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Maturity Matters: Performance Determinants of the Procurement Business

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 MATURITY MATTERS: PERFORMANCE DETERMINANTS
OF THE PROCUREMENT BUSINESS FUNCTION

Batenburg, Ronald, Institute of Information and Computing Science, Utrecht University,

Padualaan 14, Utrecht, The Netherlands, r.s.batenburg@cs.uu.nl
Versendaal, Johan, Institute of Information and Computing Science, Utrecht University,
Padualaan 14, Utrecht, The Netherlands, jversend@cs.uu.nl

Abstract
The procurement business function is increasingly recognized as strategic and subject of performance
management. In this paper we present a research model to decompose the procurement function by six
maturity dimensions (strategy, e-technology, process, information, monitoring and organization). The
model is based on the proposition that an organizations’ procurement performance is positively related
to its procurement maturity. In addition, we hypothesize that the alignment between the different
procurement maturity dimensions positively effects the maturity-performance relation. A survey was
conducted among 117 Dutch organizations from various industries and size categories, to apply the
research model and test the hypothesis. From regression analysis we found significant positive, and
stable net effects of procurement maturity on procurement performance. Alignment did not effect the
shape of the maturity-performance relationship, but (by one type of measurement) it does increases the
strength of the relationship. We conclude that our research model supports procurement maturity
assessment and benchmarking for organizations, to improve their procurement business function in an
integrative way.
Keywords: procurement, maturity, alignment, performance, benchmarking.

1 INTRODUCTION

Kraljic (1983), Speckman (1981), Porter (1985), Malone and Yates and Benjamin (1987), and other
scholars already identified the strategic importance of procurement in the 1980’s. Many companies,
however, have unnoted the competitive value of the procurement business function. The primary
interests of managers concerned the internal processes, sales and marketing. Since the rise of e-business
in the late 1990’s, new opportunities related to procurement arose: e-procurement, spend management,
outsourcing, joint product design, and more (Lacione & Smith & Oliva 2000). Although the
opportunities for improvement seem abound, both private and public sector are still cautious as for far
as the adoption of electronic technologies is concerned (Zheng & Caldwell & Harland & Powell &
Woerndl & Xu 2004). Ward and Peppard (2003) indicate that 60% of IS/IT application implementations
do not deliver the expected benefits, and anecdotal evidence shows that procurement initiatives in
general – and IT-implementations in the procurement domain specifically – are no exception (cf.
Adamson 2001, Pan & Parkes, 2006, Puschman & Alt 2005, Davila & Gupa & Palmer 2002). As the
number and diversity of procurement frameworks, models, perspectives and concepts continues to
grow, the need to combine or integrate these increases likewise. In addition, the demand grows for their
empirical validation, including evaluation of the claims and assumptions of models and approaches to
improve procurement in organizations.
In this paper, we attempt to achieve both the practical and academic benefits of integrating existing
approaches to procurement improvement and optimization on the one hand, and validating the
propositions underlying these approaches through data surveying a substantial number of procurement
managers from different organizations on the other. To do so, we present a research model that is built
on principles of maturity, business/IT-alignment and performance measurement. Subsequently, we
validate its two underlying propositions: (1) the procurement performance of an organization is
positively related to the maturity level of its six procurement dimensions (strategy, e-technology,
process, information, control and organization) with respect to procurement, (2) the procurement
maturity-performance relationship is positively effected and moderated by the degree of alignment of
these six procurement maturity levels.
In the domain of procurement many papers have been published on procurement performance (cf.
Bozartha & Handfield & Dasb 1998), yet without an maturity and alignment approach for procurement
performance. Beukersm, Versendaal, Batenburg and Brinkkemper (2006) created a maturity/alignment
framework for procurement, but with emphasis on one particular case. While Kroese, Den Teuling,
Versendaal, Batenburg and Van de Kamp-Slootweg (2008) created a maturity/alignment framework for
integrating e-procurement in organizations, and applied it on survey data from 300 Dutch organizations,
they did not relate it to procurement performance. With our research we want to extend the work of
Beukers et al (2006) and Kroese et al. (2008).
In the remaining of this paper, we first elaborate on the foundations and construction of a procurement
maturity/alignment/performance model. Then, a survey that is based on the model is described, with a
focus on the validity of the measurement instruments. Next, the data collection by surveying 68
procurement managers from different organizations is explained, i.e. through the practical application of
a questionnaire. After testing our central hypothesis through several analyses, we provide suggestions
for procurement improvement plans, based on the survey and its outcomes. We close with
recommendations and suggestions for further research.

