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The global procurement software market size was valued at USD 6.15 billion in 2021. The market is projected to grow from USD 6.67 billion in 2022 to USD 13.80 billion by 2029, exhibiting a CAGR of 10.9% during the forecast period. Based on our analysis, the global procurement software market exhibited an average growth of 6.2% in 2020 as compared to 2019.
In the market study, our analysts have included numerous data center automation solutions provided by the market players, such as Basware’s Purchase-to-Pay Solution, AP Automation, SAP SE’s SAP Ariba Buying and Invoicing Software, Oracle’s Cloud Self Service Procurement, Cloud Supplier Qualification Management, Cloud Sourcing, and Cloud Procurement Contracts. In addition, the study includes Zycus’s Procurement Software Suite, Procure-to-Pay Suite, and eProcurement Software, among others.
The global procurement software market growth can be credited to numerous aspects such as the growing implementation of the cloud, embracing digitization for saving on expenses, streamlining of the procurement process, and prevention of duplicated records and internet of things (IoT) devices across enterprises. Additionally, transparency to suppliers and improved efficiency by maintaining relationships with partners create ample market growth opportunities.
Emergence of COVID-19 Pandemic Increased Investment in the Development of Procurement Solutions
The COVID-19 pandemic had a positive impact on the global market due to rise in the number of end-users adopting neo and competitor bank solution tools during the outbreak of COVID-19. There has been an increase in the adoption of these services, including scheduling, checklist, development of standard protocols, report development, and implementation of recommendations, among others.
The increased efforts to expand the business across regions, upgrade the product offerings with AI and automation, and launch new products are expected to fuel the adoption of procurement solutions post-COVID-19 pandemic. For instance,
Thus, such growing funding and spending are projected to create substantial market opportunities in the coming years.
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Surging Adoption of AI and Cloud-based Solutions to Act as a Key Trend
The rate of change in the procurement process of businesses has been astonishing as the implementation of technologies such as Artificial Intelligence (AI), cloud, Machine Learning (ML), Robotic Process Automation (RPA), and the Internet of Things (IoT) remains to rise in businesses.
With digitalization becoming the norm, Chief Procurement Officers (CPOs) have found it necessary to stay on top of the news regarding procurement software best practices. The future is filled with intelligent cloud-based procurement platforms, which will lead to a more vertically integrated analysis, better support for CPOs, and efficient sourcing strategies. These digital procurement technologies give CPOs access to previously unavailable metrics.
The emerging trends in procurement technology that increase businesses are next-gen analytics, artificial intelligence, digitization of supplier data, and the introduction of blockchain technology in procurement. Thus, the above-mentioned factors are projected to be a trend in the forecast period.
Integration of Emerging Technologies such as Artificial Intelligence (AI) to Fuel Market Growth
The rise in the adoption of AI allows procurement organizations to solve complex problems more effectively or efficiently using computer algorithms. For instance,
As per the Deloitte, Chief Procurement Officers (CPOs) survey, it is reported that high-performing agility masters are ahead in adopting next-gen digital technologies in procurement. The key benefits of next-generation technologies in procurement reported by the CPOs were process efficiency (65%), process effectiveness (50%), and increased agility (50%).
Similarly, supply chains around the world are focusing on modernizing & streamlining processes to drive productivity & efficiency of business operations. This is estimated to increase the demand for digital procurement services. For instance,
Lack of Skilled Professionals to Hinder Market Growth
With innovations flooding the market, having employees skilled in maintaining and programming advanced technologies is essential. When addressing the skills shortage, understanding the importance of procurement value proposition, managing organizational expenditures, reducing cost, optimizing supply chains, and imposing proper procurement policies are always a continuous concern for the procurement team.
According to Ivalua, a global spend management cloud solutions prominent provider, the majority of U.K. organizations (86%) encountered considerable obstacles in building digital procurement skills. From this research, it is revealed that lack of training for technical and soft skills (28%), shortage of digitally experienced talent (31%), and lack of understanding of the skills required (13%) are some of the main challenges limiting the U.K. businesses from developing the digital skills they required. Moreover, over half (55%) of the businesses in the U.K. believe that digital skills in procurement are less innovative than in other departments.
Therefore, lack of skilled professionals restricts the procurement software market growth.
Cloud Deployment to Gain Traction Owing to Increased Efforts by Organizations to Shift Operations to Cloud
In terms of deployment, the market is classified into cloud and on-premise.
The cloud segment held the largest share in 2021 and is anticipated to grow with a remarkable CAGR during the forecast period. The cloud-based software offers greater transparency, better pricing, lesser time of transaction, and wider geographical reach; hence, it propels the technology as an essential safeguard and advancement with the growing technology. Additionally, continuous investment and product enhancements surge the demand for procurement solutions among enterprises.
