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Procurement teams are under pressure to optimize spending, improve efficiency and mitigate risks, but manual processes and fragmented systems can throttle these efforts. To address these and other challenges, companies will often add business spend management (BSM) software to their technology stacks.
These applications provide a centralized hub for managing the whole procurement lifecycle—from sourcing and supplier management to purchase order processing and invoice payments, and all steps in between. More specifically, NetSuite defines BSM as “a set of business practices, supported by software, that are used to track, manage and analyze enterprise-wide supplier relationships and expenditures, such as striking big-ticket contracts with key vendors, purchasing everyday office supplies and out-of-pocket travel expenses.”
Because BSM consolidates the processes of sourcing, contracting, purchasing and managing suppliers, invoices, employee expenses and payments into a single process, it helps companies gather and analyze all spending data and make more informed and insightful spending decisions. Procurement teams can use the platforms to improve their negotiating power, access spending pattern data, minimize fraud and improve cash flow.
High Demand for BSM Applications
The BSM software market is in growth mode right now. Valued at about $23 billion in 2024, the market is expected to surpass $57 billion by 2032 and is posting an 11.8% compound annual growth rate (CAGR), Fortune Business Insights reports. This software segment includes procure-to-pay solutions, supplier and risk management, travel and expense management, contract and e-tender management, and spend management/spend analytics, among others.
Business spend management is an umbrella term that refers to the process of requesting and approving spend, capturing transaction details, making payments, booking, tracking and analyzing business expenditures. “BSM software helps organizations provide a broad view of a company’s spending in real time to make accurate, informed decisions with greater visibility,” the market research firm points out.
Some of the key market drivers right now include the demand for applications that incorporate artificial intelligence (AI), cloud, machine learning and the Internet of Things (IoT). For example, some BSM applications are using machine learning and AI to standardize, classify and augment spend across enterprise resource planning (ERP) systems, which can effectively eliminate the need for manual classification labor. Others are using digital platforms to develop flexible procurement procedures, including those that give users more visibility over expenditures and supplier monitoring.
“By managing the business spend, automation has clearly emerged as a crucial enabler for enhancing productivity and achieving critical business goals while lowering effort and expenses associated with manual and repetitive procedures,” Fortune Business Insights points out. “As a result, the most accessible parts of automation, such as AI, cloud, and robotic process automation (RPA) analytics tools, have led the adoption push.”
Cloud is Big Business
Looking ahead, the BSM software market is clearly poised for growth, driven by increasing demand for automation, enhanced visibility and improved decision-making capabilities.
Fortune Business Insights says cloud-based BSM software deployment is expected to “surge” over the next nine years. On-premise deployments are anticipated to showcase steady growth in the coming years due to the increasing adoption of cloud technology by small and medium-sized enterprises, it adds.
Geographically, North America holds the largest market share for BSM thanks to major market players like Coupa Software Inc., Ivalua Inc., Zycus, Jaggear, Xeeva and GEP. “Key market players in the region are focusing on partnerships, collaborations, mergers, and acquisitions,” the research firm adds, “which are expected to fuel the business demand for spend management solutions and services across North America in the coming years.”