2 THEORY AND RESEARCH MODEL

In the subsections below we discuss and define procurement maturity, procurement alignment and
procurement performance as the main pillars of our research model.

2.1 Procurement maturity

The first pillar of our theoretical framework is based on the concept of progress maturity. In general, the
idea of maturity is presented by sketching a number of growth stages that depict the potential-upward
development or performance of organizations during several sequential periods of time. Within the field
of information systems, the Nolan model is often quoted as the origin of the maturity perspective
(Nolan 1979). As for information systems planning, Earl’s model of learning curves with respect to IT
can be considered as one the first examples IT-specific extensions to Nolan’s model (Earl 1989). Since
then, both the original Nolan and Earl models have been revised, extended, specified and modified, in
line with progress made in the field of information systems and software engineering (cf. Galliers &
Sutherland 1991). After publication by the Software Engineering Institute (SEI) at Carnegie Mellon, the
Capability Maturity Model (CMM) has become an established model in the field of information
systems. It is designed to measure, monitor and evaluate the professional development and engineering
of software and many related domains such as IT-governance, project management, people
management and so on (Peppard & Ward 1999), with the assumption that the higher the level, the more
mature and the higher the performance of an organization.
With the idea that the procurement function has the ability to influence corporate profitability favorably,
the functional development has been a topic of great interest. Departing from the passive, re-active
clerical viewpoint of the 70’s, the procurement function has developed in a strategic pro-active function
contributing, as much as other business functions, to the creation of (sustainable) competitive
advantage. The fact that such a significant advantage can be achieved is described by many authors (e.g.
Adamson 1980, Porter 1985, Cavinato 1991, Herberling 1993).
During the last two decades numerous authors proposed, and constructed, development models for
corporate procurement. Most of these assume a stage/step-wise development. Van Weele and Rietveld
(2000) derived an integrated purchasing development model based on no less than 12 of these models.
We consider their ‘meta-model’ of procurement maturity stages as a solid starting point for further
modeling. Their six cumulative stages for procurement maturity are:

• Transactional orientation;
• Commercial orientation;
• Purchasing co-ordination;
• Internal integration;
• External integration;
• Value chain integration.
In our framework we will adopt this Van Weele and Rietveld maturity categorization. In our empirical
research however, we will abstract from their distinction between ‘external integration’ and ‘value
chain integration’ as we practically experience these stages as ‘Network orientation’ both dealing with
integration beyond the firm. It is our proposition that procurement performance is correlated to the level
of procurement maturity.

2.2 Procurement alignment

The second pillar of our framework is based on the concept of business/IT-alignment. Since the 1980’s,
scholars, analysts and consultants alike have advocated an aligned approach with regard to introduction
and deployment of information systems (IT) in organizations. One widely cited source is Porter (2001),
who argues that the Internet does not make business strategy obsolete. Instead, an Internet and business
strategy should coincide, i.e. be aligned. On an operational level, many authors can be cited for the
statement that IT implementations should come along with a careful consideration of business processes
and other organizational issues (cf.. Peppard & Ward 1999, Hammer & Champy 1994). Henderson and
Venkatraman’s Strategic Alignment Model is one of the first models that provided levers for
organizations in introducing new IT technologies using business/IT-alignment concepts (Henderson &
Venkatraman 1993). Business strategy, IT strategy, organizational infrastructure and processes, and IT
infrastructure and processes should be in balance through strategic fit, and functional integration (see
also Luftman & Lewis & Oldach 1993). Subsequently, several authors applied the Strategic Alignment
Model. With varying success, the connection between alignment and organizational performance has
been investigated (Cragg & King & Hussin 2002, Kearns & Lederer 2000, Peppard & Ward 1999).
If we apply the Strategic Alignment Model to the field of procurement, the business domain of the
model clearly can be specified. Procurement is connected to many domains. Cavinato (1999) identified
15 different attributes or viewpoints to track the purchasing business function across developmental
maturity stages, such as key procurement measures, management style, and budgetary approach towards
procurement. In a similar vein, A.T. Kerney's house of purchasing and supply management framework
identifies eight procurement dimensions ("The New" 2000). In our research, we define the
business/procurement domain by building on the alignment model of Turban (Turban & McLean &
Wetherbe 1999). Turban et al. distinguishes five basic business dimensions (including IT) that are
generic or every organization. In turn, these build upon the classic ‘balanced’ organization models as
developed by Leavitt (1965) and Scott-Morton and Allen (1984). Applying these to the procurement
domain and extending the (IS/IT) technology dimension, we define as the main business dimensions:
• Goals and strategy
• Control
• Organization
• Process
• Information
• E-Technology

