5 Technology Trends in Procurement
By Hugo Britt | August 2, 2022
We like talking about savings in big numbers at Una, but even we are awed by the sheer scale of the procurement technology market. You may have had a hint of its size from the dozens of ads that pop up as you browse the internet, or the number of technology vendors clamoring for your attention at procurement conferences.
According to Verified Market Research, the global procurement software market will grow from $5.5 billion (2020) to a projected $9.5 billion by 2028 at a CAGR of 7.6%.
It’s also important to understand the sheer scale of the opportunity that’s up for grabs through procurement modernization and digitization. Benefits include cost savings, risk reduction, efficiency gains, transparency, agility, customer satisfaction, employee engagement, and much more.
Technology trends in procurement
Procurement is noticeably lagging behind other functions in terms of digital transformation. Ivalua/Hackett’s 2022 Procurement Insights and Key Issues report found that laggards are being held back by concerns including fear of failure, access to suppliers, legacy system costs, and teams lacking the skills to leverage digital transformation.
Take B2B services purchasing as an example. According to 2022 research from the Sourcing Industry Group (SIG), 94% of surveyed enterprises have not modernized their operating models for purchasing B2B services, and only 6% of enterprises have “fully embraced” digital transformation in the way they buy services.
With the above context in mind, let’s dive into what’s coming down the pipeline in the world of procurement tech.
Here are five technology trends in procurement.
Human patterns of migration never happen all at once. The great diasporas from countries such as India, Italy, or Mexico are great examples. The first wave of migrants are explorers and entrepreneurs.
Not afraid to take a risk, they benefit from first-mover advantage if successful. Others follow, until finally we are left with those who hang back until they’re absolutely sure it is safe to migrate.
This is the current situation in procurement. Early adopters are reaping the benefits of Cloud maturity such as Big Data insights, enhanced integration with other functions, and super-scalability. Meanwhile, immature procurement functions are taking their very first steps into the Cloud environment and are a long way from seeing any ROI.
AI-enhanced spend categorization
As machine learning gets smarter, pattern recognition can be used to categorize unstructured data and make manual classification a thing of the past. Fully-automated spend categorization will boost visibility, free up time, supercharge advanced analytics, and improve decision-making.
AI is also getting better at reading unstructured documents including supplier contracts, with one study revealing that AI read a contract in 26 seconds while human lawyers took 92 minutes.
Character recognition enables the AI to extract key data points such as pricing and timelines, then provide analytics based on this data. Importantly, technology can monitor contract expiry dates to prevent auto-renewals and provide the procurement team with an opportunity to reconsider or renegotiate the contract.
There are over 7 billion connected IoT devices in the world, with IoT sensors and wearables surpassing non-IoT devices in 2020. This number is expected to swell to over 25 billion connected devices by 2030.
Procurement stands to gain a treasure-trove of data as IoT continues to proliferate across manufacturing, supply chains, and warehouses, ultimately enabling real-time inventory tracking, enhanced demand planning, and improved predictive analytics.
No procurement process can be considered fully automated without self-service. Self-service for everyday, tactical purchasing removes the manual burden involved in carrying out stakeholder tasks and creates more time for strategic work.
Salesforce found that self-service:
- Reduces costs
- Reduces manual input errors
- Improves productivity
- Teaches users new skills and encourages them to take ownership of their purchasing request rather than regarding it as procurement’s responsibility.
Users increasingly prefer the option of self-service. Millennials and GenZ prefer to take care of matters themselves (via a self-service portal) before reaching out to a live representative. Self-service success can be enhanced through the use of Voice Assisted procurement software or a procurement chatbot that is programmed to carry out basic purchasing tasks and answer frequently asked questions.
Will any of these trends directly impact your organization’s approach to procurement and technology? Need help saving money on the technology solutions your business needs to stay in the game? Una can help. Contact our team of Sourcing Advisors to learn more.
Get in Touch
Do you have questions about group purchasing? Wondering how a group purchasing organization works to save you money, time, and effort?
Una’s team of Sourcing Advisors is here to help. Contact us to learn more.