An outsourced procurement model that blends technology, staff, and expertise to manage some or all of an organization’s procurement function, procurement-as-a-service is expected to grow into a $4.74 billion market by 2027 (up from last year’s $3.14 billion), according to a new research report from The Insight Partners.
Similar to Software-as-a-Service (SaaS), procurement as-a-service is cloud-based technology that’s used to manage specific functions—in this case, procurement services. Procurement as-a-service offerings support the end-users by selecting the categories for sourcing and allocating category experts to manage purchasing for those categories. Technology handles the sourcing and procurement, tracking payments and purchases, plus three-way matching to ensure that the users are only paying for what they get.
According to MarketsandMarkets, manufacturing is the biggest user of procurement as-a-service right now. “Increasing global competition and rising consumer demand are driving companies to differentiate themselves from their competitors,” the research firm states.
“Manufacturing companies must deliver higher quality at lower prices, newer features, and shorter production times while maintaining market presence and managing costs effectively,” it continues. “As a result, [they’re] progressively adopting procurement outsourcing and technology-driven solutions that enable them to streamline their manufacturing processes and achieve significant cost savings.”
More Growth Ahead
In its report, The Insight Partners highlights both the market drivers and the factors that are holding it back. It points to Accenture, CAPGEMINI SE, Corbus, LLC, Genpact Ltd, GEP, HCL Technologies, IBM Corporation, Infosys Ltd, Wipro Limited and WNS (Holdings) Limited as some of the top players in the procurement as-a-service space. “The global procurement as-a-service market is anticipated to witness impressive growth during the forecast period,” it writes.
“The increasing demand from enterprises to streamline the procurement processes and the positive impact of business process outsourcing (BPO) evolution on procurement outsourcing are the major driving factors for the global procurement as-a-service market,” the research firm adds. “Additionally, significant technological development initiatives by several leading companies are also expected to drive the demand during the forecast period.”
Why Procurement as-a-service?
Procurement as-a-service helps companies see what they’re spending money on, identify potential savings, choose the categories for sourcing and assign category experts to handle the purchasing of those categories. It also makes it easier for organizations to handle strategic procurement, according to PurchaseControl. This is particularly attractive for small to mid-sized organizations that can’t afford to employ their own procurement departments.
“Procurement as-a-service relies on technology to do the sourcing and procurement, track purchases and payments, and handle three-way matching to make sure you’re only paying for what you get, and that you get everything you’re supposed to when you’re supposed to,” PurchaseControl adds.
The technology also helps companies take somewhat of a “set-it-and-forget-it” approach to procurement technology, knowing that the provider will keep that technology up-to-date and scaling up as the company grows. “Procurement as a profession continues to grow, but only large organizations can afford to invest in all the capabilities procurement has to offer,” PurchaseControl continues. “The executives in smaller companies will have access to targeted technology and expertise at an affordable price point so they can justify their investment.”
Tossing the Paper and the Spreadsheets
For companies that still rely on paper-based processes and spreadsheets to run their procurement activities, procurement as-a-service provides the technological support structure they need to start moving into the digital age.
“Procurement shouldn’t have to contend with paper-based, tactical processes. They should enjoy the opportunity to carry out high-value, strategic work that directly serves broad business objectives,” SourceOne points out. “By automating and optimizing processes across the sourcing cycle, procurement as-a-service empowers businesses to see the big picture and evolve in their approach to procurement.”