Related research in the functional domain of customer relationship management (Batenburg &
Versendaal 2004), and product lifecycle management (Helms & Batenburg & Versendaal), as well as
the research of Beukers et al (2006) identifies a comparible drill-down of business/IT dimensions, while
the research of Kroese et al (2008) uses identical dimensions. From an organizational performance
perspective, we consider each of the dimensions as equal important (i.e. of equal weight). Further, we
define the degree of alignment as the degree to which these 6 perspectives are balanced as for their
maturity. It is our proposition that a higher degree of alignment positively influences the correlation
between procurement maturity and procurement performance.
2.3 Procurement performance

As a specific research goal of this paper is to explore the procurement performance of organizations, we
explicitly address procurement performance into our model. Berkowitz and Mohan (1987), Monczka
and Trent (1991), Porter (1985), Speckman (1985) and Sutton (1989) identify the following benefits
when effectively manage the procurement function: cost reduction, enhanced profitability, assured
supplies, quality improvements, and competitive advantage.
The I-Frame (Versendaal & Brinkkemper 2003), a procurement improvement framework, provides no
less than twenty different benefits derived from several sources in the procurement and e-business
literature. Those benefits can be categorized as follows: process-related (with e.g. the benefit of
improved sourcing decisions), cost-related (e.g. reduced purchasing costs), product quality-related (e.g.
better product quality), and organization-related (e.g. increased trustworthiness). In an investigation of
procurement improvement effectiveness, Accenture (2002) identifies the following four procurement
performance indicators: purchase price index, quality conformance, raw material inventory turnover,
and supplier delivery accuracy. These indicators can be easily mapped onto the identified benefits in the
I-Frame.
For our model we can select from many performance indicators and benefits. In order to have a
manageable set we include basic indicators per procurement level: strategic, tactical and operational
(De Paoli 1999, Van Weele, 2001, Versendaal and Brinkkemper, 2003). The related research from
Accenture, Toole and Donaldson (2002) and Humphreys and Li and Chan (2004) support our selection
of the following procurement performance indicators.
• Quality conformance (strategic)
• Price purchase index (strategic and tactical)
• Procure-to-deliver time (operational)
• Transaction costs (operational)

2.4 The research model

The procurement maturity and alignment concepts as described above can be put together as our
procurement framework. In combination with the procurement performance as defined above, the
following scheme depicts the research model that will steer our empirical analysis in the next sections.

Transactional Commercial Purchasing Internal External

orientation orientation co-ordination integration integration

Goals and strategy

Control

Process Procurement
Alignment
Organization

Information

E-technology

Procurement Procurement
Maturity performance

Figure 1. Research and conceptual model

Note that we modelled a direct relationship between procurement maturity and performance, which will
be moderated by the degree of alignment. The figure presents our plan of analysis for the next sections.
We start with measuring the procurement maturity by the five levels, sketched in the matrix of the
figure form left to right. This maturity measurement is applied for the six basic dimensions of the
procurement function. The alignment concept implies the balance between the six procurement
domains. The main hypothesis to be tested is that both the maturity of the six procurement functions,
and the alignment between these dimensions are positively related the firms’ procurement performance
as depicted by the two arrows.

