Procurement Digitisation: Lessons from the Best

Executive Summary

As procurement becomes a strategic advantage—not just a back-office function—digitisation is no longer optional. In their 2025 HBR article, Van Hoek and Lacity examine how BP, Otto Group, and Walmart accelerated their digital transformation through distinct models: the innovation garage, venture client unit, and procurement centre of excellence (CoE).

This review breaks down their approaches and evaluates what Australian SMEs can learn from these multinationals—particularly those aiming to pilot AI tools, streamline sourcing, or improve supplier engagement.

Key Models for Procurement Digitisation

• BP: Procurement Garage
  BP set up a fast-moving "technology garage" to pilot AI tools and sustainability platforms. With a "problem-first, solution-second" approach, the team tested tools like Cirtuo for category strategy development—cutting strategy build time by 50% and delivering 10x deeper insight.
• Otto Group: Venture Client Unit
  Otto's OTTO DOCK 6 focuses on co-developing solutions with startups to solve procurement pain points. With rapid low-risk pilots, they used AI chatbot Pactum to automate long-tail supplier negotiations—achieving 65% supplier participation and 70% deal closure.
• Walmart: Procurement CoE
  Walmart's CoE scaled e-auctions and now supports global rollout of digital tools. They trained in-market champions to localise adoption and created super users to embed tools beyond pilot teams—driving billions in savings through competitive digital bidding.

Strategic Takeaways for Australian SMEs

• 🔹 Don't start with tech—start with a defined procurement pain point.
• 🔹 Run short, controlled pilots with clear ROI gates before scaling.
• 🔹 Cut red tape—ditch the 50-page contract for a 3–6 page agile pilot agreement.
• 🔹 Identify champions early to embed tools post-pilot.
• 🔹 Focus on adoption pathways, not just tool features.

SMEs can replicate these tactics without global budgets—by framing pilots around business outcomes, collaborating with local tech partners, and assigning ownership for post-pilot scale-up.

Which Model Fits Your SME?

Van Hoek and Lacity (2025) emphasise that model choice depends on technology maturity:

• 🚀 Garage: Ideal for exploring unproven AI or sustainability tools.
• 🤝 Venture Client Unit: Great for custom tools from startups needing co-development.
• 📈 Centre of Excellence: Best for scaling proven tools across teams or regions.

At Divergent Edge, we help SMEs choose and customise the right model—whether testing AI tools for quoting, digitising POs, or improving supplier response time.

Reference

Van Hoek, R., & Lacity, M. (2025, July 9). How 3 companies digitized their procurement processes. Harvard Business Review.
https://hbr.org/2025/07/how-3-companies-digitized-their-procurement-processes