally, over half of the executives surveyed expressed concern about talent shortages and inflation. Meanwhile, more than a quarter of study participants cited the inability to successfully transform their business and related functions as a significant concern.
To prepare for the possibility of an economic downturn, organizations are adjusting their spending patterns to improve margins and generate cash flow to fund potential recessionary challenges. Technology has emerged as a crucial tool for addressing enterprise risks, with 45% of executives reporting that they are accelerating their digital transformation efforts, including automation, advanced analytics, and modeling, in anticipation of a downturn. This response was higher than any other measured, including capital spending and cost reduction programs.
The cloud has become a primary platform for organizations looking to achieve agility, growth, and transformation. However, the study found that 42% of enterprises still rely on legacy solutions that need to be replaced. Many of these applications can only be replaced by cloud solutions, but organizational disconnects have held back companies from achieving their transformation goals.
Executives are approaching 2023 with a mix of caution and determination, as they face a complex set of challenges. While they recognize the risks and uncertainties ahead, they are also embracing technology, particularly cloud solutions, to transform their operations and remain competitive in a rapidly changing environment.
Procurement’s Top Priorities and Critical Actions to Succeed
Listen to an overview of the Procurement Key Issues research with Hackett’s Senior Research Director Amy Hillcox and Principal and Global Procurement Advisory Practice Leader Chris Sawchuk