3 DATA AND OPERATIONALIZATION

3.1 Data collection

During the fall of 2006 and 2007, 117 procurement managers from an equal number of Dutch
companies in different branches and size categories took part in a two-hour expert meeting. Their
participation was partly solicited through ‘cold calling’, partly from the social and business networks of
Business Informatics students at Utrecht University as part of a 10-weeks master course. This type of
data collection can be labeled as convenient random sampling (Triola, 2004) or respondent-driven
sampling (Salganik and Heckathorn, 2004). The setting for the expert meetings (in six comparable
sessions divided over two days) was the “policy lab” of Utrecht University, an electronic meeting room
with GroupSystems software installed to support taking surveys and managing discussions (cf.
Weatherhall & Nunamaker 1999).
Table 1 shows the composition of our respondent group by industry and the euro-value of goods
purchased by the procurement function (purchase spend) as a relevant size indicator. Although the
number of organizations/observations is not that large, their total purchase spend per year is quite large
(55.2 billion Euro per year).

Sector Purchase spend Total

< 50 50-500 >500
Manufacturing 5 6 12 23
Utilities and construction 4 3 4 11
Healthcare 4 0 2 6
Wholesaler retail and logistics 4 14 8 26
Banking and Insurance 1 0 5 6
Professional service 6 5 1 12
Government and education 2 6 4 12
Other 9 7 5 21

Total 35 41 41 117
Table 1. Respondents by sector and yearly purchase spend (in mio €)

During the meetings, the managers completed the surveys while in between oral group discussion about
e-procurement were held. One questionnaire contained 12 questions about the company in general,
including questions about their purchase portfolio and supply chain position. The second and main
survey existed of 15 questions related to the six procurement dimensions as presented above. Third,
eight questions were posed by which the respondents self-estimated their procurement performance.
Through the formulation of the items that the respondents were systematically reminded to answer all
questions for ‘their organization’ and ‘the spend category of focus’ only.
Since the questionnaires were completed ‘life’ during the discussion meetings, i.e. in the presence of the
facilitating students and researchers, the validity and reliability of the questions were checked directly at
the spot. Only a small number of remarks and questions was received during the survey, which
indicates that the respondents had no difficulties in understanding and answering the (large amount of
questions. The average time respondents spent on answering all questionnaires was approximately 45
minutes.

3.2 Measuring maturity

The respondents answered six sets of questions that measure the organization’s current maturity on the
six procurement dimensions. The maturity questions were formulated as items with 5-point scale
answer categories (coded 1 for ‘full disagree’ to 5 as ‘fully agree’). Table 2 below summarizes the
scores on the separate items (summarized by their keywords), as well on the procurement dimensions.
For each of the six dimensions, the aggregation was computed by the un-weighted mean of the items
scores. This aggregation is validated by significant correlation coefficients (p<.01) if a dimension was
queried by two items (such as the strategy dimension), and reliability analysis (Chronbachs alpha is .70
or higher; Nunnally, 1978) if three or more items are part of the procurement dimension (such as the
process dimension). It also appeared that the 15 maturity items can be aggregated into one latent overall
maturity measurement as well, as the Chronbach’s alpha is .86 and the one-factor solution using
principle component analysis covers 61% explained variance.
Table 3 below summarizes the results of the maturity measurements. It shows that the overall maturity
of the participating organizations is 3.05, which is above the midpoint of the generally applied 5-point
scales. The average scores on the process maturity dimension is the highest (3.58), while the average
score on the e-technology dimensions of the procurement function is relatively low (2.47). Looking at
item level, we see that many respondent say they perform product selection in their procurement
process, while far less agree with the statement that they apply e-technology for tactical purchasing
processes. Standard deviations of most items and dimensions are limited to one unit of the 5-point scale.

