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The Operating Model Imperative

Transforming the 2025 procurement operating model has emerged as a critical priority for CPOs. According to The Hackett Group’s 2025 Procurement Agenda and Key Issues Study, this ranks as the third most important objective, moving up from fifth place in 2024. This elevation reflects the growing recognition that traditional procurement structures must evolve to meet changing business demands and technological possibilities.

The study defines procurement operating model transformation broadly, encompassing changes to processes, technology, and people. As procurement leaders navigate this transformation, they face critical decisions about organizational structure, capability distribution, and resource allocation that will fundamentally shape how procurement delivers value.

The Current State of Procurement Operating Models

The Hackett Group’s study provides valuable insights into how procurement operating models are currently structured:

Resource Distribution

69% of procurement resources are currently centralized
31% are decentralized across business units or regions
This distribution is expected to shift slightly toward greater centralization (71%) in the next three years

Spend Management Structures

77% employ enterprise-wide category management teams
74% maintain a clear split between strategic and operational activities
71% utilize dedicated sourcing execution teams

Procurement Excellence Teams

76% leverage third-party capabilities (e.g., market intelligence)
72% have dedicated data analytics teams
55% maintain procurement centers of excellence (COEs)

Support Functions

58% utilize supplier support teams
55% have digital enablement teams
50% operate centralized shared service/GBS organizations

Evolution Trends in Operating Models

The study reveals several important trends in how operating models are evolving:

Increasing Specialization

Organizations are creating more specialized teams to address emerging needs:

21% plan to start using dedicated supplier relationship management teams
17% plan to adopt dedicated risk management teams
19% plan to establish digital enablement teams

Enhanced Business Integration

There’s a growing focus on embedding procurement capabilities within business units:

11% plan to increase procurement personnel embedded in local businesses
15% plan to create dedicated business partnering teams
11% plan to add supplier diversity and/or sustainability teams

Operational Efficiency

Organizations are restructuring operations to improve efficiency:

25% plan to implement dedicated buying desks for low-value purchases
14% plan to adopt centralized excellence teams
10% plan to create dedicated R&D support teams

The Zycus Perspective: Operating Model Innovation

Zycus’s approach to procurement operating models recognizes that technology should enable new organizational possibilities rather than simply automate existing structures. The company’s Merlin Intake & Orchestration Agent exemplifies this philosophy by facilitating new operating models that would be impractical with traditional technologies.

Reinventing Procurement Intake with Merlin

Traditional procurement intake models face several challenges:

Stakeholder Friction – Complex processes frustrate business users
Resource Inefficiency – Strategic resources handle routine requests
Inconsistent Governance – Variable application of policies and procedures
Limited Visibility – Fragmented view of demand and performance

Zycus’s Merlin Intake & Orchestration Agent addresses these challenges by creating an intelligent front door for procurement that:

Simplifies User Experience – Providing intuitive, conversational AI interfaces
Intelligently Routes Requests – Directing work to appropriate resources
Enforces Consistent Governance – Applying policies automatically
Creates Comprehensive Visibility – Tracking all requests and outcomes

This approach enables new operating models where procurement expertise is dynamically allocated based on business needs rather than rigid organizational structures.

Centers of Excellence: The Hub-and-Spoke Model

The Hackett Group’s study reveals that 55% of organizations maintain procurement centers of excellence, with plans for further adoption. These COEs serve as capability hubs that support distributed procurement activities.

COE Focus Areas

The study identifies the most common activities housed in procurement COEs:

Analytics (67% of COEs)
Performance Measurement & Savings Tracking (65%)
Knowledge Management (60%)
Supplier Negotiations (60%)
Technology Support (56%)

The Zycus COE Enablement Approach

Zycus’ solutions are designed to enhance the effectiveness of procurement COEs by:

Standardizing Best Practices – Embedding proven approaches in workflows
Knowledge Dissemination – Making expertise accessible throughout the organization
Capability Amplification – Extending the reach of limited expert resources
Performance Visibility – Providing comprehensive metrics and insights

This capability is particularly evident in how the Merlin Agentic Platform can extend COE expertise to the entire organization through intelligent agents that embody procurement best practices.

Balancing Centralization and Business Alignment

One of the perennial challenges in procurement operating models is finding the right balance between centralization (for efficiency and leverage) and business alignment (for responsiveness and relevance).

