With the economy showing clear signs of improvement, the demand for procurement software is expected to rise.
Naturally, that’s good news for us here at Aravo, and I agree with Michael Koploy who points out at The Software Advice Blog, that there are several reasons why businesses will be accelerating their investment in procurement management systems over the coming year. In particular, Michael says he has his eye on these six trends:
- Demand. The increase in demand is fueled by both an improved economy and the need to fine-tune efficiencies (perhaps with less procurement headcount)
- Cloud-based procurement systems. These new systems can deliver costs savings while enabling exciting opportunities for both internal and external collaboration.
- Usability. New systems also have intuitive, easy-to-navigate user interfaces.
- Strategic sourcing. Today’s innovative procurement management applications allow buyers to easily evaluate suppliers with regard to broad range of criteria such as quality, delivery, reliability, etc.
- Spend analytics. As collaboration between finance and procurement grows, businesses are investing in sophisticated analytics that can customize reports and provide real-time, actionable insights.
- Contract management. Automated contract management can create efficiency, cut cost and mitigate risks.
See Michael’s post for a more complete discussion of each trend, and then let me add two more. Over the coming year, I expect we’re also going to see procurement professionals pay more attention to:
- Sustainability. Walmart, the Procter & Gamble Company and others have launched supplier environmental sustainability scorecards and rating processes to measure and improve the environmental performance of key suppliers. This trend will increase as more and more businesses recognize the business benefits of greening the supply chain.
- Risk. Poorly managed supplier relationships put a company at serious risk. For example, a single supply chain disruption can significantly impact EPS and the bottom line. Today’s supplier networks are global, complex and interconnected, and so the threats are diverse –and they need to be managed. The list of possible risks includes: supplier non-compliance, global supply chain interruptions due to natural disasters or geopolitical factors, questionable supplier financial health, poor supplier quality, and sub-par delivery performance. Now, more than ever, companies need visibility into risk, compliance and performance indicators in real time, allowing for the proactive assessment and mitigation of supply chain risk.
I’m curious about your thoughts, too. What do you think is driving the demand for procurement software?