Dimension Item Mean SD

Overall Procurement maturity 3.05 0.80
Strategy 3.04 1.17
Documentation and plan(s) 3.49 1.45
Global sourcing 2.61 1.43
Processes 3.58 0.81
Product specification 3.66 1.15
Product selection 3.69 1.03
Contracting 3.42 1.01
Ordering 3.54 1.11
Control 3.18 0.91
Process control 3.27 1.24
Internal performance measuring 3.17 1.20
Supplier performance measuring 3.10 1.18
Organization 3.26 1.11
Purchasing department’ 3.29 1.34
Staff competences 3.23 1.26
Information 2.73 1.11
Information processing 2.74 1.36
Management information 2.72 1.18
E-technology 2.47 1.06
Operational purchasing process 2.69 1.34
Tactical purchasing process 2.25 1.14
Table 2. Average procurement maturity scores by dimension and item (N=117)

3.3 Measuring alignment

Alignment is defined earlier as the degree of leveling between the six business dimensions (cf. Scheper,
2002). This implies that the more the dimensions are at the same maturity level, the higher the
alignment score. Different measurements can be used to operationalize this alignment concept.
Here, we first measure misalignment as the difference between the lowest and the highest maturity
score (cf. Gonzalez-Benito, 2007; Batenburg & Versendaal, 2004). If, for instance, a company shows an
array of average maturity scores of 4.1, 4.8, 4.2, 3.5, 1.2, and 2.6 on the six procurement maturity
dimensions, the misalignment score is 3.6 (i.e. the difference between 4.8 as the highest score and 1.2 as
the lowest score). A company that shows a straight array of six similar average maturity scores, by
definition, reaches the primal level of alignment as the misalignment score is 0. For calculating the
alignment score, the reverse of this misalignment measure is taken (in formula:
1/(MAX[Si,Pi,Ci,Oi,Ii,Ei]–MIN[Si,Pi,Ci,Oi,Ii,Ei]), where Si,Pi,Ci,Oi,Ii,Ei represent the respondents score
on the Strategy, Process, Control, Organization, Information and E-technology maturity dimensions
respectively). As a second measures, the standard deviation of the similar array of maturity scores is
taken and likewise reserved to indicate the level of alignment (in formula: 1/SD[Si,Pi,Ci,Oi,Ii,Ei]).
Below we use both indicators to enable robustness checks on the analysis and outcomes. Intuitively, one
might argue that alignment and maturity are positively correlated because the mature organizations will
have the opportunity or capabilities to care about the balance between the procurement dimensions as
well. Correlation analysis on our data set does not support this expectation however. Alignment
correlate positively with overall maturity, but these correlation are far from significant (r= +0.044 and
+0.042, with p=.634 and .649 if alignment is measure b the MAX-MIN- formula and the SD-formula
respectively). This implies that leveling the procurement maturity scores is indeed an additional
challenge for the procurement organization. We will elaborate on this matter in the next analysis
section.

3.4 Measuring performance

Procurement performance was measured through eight questions about the perceived and relative
success of the respondents’ organization. Four questions were posed to the respondent to obtain an
estimation of the procurement performance increase of the organization over the last two years. Four
similar questions were posed to measure the extend to which the respondent’s company outperforms its
competitors with regard to procurement. Both the time and competitor related questions specified
performance in four dimensions, i.e. procure-to-deliver, price of goods, quality of goods and transaction
costs (cf. Gonzalez-Benito, 2007).
Table 3 shows the results of the two-dimensional performance measurement. Items were accompanied
with the Likert answer scale ranging from ‘strongly disagree’ (coded as 1) to ‘strongly agree’ (coded as
5), similar to the maturity items. From the average scores in Table 3 it appears that, in general,
respondents judge their procurement performance compared to competitors as somewhat lower
compared to their performance improvement over time. This is probably due to the fact that the
uncertainty about their previous performance is lower compared to the estimation of the competitor’s
performance, resulting more ‘moderate’ self-estimations.

”In the last two years ”Compared to our

...” main competitors...”
Mean SD Mean SD
... the average time, from purchase order to delivery has
3.49 0.98 3.21 0.73
decreased
... the average number of purchased items that do not measure
3.43 0.95 3.16 0.69
up to the agreed quality has decreased
..t the average purchase price of purchased items has decreased
3.12 1.14 3.31 0.78
(controlled for the influence of market forces)
... the average purchase (process) costs per transaction for
3.32 0.97 3.22 0.73
purchased items have decreased
Table 3. Average performance scores on four items queried by comparison over time and over
competitors (N=117)

As with the procurement maturity measurement, reliability and factor analysis is performed to validate
the aggregation of the eight performance items. The Chronbach’s Alpha score of 0.65 support this,
while the 31% explained variance for the one-factor solution in principle component analysis can be
considered as satisfactory.
4 RESULTS

