Procurement’s Rising Importance Lifts Demand for Software

Global demand for procurement software platforms is rising as procurement becomes more strategic to enterprises, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2024 ISG Provider Lens global Procurement Software Platforms report finds that, as procurement evolves into a strategic capability, enterprises are setting new priorities when choosing software. They are now seeking platforms that enhance procurement efficiency, adaptability and data-driven insights.

“Supply chain disruptions have made the business landscape far more complex and risky in the last few years,” said Robert Stapleton, partner and Business Outsourcing Services lead for ISG. “Companies need an effective procurement system to navigate these changes, and that starts with a solid, holistic procurement software platform.”

Amid ongoing economic uncertainty, enterprises are looking for ways to reduce costs in every area, including procurement, ISG says. When evaluating procurement software platforms, they seek features including spend consolidation, automated negotiation tools and the ability to optimize supplier performance. Companies also prioritize streamlined workflows, reduced administrative overhead and a demonstrably quick return on investment.

The increasing complexity of procurement processes, plus growing volumes of procurement data that need to be analyzed, are creating more demand for software that automates repetitive tasks, the report says. Automation can both reduce the chance of human error and give procurement experts more time to focus on strategic initiatives.

To make more informed decisions on sourcing, negotiation and risk management, organizations require real-time insights into trends in spending, supplier performance and market fluctuations, ISG says. Advanced, AI-powered analytics, including generative AI (GenAI), are now essential to procurement software platforms.

“The next logical step is autonomic decision-making by procurement software itself, especially given the shortage of skilled labor in this field,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “This could be the greatest disruptor that emerges from AI.”

The report also explores other procurement platform trends, including the increasing demand for easy-to-use software and the rising importance of trust between vendors and clients.

For more insights into enterprise challenges related to procurement platforms, including continued reliance on inefficient, manual processes and the need for more transparency between internal functional divisions, see the ISG Provider Lens Focal Points briefing here.