The global market for digital procurement software is growing extraordinarily fast—nearly twice as fast as the overall software market according to one Forrester report. This news is certainly remarkable, but it is far from surprising. Digital solutions leveraging big data analytics and AI-powered automations have enabled teams to streamline workflows, increase savings, lower costs, improve compliance, and achieve greater visibility into every aspect of the supply chain. As a result, digital procurement software is becoming increasingly vital to businesses of every shape, delivering surprising insights into areas like supply chain risk and even corporate sustainability.
However, as technologies become more sophisticated and affordable, so too has the market become more complex. Today, a cursory glance at popular software review websites like Capterra and G2 returns hundreds of potential solutions providers across multiple software categories—including procure-to-pay, purchasing, RFP, and spend analysis. For organizations looking to embark upon a digital transformation journey, and even those who merely wish to upgrade their existing systems, this abundance of choice can sometimes become overwhelming.
The case for disruption
Digital procurement solutions will spur innovation within your organization, but not without impacts to existing processes and teams. Before committing, take a step back to discuss how digital solutions should help achieve goals or address deficits in your business. Forging ahead with a digital transformation without defined objectives or internal buy-in can lead to disappointing results and new problems.
Excitingly, AI and big data applications can now provide real time visibility into supply chains and markets, enabling your business to streamline manual tasks like supplier scouting and shift resources toward strategic priorities such as negotiation. Technology can also empower procurement teams to take on new responsibilities in risk, compliance and sustainability, transforming the function’s place within an organization. Moreover, organizations with experimental, data-driven cultures will discover that AI solutions offer capabilities that extend beyond the envisioned use cases. Driving efficiencies and unlocking new sources of value are only the beginning.
However, realizing these benefits requires finding the right digital solution for your needs. Below, we will examine some key recommendations and considerations that will help you:
Evaluating your options
Be prepared to conduct thorough, rigorous research. Pull from a wide variety of sources when establishing your initial longlist of potential vendors. Leading analyst firms like Gartner and Forrester are a great place to start, but your search should also extend to influencer forums, free user feedback websites, and other resources. This will ensure you are getting a full, unbiased picture of the current supplier landscape.
Narrowing down your options becomes much simpler when you develop a clear understanding of your organization’s needs and ask the right questions to ensure those needs will be met. For example, will you be best served by a managed service, self-service, or hybrid model? What about API availability—which formats do you need for data extraction or quality assurance? Do you need the vendor to have experience in a particular industry, and do the reference customers listed on their website indicate that experience? Asking questions like these at the outset will help drill down your search significantly.
Mapping the rollout
Far too often, procurement leaders wait to begin planning for the rollout process until after a vendor has been selected, only to find they have chosen an excellent product that they are unable to implement in a timely manner. The years-long rollout of overly complicated software should be a thing of the past. As you evaluate your shortlist of candidates, work to identify solutions that will deliver an easy rollout process, and facilitate seamless integration with your existing infrastructure. Gartner Magic Quadrants and other resources can help to identify which vendors play best with others.
You should also be in touch with the vendor directly to determine which elements of the product can be configured for your needs and how much customization will be required. Excessive customization is a red flag for any software solution, as it is usually expensive, high risk, and difficult to maintain. Will users be required to complete onboarding or training during the rollout process? Be sure to assess the degree to which initial and long term training and changes to your teams will be required.
Ensuring long-term success
The most successful vendor relationships last for years, but achieving substantial, long term value takes careful planning and a co-entrepreneurial partner approach. Be sure to consider the long term prospects of the solution you are evaluating. For example, look for vendors that offer either a subscription-based model or a straightforward licensing model (and keep an eye out for extraneous fees). Be sure to determine whether they are named or concurrent licenses, and get a sense of how easy it will be to transfer or amend licenses over time. Also pay close attention to service-level agreements and other small print—be confident to shape the service KPIs. As the COVID-19 pandemic has taught many supply chain leaders, contingency plans and force majeure clauses can make a tremendous impact when the unexpected occurs.
IP rights could be another area of concern. Does the protection of your business model require you to own the source code of the system that is being built? Will a vendor likely apply learnings from your business to the work they do with other customers that could include your competition? You must also think about the future prospects of the vendor itself. Has it recently been acquired, or is it on the verge of being acquired? Do discuss the long term trajectory of their technology and offers. As most procurement software platforms are needed as a long-term partnership, you should know right away if a vendor is planning to grow the product in a different direction, or sunset the product you need most.
Choosing the right digital procurement solution for your organization
In general, the rapid growth of the procurement software market has brought many benefits to organizations. Greater adoption of digital solutions, growing competition among vendors, and the increasing digital savvy of sourcing leaders themselves have all helped to deliver new innovations and raise efficiencies. However, to navigate a crowded market and settle on the right options for your needs, procurement leaders must be thoughtful, strategic, and rigorous in your search. This will better ensure both an optimal roll out and long term success for whatever they choose.