The basic hypothesis as defined by our research model concerns the relationship between procurement
maturity and procurement performance. Assuming linearity, this can be expressed by the following
regression model to be estimated:
PERFORMANCE = + ßMATURITY +
As argues above, we primarily assume that alignment is a pure moderator, influencing the shape of the
relationship between maturity and performance (cf. Sharma et al. (1981). This implies the above
regression model can be extended written as:
PERFORMANCE = + ß1MATURITY + ß2ALIGNMENT×MATURITY +
For both equations, it is expected that the maturity main effect (ß and ß1), while we explore if in
addition the interaction effect between maturity and alignment (ß2) has an additional (net) positive and
significant effect as well. As second method to estimate the relevance of the maturity and
maturity/alignment interaction effect, is to measure the strength of the expected relationship with
performance. This is indicated by the explained variance of the regression model (R2 as opposed to the
magnitude of the error term). Through subgroup analysis, the explanatory power of model can be
compared for different stages of the moderator, in this case the level of alignment.
Before presenting the subsequent results of the regression analyses, it should mentioned that both the
dependent variable (procurement performance) and the independent variables (procurement maturity
and alignment, measured in two are ways) are normally distributed. For the regression models, the error
terms are normally distributed as well, nor are they significantly correlated with the predictors, showing
no problems of heteroscedascity. The result of the first method to test our expectation is showed in table
4.

Standardized Standardized Standardized Adjusted

Estimated regression model F p
ß ß1 ß2 R2

PERFORMANCE = +
.325*** - - 0.098 13.324 .000
ßMATURITY
PERFORMANCE = +
ß1MATURITY +
- .277** .062 0.091 6.713 .002
ß2MATURITY×ALIGNMENT
a

PERFORMANCE = +
ß1MATURITY +
- .308** .021 0.090 6.615 .002
ß2MATURITY×ALIGNMENT
b
a
Alignment measured by: 1/(MAX[Si,Pi,Ci,Oi,Ii,Ei]) – MAX[Si,Pi,Ci,Oi,Ii,Ei]).
b
Alignment measured by: 1/SD[Si,Pi,Ci,Oi,Ii,Ei].
*** p<.01, ** p<.05, * p<.10.
Table 4. Regression analysis: predictive power of maturity and maturity-alignment for
procurement performance (N=117)

The main conclusion from Table 4 is that maturity has a positive and significant effect on procurement
performance. The hypothesized additional (net) effect of alignment is not significant however. This
means that alignment does not influences the form of the relationship between maturity and
performance. The explanatory power of the first basic model is limited (9.8%) and does not changes
significantly if the maturity-alignment interaction is added (the p-value of the F-test on R2 is .000 for
both alignment measurements). It can be understood though, that an organizations’ procurement
performance (even if it is measured by perception of the respondent) is apparently related to many
other factors that are not included in the model.
We further investigated if alignment has an effect on the size of the maturity-performance relation. This
is done by subgroup analysis. We split the dataset into three groups of equal size, distinguishing
between organizations with relative low, medium and relative high alignment scores, using the two
types of measurements for alignment. Table 6 presents the results.

Table 6: Subgroup anaysis: predictive power of maturity for procurement performance broken dwon by
alignment level (N=117)
Standard
Estimated regression model / aligmment level Adjusted R2 F P
ß
PERFORMANCE = + ßMATURITY
a .415** 0.149 7.480 .010
Low alignment (n=39)
.167 0.004 1.151 .290
Medium alignment a (n=39)
.403** 0.137 6.394 .016
High alignment a (n=39)
PERFORMANCE = + ßMATURITY
b .206 0.017 1.638 .209
Low alignment (n=38)
.090* 0.063 3.568 .067
Medium alignment b (n=42)
.422*** 0.155 7.589 .009
High alignment b (n=37)
a
Alignment measured by: 1/(MAX[Si,Pi,Ci,Oi,Ii,Ei]) – MAX[Si,Pi,Ci,Oi,Ii,Ei]).
b
Alignment measured by: 1/SD[Si,Pi,Ci,Oi,Ii,Ei].
*** p<.01, ** p<.05, * p<.10.

