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As companies push forward with their digital transformation goals, software applications continue to play a key role in these efforts. Procurement departments rely heavily on these applications to run their operations, streamline their processes and manage their vast supplier networks.
According to Procurify, procurement software provides an organization with a set of tools to support the acquisition of goods and services. Digital procurement software, for example, lets buyers request and approve purchase orders, select and order the product or service, receive and match the invoice and order, and prepare the documentation required for verification of payment.
In its recent “Procurement applications market size worldwide 2015-2024” report, Statista says that the procurement software application market will bring in an estimated $5.94 billion in total revenue in 2021. The market is projected to experience a slow-but-steady expansion in the coming years, with a constant annual growth rate of 2.3%.
Digital Management Tools
Used to manage the tasks associated with purchasing, receiving and paying for commercial goods, procurement software is often classified under the more general field of supply chain management (SCM) software, which assists in the control of products from the “raw material” stage all the way to the “final good” stage.
Statista says the largest companies in the SCM/procurement software market include Oracle and SAP, “both of which account for double digit shares of the overall market.” As a whole, the combined SCM and procurement software markets brought in around $14 billion dollars in 2018 and have experienced overall revenue growth year after year, it adds.
Key Procurement Software Market Highlights
As the procurement software sector continues to expand, buyers should keep an eye on these key trends, as outlined by ResearchAndMarkets:
- A key driver of the procurement software market is the centralization of procurement processes that ensure efficiency. “The need to curtail losses due to inventory control is another important factor bolstering the procurement software market considerably,” it says.
- The materialization of the e-procurement technology will open up new opportunities for market growth in the coming years. “Moreover,” ResearchAndMarkets notes, “the requirement to avert the duplication of records [will] boost the development of the procurement software market in the coming years.”
- The influence of governmental policies is motivating further development in the market. The rise in the flow of international transactions between nations is further inspiring the progress of the market, while the synergies between supply and demand forces in the market will induce further growth of the market.
- The rising need for the automation of procurement processes and the emergence of e-procurement technology will drive the growth prospects for the global procurement software market in the coming years. For example, the integration of artificial intelligence (AI) with the software could unleash developmental opportunities in the procurement software market in the near future. “Technological advancements are poised to accelerate revenue creation for market participants,” ResearchAndMarkets predicts, noting that a lack of skilled personnel continues to impede market growth.
- Procurement software vendors are stepping up to the plate. These software companies are increasing their focuses on in-demand technologies and re-exploring innovative ways to serve their clients. This is happening as the COVID-19 crisis continues to create “challenges across multiple industries and is leading to a reduction in technology spending,” ResearchAndMarkets notes.
Double-Digit Growth Ahead
According to ResearchAndMarkets, the global procurement software market is expected to register a compound annual growth rate (CAGR) of 10.2% between 2020 and 2025. It attributes much of that market growth to the increasing demand for centralized procurement processes and the consolidation of SCM. “Moreover, the market also seeks opportunities owing to the growth in mobile procurement applications,” the research firm points out.
North America dominates in the global marketplace because of the rising demand for centralized procurement processes. Also, the consolidation of companies incorporated in the region is expected to provide an impetus to market growth in the years to come. “Moreover, market players that are involved in providing services of procurement software, such as Oracle and Microsoft, are located in North America,” ResearchAndMarkets adds, “which further boosts the market growth in the region.”
