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Designed to streamline and automate the process of acquiring goods and services, procurement software handles everything from purchase requisition and supplier management to invoice processing and spend analysis. These applications free up procurement professionals to focus on more strategic tasks and deliver benefits like reduced costs, better efficiencies, lower risk and improved compliance.
These benefits aren’t lost on modern procurement departments, many of which are implementing and using the software to manage their operations. In fact, Technavio expects this corner of the software market to post 10.77% annual growth over the next four years. When all is said and done, the market will be worth $5.72 billion more than it is right now.
Driving Digital Transformation
Companies like Basware, BirchStreet, Coupa, JAGGAER and Microsoft (among others) are leading the procurement software market right now. From the customer side, the digital transformation of businesses is driving the need for real-time solutions and advanced business intelligence in various industries.
“Procurement processes are no exception,” Technavio points out. “Modern businesses require efficient and accurate procurement processes to gain a competitive edge.” Artificial intelligence (AI) is also impacting the market and is being integrated into procurement software to streamline processes and provide valuable insights. Some of the procurement-related AI capabilities include virtual agents and chatbots, pattern recognition, machine translation and automatic scheduling.
According to Technavio, some of the most compelling reasons that organizations invest in procurement software include:
- The ability to gain a centralized view of business information and activities
- Easy identification of cost discrepancies
- Automated comparisons of contract data to orders and invoices
- Detection of unusual order quantities or frequencies
- Identification of potential fraud or errors
- With AI, the detection of purchasing patterns and identification of top-performing trading partners and suppliers
- AI that simplifies the ordering process, making it easier to manage
According to TechRadar, procurement software also provides efficient and accurate tracking systems, offering better visibility over spending so users can see all savings achieved from multiple contracts and partnerships. For example, general reporting dashboards provide an overview of request spending and savings analytics, allowing users to monitor data and identify where and how savings are being maximized.
The software’s proactive approach to procurement, with features like customizable workflows and automated reminders, ensures timely and accurate processing of requests for quotations and other procurement activities. “By adopting e-procurement tools,” TechRadar adds, “procurement teams can transform their operations, achieving greater financial efficiency and positioning their organizations for long-term success.”
Potential Growth Inhibitors
As the procurement software market continues to post significant growth, it’s also facing numerous headwinds. Technavio says the fact that every organization and its suppliers are “unique” can interfere with good system compatibility and integrations of different solutions. And if the company is currently using outdated systems, the odds of potential compatibility increase exponentially.
“Supplier integration is also problematic, as some may lack the resources or knowledge to integrate with new software,” Technavio says. “These challenges can lead to delays in pick up onboarding, causing significant problems for organizations. These factors are expected to hinder the growth of the global procurement software market during the forecast period.”
