Primary ProcureTech Concern: Talent Acquisition/Upskilling

Despite the false promises to the contrary, AI will not replace people for critical tasks in the near future and talent will be required.

Why?

This should be no surprise since one of the biggest barriers to success is the talent gap and one of the largest risks is the loss of the critical talent the organization has. As a result, an organization worried about its future should be very concerned about its ability to identify, acquire, and retain top talent.

Impact Potential

The potential impact of being unable to attract and upskill top talent ranges from

  • inefficiency: when unskilled sub-par talent take longer to get work done and do it more poorly
  • inaccuracy: in analysis and resulting decisions along with process and tech selection
  • inability: to manage categories, design new products, mange contracts and commitments
  • inaccessibility: to key suppliers, tenders, markets, channels, etc. if there is no one that knows how to manage them, speak the language, follow the rules, etc.
  • incohesiveness: as a lack of leadership and/or competence causes teams to fall apart

In summary, a lack of capable Talent can cripple an organization!

Major Challenges/Risks

  • lack of skilled talent: in many STEM (related) areas, there is a lack of skilled talent in the market due to lack of graduates, and even a lack of an appropriate student talent pool (as the US is 19th in the OECD rankings for adaptive problem solving and 25th in the OECD ranking for numeracy overall. (See our recent post.) That’s the good news. In the 2022 PISA test, the US ranked 34th out of 81 countries. When it comes to advanced math levels in the student population, some tests put the percentage of US students at a mere 7% compared to 30% of students in Singapore. Even back office jobs which are now analytics focussed and data dependent require advanced numeracy and problem solving skills.
  • lack of experienced candidates: with every recession, market instability, purported technological advancement, etc., companies slash headcount to preserve cash and the first to go are the experienced talent; then, when they hire, they hire cheap inexperienced graduates — with no one left to train them appropriately
  • lack of leadership: leadership requires people who have been there, done that with leadership skills — the more been there, done that that are retired, and the less that are properly trained, the less there are

Final Words

In summary, there’s a lack of talent across the board and you’re competing with everyone else. A talent war is coming, and it’s not one any organization is guaranteed to win.

You Want Predictions? You Got Predictions!

Just Remember, You Asked For This!

If you’ve been following SI, you know SI hates prediction posts, because all they end up being is hopeful fantasy because no one wants to hear the sobering reality off the bat in the new year.

But given how dangerous and costly the hopeful fantasy has become, SI is going to swallow its disgust and give you what you want for — a realistic prediction post for 2026.

1) Gen-AI hype will continue for most, if not all, of the year. The market has figured out how to not only maintain the bubble, but blow it bigger than it’s ever been blown before. So despite all the “burst is imminent” predictions, the market, and the US in particular, is going to miraculously maintain, and even grow, the bubble. (As Mr. Stephen Klein has posted multiple times, they’ve got it all figured out!

2) On the flip side, the failure rate from (Gen-)AI-first solutions will remain above 90%. Almost-back-to-back Gen-AI studies in late 2025 by MIT and McKinsey found a 95% and 94% failure rate respectively. This will improve slightly, but based upon other indicators I’ve seen, stay around 92%.

3) I2O won’t save you — especially in direct!. Yes, Joël Collin-Demers, it is true that most of the big players I2O (Intake-to-Orchestrate) players will add “direct” support, but this “support” will basically be limited to BoM (bill-of-material) import and the ability to bulk buy the components on a BoM by BoM basis. And it will be less powerful than leaders like DirectWorks (now Ivalua), Pool4Tool (now Jaggaer), and EffiGo had a decade ago! Direct requires a lot more than bulk-buying a bill of materials. A LOT more!

4) Supply Chain risks (esp. around Wars, Tariffs, and Natural Disasters) will continue to accelerate, as well as losses due to (Cyber)Fraud, Natural Disasters, and Stock-outs, but investments in risk mitigation and management will continue to be minimal.

5) The same lack of investment goes for supplier/third party 360 solutions for proper integrated risk-and-compliance assessments up front during on-boarding. This is becoming more and more critical because even good suppliers can be risky when you dive into the factory locations, shipping lanes, ownership, etc.

6) Talent will continue to be a huge concern, but instead of actually investing in people, companies will continue to invest in “AI automation” in the hopes that they can fill the gap with tech (even though the tech has zero intelligence and is only as good as the real world experience of the techs who code it).

7) The M&A mania will hit a high about mid-year as the PE firms compete for the few remaining solutions with “unicorn” potential while simultaneously scooping up as many BoB assets to fill holes and acquire talent as the fire sales hit fast and furious. (Remember, I’m projecting double to triple the usual failure rate over the next year or so, 10% to 15% as compared to the typical 5%. We ended 2025 close to 6.5%, but after two years of depressed sales and all the (over)funding going to “AI” startups, a lot of good, niche, solutions are going unfunded and unnoticed, rapidly running out of funds, and need to get bought or shut their doors.

8) “Alt Suites” continue to proliferate as mid-market vendors and PE firms try to roll up their point-based vendors / BoBs (Best of Breeds) into a process/alt-function based offering that they feel will give the newly created vendor a unique angle to get attention (and sales).

