Enterprise investments in procurement software are still rapidly accelerating three years after the COVID-19 pandemic significantly disrupted the way companies procure goods and services, according to a new research report published today by Information Services Group (ISG) a leading global technology research and advisory firm.
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“The disruption and subsequent changes in business and supply chains since the start of the pandemic have made procurement much more complex and unpredictable”
The 2023 ISG Provider Lens global Procurement Software Platforms and Solutions report finds that large and midsize enterprises increased investments in procurement platforms by between 20 percent and 30 percent in 2022, roughly the same pace as in the previous two years. Software spending outpaced the growth of procurement outsourcing and transformation services, partly because most companies acquire a software platform as the first step in procurement modernization, ISG says. While some organizations expect to implement the software on their own, most will find they need to work with service providers, ISG says.
“The disruption and subsequent changes in business and supply chains since the start of the pandemic have made procurement much more complex and unpredictable,” said Scott Furlong, partner and leader of ISG Global Business Operations. “We expect continued growth in procurement platforms and services as companies adapt to new conditions.”
Pandemic-era crises laid bare for many organizations how much the pricing and availability of critical goods could affect their ability to do business, ISG says. Supply chains have improved since the massive delays and shortages in the depths of the pandemic, but they have not yet fully recovered. Inflation, interest and exchange rate volatility and political tensions continue to disrupt procurement for many companies.
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Leading procurement platforms help companies prepare for and respond to changes by providing more uniformity of data, user experience and connections to related functions such as finance and supply chain management, the report says. They also enable operations management practices that can streamline procurement and reduce operational costs.
Procurement platforms are advancing most rapidly in intelligent automation tools that use AI and machine learning, the report says. These features not only accelerate processes but also improve accuracy through error checking and data cleansing. Platform vendors and service providers plan to automate almost all of clients’ procurement operations in the next three years, ISG says.
“Intelligent automation lets companies offload basic evaluations and decision making,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “This allows procurement organizations to focus on innovation to meet the next challenge.”
The report also explores other global procurement trends, including the use of low-code/no-code development tools and the growing importance of change management in procurement transformation.
For more insights into the procurement challenges faced by organizations, plus advice on taking a more holistic view of the role of procurement platforms, see the ISG Provider Lens™ Focal Points briefing here.
The 2023 ISG Provider Lens global Procurement Software Platforms and Solutions report evaluates the capabilities of 34 providers across two quadrants: Software Platforms and Solutions — Large Accounts and Software Platforms and Solutions — Midmarket.
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