Getting Out Of The Black Hole Of Lost IT Spend

NPI Financial, an IT procurement advisory services company based in Atlanta, Georgia, specializes in helping enterprises identify and eliminate overspending on IT purchases.   They reached out to me, and this video interview is why I am glad they did.

I will do more research, including having full direct access to clients to hear what they say in a one-on-one, “off-the-cuff,” no-questions-provided-in-advance format.

Did you know . . .

The percentage of unused procurement technology can vary depending on factors such as the organization’s size, implementation strategy, and the usability of the technology itself. However, studies and surveys provide general insights into the extent of underutilization:

General Estimates of Procurement Technology Underutilization

1. Gartner (General Enterprise Software):
   • Reports indicate that 30–40% of enterprise software functionality, including procurement tools, often goes unused across industries.
2. CPO Insights (Procurement-Specific):
   • Research suggests that 20–30% of procurement technology investments are underutilized due to poor adoption, insufficient training, or lack of integration.
3. Deloitte Global CPO Survey:
   • A significant percentage of procurement leaders believe they are not leveraging the full potential of their digital tools. Only 32% of CPOs were confident in their teams’ ability to maximize technology benefits (2023 data).
4. Procurement Leaders Research:
   • Up to 50% of procurement professionals acknowledge they rely on only a fraction of their tools’ capabilities, particularly for advanced features like predictive analytics or AI.

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Reasons for Underutilization

1. Poor User Adoption:
   • Lack of training or resistance to change from staff can hinder full utilization.
2. Complexity of Tools:
   • Complicated interfaces or unclear benefits can reduce engagement.
3. Misalignment with Business Needs:
   • Tools not aligning with an organization’s specific requirements may become unused.
4. Lack of Integration:
   • Siloed systems make it difficult to fully adopt procurement technology.
5. Budget Constraints:
   • Limited resources for continuous training, upgrades, or user support.

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Implications of Unused Procurement Technology

• Wasted Investment: Companies fail to see ROI on expensive tools.
• Missed Opportunities: Lack of insights from analytics or automation can hinder operational efficiency.
• Increased Risk: Non-use can lead to outdated practices and compliance gaps.

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Improving Utilization

• Change Management: Effective training programs and leadership support.
• User-Centric Design: Tools that are intuitive and align with user needs.
• Regular Assessments: Periodic reviews to ensure alignment with business objectives.
• Integration and Automation: Seamless integration with existing systems boosts usability.

Summary: Approximately 20–40% of procurement technology investments go underutilized, primarily due to challenges in adoption, complexity, and misalignment with business needs. Addressing these challenges can significantly improve ROI and efficiency.

My Takeaway

• An audit of your existing procuretech IT infrastructure or stack to ensure you realize the optimal ROI on your investment is a must before adding new technological tools, platforms, and software solutions.
• Utilizing an agent-based model to assess procuretech-related integration with stakeholders or agents within the end-to-end enterprise and with external partners, e.g., suppliers, shipping companies, and customs.

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