9) Software-backed services continue to gain momentum as mid-market consultancies fight for limited budgets and large consultancies try to keep costs down, but in the interim, expect more Deloitte-style failures (where they’ve been caught twice publishing AI-generated cr@p as human analyst work — in Australia and Canada) among firms trying to cut costs with Gen AI-based software.

10) The Big Consultancies and Big Analyst Firms won’t help you! They’ll all publish their annual studies, which, as we pointed out in our You Don’t Need to Read Another State of Procurement Study for the Next 5 Years, but 90% of the “results” will be the same as this year, with just a re-ordering of the barriers, concerns, risks, etc. The only differences will be the “risk-du-jour” and “tech-du-jour”, which will likely be a new spin on supply chain risk and Agentic AI, but the conclusions will be “engage them to help you with a tech-du-jour plan that will solve all your problems” but in reality be a “let’s do a massive project to underpin your entire Procurement operation with tech-du-jour that will require a year of process definition of study, a year of implementation, and then years of training to customize the tech to your processes (i.e. train the tech enough so it actually works okay” that will cost you millions (upon millions) of services dollars but not actually deliver any ROI in the short (and even mid) term.

So, now that you finally got a realistic 2026 Procurement predictions post — tell me, how does it make you feel?

Primary ProcureTech Concern: Cost Control

This is one of the oldest concerns of Procurement. After assurance of supply, control of cost is key.

Why?

Costs are rising. Inflation is coming back with a vengeance. And the trade wars aren’t helping. Rare earths are becoming more rare. Geopolitical tensions and actual wars are resulting in sanctions and cutting off primary supply lines. Everything is driving up costs.

Impact Potential

Shortages can cause significant cost spikes. The costs of raw materials and goods can increase 20%, 50%, 100% or more. During transportation shortages (such as those that occurred during the pandemic), transportation costs can increase as much as tenfold. Costs can cripple an organization, bring down a product or service line, and even an organization if they can no longer manufacture products at a cost that allows them to sell at a price point that consumers can afford.

Major Challenges/Risks

Price Prediction/Trend Analysis: understanding the past, current, and likely future price points to understand when the cost point of a good or service might get to a critical point where it could affect not just profitability, but operation

Impact Events: identifying which events could lead to a rapid, unpredictable, price increase for a good or service, detecting those events, and taking action the minute such an event is predicted

Sustainable Supply: identifying alternate sources of supply that an organization can take advantage of should a primary source become unaffordable or unobtainable, and ensuring those remain affordable until other primary sources can be identified

Final Words

Cost control will always be an issue because an organization can’t pay more for something than it can afford and can’t pay more for raw materials than it can sell the finished good for.

Primary ProcureTech Concern: CSR/ESG/Sustainability

Today we start our coverage on the primary concerns of Procurement leaders, starting with CSR, ESG, and Sustainability. We will discuss the why, the impact potential, the major challenges and risks, and leave you with some final words of insight.

Why?

Corporate Social Responsibility is becoming paramount because many consumers are becoming conscious of their spending impact and spending power and don’t want to buy from companies that don’t take care of their workers, corporations that pollute the requirements, brands managed by executives who endorse fascist authoritarian regimes, and so on. Unless your corporation has a (local) monopoly, being a bad brand can be harmful to your bottom line. That’s the last thing any executive response, even a psychopathic sociopathic one (because a boycott inflicts major damage to the bank account).

Environmental and Social Governance is becoming top of mind because, in most first world countries, laws have been continually introduced to protect the environment over the last three decades. Moreover, you have to comply with those laws while simultaneously pretending not to give a rat’s ass about the environment in the United States which, as we pointed out in our post on how in the corporate world, sustainability/ESG is not a priority, is attempting to roll environmental regulation back to the Early Modern Era (i.e. pre-World War II), and any corporation not on board with that mission gets on the administration’s bad side.

Finally, sustainability is becoming important because many organizations are reliant on diminishing natural resources; crops are increasingly being wiped out by natural/climate disasters; and consistent, large, energy and water requirements necessitate sustainability to stay in business. Even if they don’t really care about CSR or ESG, they still need sustainability.

Impact Potential

Let’s face it.

  • We’re in an age where boycotts can cost Billions — and that’s exactly what could happen if your brand is perceived to be particularly heinous with respect to human rights in the supply chain, egregious with respect to its environmental damage, spine-chilling with respect to its sustainability, or reprehensible with respect to its far-right organizational ties.
  • Violating one of the many regulations, especially in the EU, can be quite costly. There can be massive fines, seizure and destruction of goods, and if you attempt to import hazardous or banned substances, even criminal charges.
  • Not minimizing energy, fresh water, or non-renewable material requirements can greatly increase costs and decrease supply assurance — neither is good for profit.

Major Challenges/Risks

Regulations: There are dozens of major regulations in Europe alone that you need to be aware of. Violating any single one of them can be disastrous, as per our regulatory compliance risk post.

