Anyone who has paid even the slightest bit of attention to the progression of global industry in recent years has noticed two inescapable facts: First, software has had an irreversible influence on virtually every business sector. Second, everyone from the traditional players within the cloud-based service industry to newcomers involved in the SaaS marketplace appears to have ridden the software boom to unprecedented heights.
This growth is abundantly evident in every facet of the procurement software industry. Already an industry that has surged to a worth of almost $6 billion, the procurement software market is projected to increase to nearly $8 billion by 2024, thanks to a compound annual growth rate of about 7.6%. In that same time span, we can expect to see the procurement analytics market swell to an overall worth of $4.1 billion, reflecting a CAGR of over 20%, in just four years.
Of course, this growth is altogether unsurprising given our present business climate. The disruptive onslaught of cloud companies upon traditional bulwarks of the business world has promulgated the gradual and relentless surrendering of market share to software developers, along with the inevitable responses of both hardware companies and non-tech companies that have transitioned into new roles as SaaS providers.
Justifiably, the software industry is viewed as a land ruled by giants. This perception is underscored by the manner in which traditional powerhouses have accumulated market share and influence by absorbing smaller software companies through an assortment of business maneuvers. With each move to expand, mainstays like Microsoft and Oracle have reasserted their dominance and reinforced the popular notion of the software world as a playground reserved only for established corporate titans. As a result, would-be participants on the supply side of the software industry are routinely advised to remain as fixtures on the sidelines as the supremacy of the established players has purportedly left almost no room for fledgling companies to experience appreciable, bottom-up growth.
In my experience, this defeatist conception of the software industry is thoroughly misleading with respect to many business sectors, and it is altogether fallacious given even a cursory examination of others. In particular, the procurement software market is a prime example of a sector in which enterprising organizations, armed with sound business models and the minimum requisite funding, can innovate their way into positions of relevance and profitability.
To be fair, my arrival at this belief is partially derived from my own experiences within the procurement software industry. My procurement software company was conceived as the result of a rather innocuous conversation. My fellow founders and I listened intently while a client decried the vast amounts of time his staff members were routinely allocating to trivial purchasing decisions. Upon further reflection, my associates and I recognized the value we could generate by creating a firm to streamline the purchasing of client’s tail spend products — the items which account for 20% of a company’s purchases, but which result in 80% of vendor interactions.
Catalysts For Growth
Certainly, one of the primary drivers of the procurement software market’s mercurial growth will be the ever-increasing reliance on mobile devices by business professionals who need to manage purchases during travel. While this trend is sufficient to grow the procurement software market all on its own, we also expect the infusion of artificial intelligence to further help businesses with fine-tuning their procurement processes, making procurement software all the more essential and desirable.
Another catalyst for future growth within the procurement software market is likely to stem from a reimagining of the relationships between executive staff members and their procurement teams. Far from being a team that exists solely for the sake of supplying companies with the material essentials for conducting day-to-day business operations at a minimal expense, a wise procurement staff fuels its company’s innovative processes by predicting trends and preemptively acting upon them.
Another point worth considering is the degree to which innovations will continue to act upon one another to generate future opportunities for advancement in areas that once seemed bereft of such possibilities. A key example of this is the emergence of blockchain technology. When blockchain’s immutable characteristics are integrated into different types of software, including procurement software, it will have the potential to spark an unprecedented level of transparency.
What To Look For In Procurement Software
As the software industry grows over the coming years, decision-makers in the procurement space should be smart and informed about the procurement software they use. As with any software purchase, the first step is understanding your current system in place. It is essential that any software you purchase is functional within your current architecture.
Another important factor is assessing your internal data situation and establishing what data streams you do and don’t have, including an idea of your data quality.
Finally, I would determine the business process and workflow changes that would go into this new software purchase.
In short, scores of executives in companies both large and small are finally understanding the untapped potential of their procurement teams, and this realization is becoming commonplace within a climate in which the maturation of technology capable of ascending to a superior level of purchasing efficiency is also occurring. As a result, the procurement software market is fertile ground for the seeds of innovation, investment and entrepreneurial exuberance from anyone wishing to grow alongside an industry that has only just begun to take root.