Two different results from Table 6 appear. For the first measurement of alignment, the medium
alignment category shows a non-significant effect of maturity on performance while the other
subgroups do. For the second alignment measurement, it appears that the magnitude and significance
level of the maturity effect increases with the alignment level. This result supports the hypothesis that
alignment strengthens the relation between maturity and performance. It should be reckoned however,
that this result appears within one of the four robustness analysis only. As such, it only partly indicate
that alignment indeed has an moderated role on the maturity-performance effect.
To achieve further robustness in the hypothesis testing, the relationships between maturity, alignment
and performance are also investigated using the separate dimensions and items that build up the
constructed variables. This allows us to increase the number of test occasions and explore the stability
of results. As a result, it appears that the direct relationship between procurement maturity and
procurement performance remains positive and significant for each of six separate dimensions and 15
different items. For none of the dimensions or items, the alignment-maturity interaction significantly
effects performance. These result additionally supports our main findings. Also, if we estimate the
regression models for the different performance items separately, the results remain consistent.

5 DISCUSSION AND CONCLUSIONS

In this paper we propose a research model to investigate the determination of an organization’s

procurement performance by its procurement maturity and alignment scores on six business
dimensions, including e-technology. The proposition of the model is twofold: (1) procurement maturity
will positively influence procurement performance, and (2) the level of alignment will strengthen the
(positive relationship) between maturity and performance. To test these propositions, dedicated data is
collected through surveying 117 Dutch organizations in a controlled setting of group decision meetings
in 2006 and 2007. The resulting sample of organizations is diverse according to industry and
procurement size (i.e. the average purchase spend), but cannot be considered as representative for the
Dutch business population however.
Statistical analyses after construct validation shows that the first proposition is strongly confirmed. The
net (regression) effect of an organizations’ procurement maturity on procurement performance is
significant and positive, and stable for the different dimensions of the maturity and performance
construct. It should be noted that performance is subjectively measured by the respondent but in a
comparative manner to avoid systematic under- or overestimations. The second proposition, the
moderating effect of the alignment between the six dimensional maturity scores, is only partly
confirmed. Alignment – measured by two indicators for the multidimensional maturity leveling – does
not significantly effect the shape of the maturity- performance relation. For one of the alignment
measurements though, subgroup analysis shows that the explanatory power of the maturity regression
model indeed increase for categories with higher alignment scores. This result supports the proposition
that alignment enforces the maturity-performance relation; this outcome is not stable for the other
measurement of alignment however. Additional research as for our selection of business dimensions,
maturity level and alignment (measurement) is needed for further explanation of the alignment data
results.
While not all propositions behind our research model can be confirmed, the results do give base for
practical suggestions. As maturity clearly matters for the (perceived) procurement performance of an
organization, our maturity framework can be used as an assessment, benchmark and improvement tool
for procurement organizations. And since it is developed and structured by the alignment or levelling
principle, it enables organizations to formulate integrative procurement plans and design ‘procurement
improvement roadmaps’. As such it addresses the issues described by Adamson (2001), Pan and Parkes
(2006), Puschman and Alt (2005) and Davila et al (2002) and it adds to the work of Beukers et al.
(2006) and Kroese et al. (2008). In terms of maturity model types as described by De Bruin, Rosemann,
Freeze and Kulkarni (2005) our conceptual procurement model falls into the categories of descriptive,
prescriptive and comparative models, as it helps in assessing the procurement maturity, it provides
directions for procurement strategy, and, it can be used leveraging existing assessment data. The
procurement roadmaps define and monitor the actions and projects to bring a company to the next level
of procurement maturity. While this can be supported by our measurement framework, its dimensions,
and items, we should recognize that alignment in terms of procurement integration implies a more
complex challenge. Creating a high level and balanced procurement situation paves the way to
integration, but this requires additional polices and specific measurements. An interesting extension of
this study would therefore be to develop measurements that indicate if and how organizations secure
that their operational procurement processes are synchronized with the required control, information
and e-technology activities. Also, further empirical research among procurement organizations is
desirable to explore the effects of organizational contingencies and conditions on the procurement
function, and to enable the design of a situational procurement framework.

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