Investment Requirements: Sustainable, affordable, clean energy and water often requires a lot of up front investment if there are no renewable energy plants or water desalination plants in the area. It also costs a lot of money to upgrade designs to use less non-renewable materials or alternative requirements, especially if there are a lot of redesign and testing iteration cycles that will need to be undertaken.

Supply Assurance: while you attempt to transition to a more socially responsible and environmentally aware organization. This is a top barrier for a reason!

Final Words

Whether or not you believe in climate change is irrelevant. Natural disasters have increased five fold over the last five decades, a pace that has not been equalled in recorded history. We’re running out of fresh water and struggling to produce enough energy, especially in the age of AI where a single model requires a multi-billion dollar centre to support it! Even without natural disasters, some regions struggle to produce enough food. Thus, sustainability is a major concern because the sustainability of the business is at stake.

Primary Concerns for Procurement Leaders

In our last two series we noted that Deloitte recently released their annual latest and greatest CPO Survey with the help of Spend Matters, that was designed to highlight, among other things, the latest and greatest “observations, challenges, and trends” in Procurement, but that, in reality, just highlights the same problems, priorities, and barriers it found in the past 9 editions, just like every other annual survey in Procurement.

There’s no embellishment here. We mean every other study that has come before for years because:

  1. the doctor has been reading them.
  2. the doctor went back through 15 studies in detail that were released in the past five years and a few other related papers published in the same timeframe.

As part of this in-depth review, the doctor pulled out, for each of these 20 papers (which included papers from the usual suspects like Kearney, CapGemini, E&Y, PWC, and Everest), the

After doing so, the results were that, for the Deloitte study, analyzing the:

  • top barriers, of the 10 quoted in 2 or more of the papers, 7 are in the Deloitte study,
  • major procurement risks, of the 7 quoted in 2 or more of the papers, 5 are in the Deloitte study, and
  • primary concerns, of the 13 quoted in 2 or more of the papers, 8 are in the Deloitte study.

Moreover, if we were to abstract the barriers, risks, and concerns one level and start looking at the underlying systems or processes that would need to be addressed, the similarities would be even more significant.

More importantly, they aren’t changing much year to year, and aren’t going to change much for the next decade at least.

A year ago I penned a post where I pointed out that before you get all excited to learn about trends for fall conference season, with the exception of:

  • Gen-AI being the new fluffy magic cloud
  • Fake-take (sorry, intake) being the new dangerous and dysfunctional dashboards

the majority of trends that have been discussed for the past year are the same trends that were discussed ten years ago (and SI has the blog history to prove it, especially since it doesn’t purge over half of the blog history on a site upgrade and/or migration).

This is because the core purpose, and thus the core priorities, challenges, and risks, of Procurement haven’t changed in decades. The systems have evolved, the processes have become more complicated, and the global supply challenges haven’t been this bad since the nineties, but the core HAS NOT changed (and, to be fair, has NOT changed since the first manual was published in 1887 and has NOT changed much since cross-continental trade began thousands [and thousands] of years ago).

Which means we don’t need any more annual surveys on these issues (every 5 years would be more than enough, and even then you might find that the only movement is related to the hot tech of today vs. the hot tech 5 years ago, as SI did when it did its trend analysis last year).

In our last two series, we also noted that we weren’t going to bore you by digging up two decades of studies and showing the same issue lists again and again, because that’s not the problem. The real problem is that these core issues still aren’t adequately addressed after decades of these “studies” being published, even though it’s the same issues again and again that come back year after year after year, sometimes with a vengeance when an unexpected natural disaster or pandemic strikes, a war breaks out, or a fan of the Gilded Age believes that tariffs are the cure-all and starts global trade wars.

However, before you can solve these problems, or anyone can put forth a solution, you need to understand what these issues are, why they keep coming back, and acquire some insight into how you might deal with them once and for all and finally move the needle forward.

In our last two series we focussed on the barriers to success and the risks. This time we are going to focus on the thirteen (13) concerns that consistently stay front and center in these surveys and reports, of which eight of them are among the top concerns in the Deloitte survey.

  • CSR/ESG/Sustainability ([01], [03], [04], [06], [08], [09], [16], [17], [19])
  • Cost Control ([01], [08], [10], [11], [16], [17], [19])
  • Talent Acquisition/Upskilling ([00], [01], [03], [08], [10], [16], [17])
  • Compliance ([01], [04], [06], [12], [19])
  • High Inflation Pressure ([00], [04], [11], [19])
  • Supplier/Supply Chain Resiliency/Continuity ([00], [04], [08], [11])
  • Tech Transformation Delays/Obsolescence ([12], [16], [17], [19])
  • Geopolitical Uncertainty ([00], [12], [19])
  • Economic Downturn & Deflation/Recession ([00], [12], [19])
  • Managing Digital Fragmentation / Digital Transformation ([00], [01], [11])
  • Tightening Credit Conditions ([00], [12], [19])
  • (Gen-)AI Integration/Impact ([03], [04], [19])
  • Weakness & Volatility in Emerging Markets / Trade Wars ([00], [12])

It is hoped that you enjoy the continuing coverage!

Finally, remember to review our article on why You Don’t Need To Read Another State of Procurement Study for the Next 5 Years! if you want to dig up the referenced papers.