The Hackett Group’s study reveals a continued preference for centralization, with 69% of resources currently centralized and a projected increase to 71%. However, the study also shows growing investment in business alignment mechanisms:

41% have procurement personnel embedded in business units
31% utilize dedicated business partnering teams
50% maintain dedicated sourcing execution teams

The Zycus Hybrid Approach

Zycus’s solutions enable a hybrid operating model that combines the benefits of centralization and business alignment:

Centralized Intelligence – Core expertise and data reside in a central platform
Distributed Access – Business users access procurement capabilities directly
Intelligent Governance – Rules and policies are consistently applied
Dynamic Resource Allocation – Specialized resources focus where most needed

This approach is exemplified in Zycus’s Merlin Intake & Orchestration Agent, which serves as an intelligent intermediary between business stakeholders and procurement resources, ensuring optimal matching of needs and capabilities.

Technology-Enabled Operating Models

The Hackett Group’s study highlights the critical role technology plays in enabling new operating models. Procurement technology spend is projected to increase by 5.6% in 2025, significantly outpacing growth in staffing (1.0%) and operating budgets (0.9%).

This investment reflects recognition that technology is not merely a tool to automate existing processes but a fundamental enabler of new operating models. The study reveals several important technology-related trends:

Digital Enablement Teams

55% of organizations currently have digital enablement teams
19% plan to add such teams in the next three years

Autonomous Operations

53% have deployed generative AI solutions (4% large-scale, 49% pilot)
50% have implemented robotic process automation (19% large-scale, 31% pilot)

Buying Desks

46% currently operate dedicated buying desks for low-value purchases
25% plan to implement such desks in the next three years

The Agentic Operating Model

Zycus’s vision of the future procurement operating model centers on the concept of an “agentic” organization, where intelligent agents handle routine tasks and augment human capabilities across the procurement lifecycle.

This agentic model is enabled by Zycus’ Merlin Agentic Platform, which creates an ecosystem of specialized procurement agents that work collaboratively with human experts to deliver superior outcomes.

The Agentic Advantage

The agentic operating model offers several distinct advantages:

Scalability – Agents can handle growing workloads without proportional staff increases
Consistency – Agents apply best practices uniformly across the organization
Expertise Distribution – Specialized knowledge is embedded in agents and made available to all
Continuous Improvement – Agents learn from experience and continuously improve
Human Focus – Procurement professionals can concentrate on strategic activities

This model aligns perfectly with The Hackett Group’s finding that procurement teams face an 8.8% productivity gap in 2025, with workloads increasing by 9.8% while staffing grows only 1.0%.

Read success story: Broadridge Transforms Procurement in New York with Merlin Agentic Platform

Global Operating Model Considerations

The Hackett Group’s study includes respondents from various regions (63% North America, 27% Europe, 9% Asia-Pacific), providing insights into global operating model trends.

Global procurement organizations face several unique challenges:

Regional Variance – Balancing global standards with local requirements
Time Zone Management – Ensuring responsive support across time zones
Cultural Differences – Adapting practices to diverse business cultures
Regulatory Complexity – Navigating varied legal and compliance requirements

Zycus’ Global Operating Model Support

Zycus’ solutions are designed to support global procurement operations through:

Configurable Workflows – Adapting processes to regional requirements
Multi-Language Capabilities – Supporting users in their preferred languages
Localized Compliance – Enforcing region-specific rules and regulations
Follow-the-Sun Operations – Enabling 24/7 procurement support

This global capability is particularly valuable given The Hackett Group’s finding that 50% of organizations cite supply chain resilience as a critical transformational trend.

Operating Model Transformation Roadmap

Based on The Hackett Group’s findings and industry best practices, here’s a strategic roadmap for transforming your procurement operating model:

1. Strategic Assessment

Evaluate your current operating model against business requirements and identify key gaps.

2. Target Model Design

Define your target operating model, incorporating elements of centralization, specialization, and business alignment.

3. Technology Enablement

Identify and implement the technology capabilities needed to support your target model.

4. Capability Development

Build the specialized skills required in your target model, including analytics, business partnering, and technology management.

5. Change Management

Guide your organization through the transition with appropriate communication, training, and stakeholder engagement.

6. Continuous Evolution

Regularly reassess your operating model against changing business needs and technological possibilities.

Embracing Operating Model Transformation

The shift toward more sophisticated operating models is not merely an organizational exercise but a strategic imperative. As procurement’s role continues to evolve from transactional to strategic, operating models must adapt to enable this broader value proposition.

Organizations that successfully transform their operating models will be better positioned to address the key challenges identified in The Hackett Group’s study, including supply continuity, cost reduction, inflation management, and digital transformation. Those that maintain rigid, traditional structures will struggle to deliver the agility and expertise that stakeholders increasingly demand.