As per IDC study conducted in September 2020, 35% of Canada-based organizations moved their applications to the cloud and 28% invested in cloud data management.
Based on enterprise type, the market is divided into large enterprises and small & medium-sized enterprises. Large enterprises segment is expected to hold a major procurement software market share during the forecast period owing to the increasing demand for smart procurement management solutions to manage complex supply chains by reducing the complexity and providing transparent information for business growth.
Also, small and medium-sized enterprises are expected to grow with remarkable CAGR owing to growing investment and funding and adoption of cost-effective cloud solutions led by leading organizations. For instance,
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Increased Demand for Sourcing and Procurement Solutions to Witness Significant Market Growth in Healthcare & Pharmaceutical
Based on end-user, the market is divided into retail & e-commerce, healthcare and pharmaceutical, manufacturing & automotive, BFSI, IT & telecom, oil & gas, energy & utilities, and others. Among these, healthcare and pharmaceutical segment held a significant market share during the COVID-19 pandemic as it accelerated the demand for medical equipment, vaccines, medicines, and other pharmaceutical products, which increased the demand for fully compliant and transparent procurement processes across hospitals.
Furthermore, the surge in the adoption of digital technology, cloud, and smart solutions to manage the global supply chain and government regulations across retail & e-commerce, manufacturing, and automotive industry drives the market growth.
North America Procurement Software Market Size, 2021 (USD Billion)
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Geographically, the market is divided into five major regions such as North America, South America, Europe, the Middle East & Africa, and Asia Pacific.
The North America market is studied across the U.S., Canada, and Mexico. The U.S. holds the major market share owing to the presence of key players in the region and the rising adoption of disruptive technologies across organizations.
Further, the Canada market is anticipated to increase with significant CAGR owing to a surge in investment by procurement software vendors. For instance, in April 2021, GEP partnered with ENMAX Corporation, a Canada-based electrical services provider, to implement GEP SMART, a cloud-based procurement software.
Europe is expected to hold a significant market share during the forecast period due to prominent companies in the market emphasizing business expansion by offering modified services to customers across countries.
Supply chain disruptions and nationwide lockdowns had an extensive impact on the sales of software and services for a short period of time. The demand for procurement solutions increased post-COVID-19 period in European countries. The enterprises invested in technology to manage the procurement and international import and export activities. For instance,
These factors are anticipated to propel market growth across the region.
Asia Pacific is estimated to display dynamic growth during the projection period. The surging investment by emerging economies for digital transformation, such as India, Singapore, Japan, South Korea, South East Asia, and others, is contributing to market growth.
According to the IDC Report, the Asia Pacific’s ICT spending reached USD 924 billion in 2021 and is projected to reach USD 1 trillion by 2024. Thus, the increase in ICT spending will increase the demand for solutions and services across various industries. Further, in January 2022, IDC stated that professional services increased by 13.5% from 2021 to 2022, which is expected to fuel the growth of services.
The Middle East & Africa region is projected to showcase moderate growth in the coming years. Some of the major government-funded initiatives would create unprecedented opportunities for procurement and supply chain solutions in the near future.
South America is projected to show steady growth during the forecast period. However, the COVID-19 pandemic has provoked decision-makers across Latin American countries to boost their IT spending in 2021.
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Around 39% of organizations in the region are planning to invest in cloud computing. The acceleration of cloud adoption in Brazil, Chile, and Argentina is drawing the attention of big companies and hyper-scale cloud providers to invest in procurement software. These factors are expected to drive the adoption of cloud-based software and services.
Market Players to Initiate Merger and Acquisition Strategies to Extend their Shares
Important players functioning in the global market focus on expanding their global presence and market share through the acquisition and merger tactics. These companies aim to purchase small and local firms to broaden their business presence.
An Infographic Representation of Procurement Software Market
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The research report provides a detailed market analysis. It focuses on key aspects such as leading companies, software types, and leading software and services applications. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the aforementioned factors, the report encompasses several factors that have contributed to the growth of the market in recent years.
Value (USD Billion)
By Deployment, Enterprise Type, End-user, and Region
By Enterprise Type
The market is projected to reach USD 13.80 billion by 2029.
In 2021, the market value stood at USD 6.15 billion.
The market is projected to grow at a CAGR of 10.9%.
The healthcare and pharmaceutical segment is likely to lead the market.
The integration of emerging technologies such as AI drives the market growth.
Basware, SAP SE, Coupa Software Inc., Oracle, Ivalua Inc., JAGGAER, Workday, Inc., GEP, and Zycus Inc. are the top players in the global market.
North America is expected to hold the highest market share.
Asia Pacific is expected to exhibit the highest growth rate during the forecast period.
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