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Companies are investing in more digital tools, software platforms and IT systems that help automate and support procure teams, processes and tasks. Typically lumped under the “procurement technology” umbrella, these solutions are helping chief procurement officers (CPOs) and their teams work smarter, better and faster—often with fewer internal resources.
As with any technology investment, getting the “powers that be” to approve the purchase and implementation of procurement tech isn’t always easy. Companies are assessing their budgets more carefully than ever right now, and competing priorities may win out when it comes to allocating dollars to cover IT investments.
The good news is that procurement is increasingly seen as a function that’s ripe for more technology, automation and innovation. In other words, companies have awakened to the fact that their procurement departments can’t be expected to manage increased workloads, work growing supplier bases and do their jobs with the same tools they’ve been using for years (or decades, in some cases).
According to Emergen Research, the global procurement software market is on track to reach nearly $18 billion by 2032—up from $6.7 billion in 2022. It says increased demand for cloud-based procurement solutions and the rising need for automated and efficient procurement processes are the key factors driving market revenue growth for the sector right now.
Software developers are also embedding more artificial intelligence (AI) and machine learning into their procurement solutions. These advanced options help companies automate “increasingly complex procurement processes while enhancing decision-making,” says Emergen.
Of course, getting CFOs and other decision-makers to sign off on major IT investments requires a certain finesse. When making a business case for procurement tech, for example, CPOs have to be able to articulate measurable return on investment (ROI), tangible benefits and related cost reductions that the software will produce.
In “Getting to the digital ‘yes’ – What makes a good case for procuretech,” Spend Matters says CPOs and procurement teams should start with an understanding of the key benefits that the new piece of technology will provide. Look outside of the “procurement bubble” for a moment and make sure the investment aligns with the corporation’s broader objectives. And, go beyond just “saving money” and carefully assess the relationship between the problem, the solution and the technology itself.
Here are five more strategies that Spend Matters recommends to CPOs that need help making the business case for new procurement technology:
- Don’t overlook the softer benefits. CFOs may be focused on dollars, cents and profit & loss (P&L) statements, but there’s always room to include soft results (e.g., risk reduction) in your presentation.
- Efficiency gains are another good selling point that procurement professionals can use, including cost savings like reduction in invoice or purchase order (PO) processing costs or reduction in unauthorized purchases.
- Be able to talk the integration talk. If you’re making the case to a CIO or CTO, these executives will want to know how the new technology will integrate into existing systems or how the upgrade will work.
- Get ready to answer these questions: How will this system reduce the organization’s financial burden? How will it fit into an overall system architecture? And, why are you deploying this system now versus another one on your digitalization roadmap?
- Put procurement first. Use these different types of “ROI language” to describe procurement-specific benefits for the new technology:
- Reduction in unauthorized purchases
- Reduced maverick spend
- Increased purchasing from approved suppliers (to maximize negotiated savings capture, etc.)
- Carbon footprint reduction
- Better supplier diversity
- Better alignment with corporate goals
- Reduction in organizational risk through audit trails and better budget control, safeguards against non-compliance, secure data storage and supplier compliance
- Share of product innovation coming from suppliers
