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Procurement Software: Revolutionizing the Procurement Process

Procurement can’t get away with being “the cost cutter” anymore. Its areas of responsibility impact business performance too substantially. But to rise to the challenge and optimize business performance, teams need procurement software that take the function from tactical and operational to a true business innovator.

At the end of 2023, Kearny’s Dr. Elouis Epstein published a spider map detailing the modern procurement technology landscape. Her point: there are more procurement software options than a single team could ever evaluate. In this blog, we’ll explore why strategic solutions are a crucial investment for reaching the next level.

What is procurement software?

Procurement software is any piece of digital technology that improves or extends Procurement’s strategy and workflows. Examples range from full suites that house a broad range of capabilities to best-of-breeds and point solutions like SpendHQ that provide in-depth capabilities for a specific part of the procurement process.

How does procurement software compare to a traditional system?

Traditionally, Procurement was a cost-cutting function. But because of changes in supply chain complexity and vendor management, Procurement has inherited new responsibilities that require it to be proactive and strategic. Now, the function doesn’t just manage costs, it helps protect the business and drives its profitability.

To help teams deliver on these responsibilities, procurement software facilitates and automates many of the manual tasks involved in both the strategic and tactical sides of Procurement execution. SpendHQ, for example, is a spend intelligence, project management, and savings tracking solution for Procurement.

Our platform consolidates 100% of a company’s spend data into sourcing categories and subcategories for streamlined intel on spending, supplier relationships, ESG priorities, savings leakages, and category performance. With this information, teams can easily take inventory opportunities, manage them centrally, and report the results with realized financial data.

What are the benefits of procurement software for your business?

As we’ve explained, procurement software expands Procurement’s capabilities so the function can execute tactical responsibilities more easily and contribute more strategic value to the organization. Here are a few specific ways a spend analytics and performance management solution can benefit a team.

Reduced administrative burden

Procurement initiatives often require background work that makes them too time intensive to be a priority. But procurement software can automate most of the administrative work such as

Cleaning, categorizing, and analyzing spend data for opportunities and insights
Project management and oversight
Realized financial impact report creation and distribution

Finding the right tool for these administrative tasks matters. SpendHQ’s spend analytics and intelligence module categorizes 97%+ business spend and automatically generates insights into spend, risk, and ESG opportunities. Alongside it, our performance management module provides a single source of truth for the team’s full project pipeline, including results—complete with realized financial data.

As Gerardo Aguilar, Global Head of Indirect Procurement at Syngenta Group said, “At the end of the day, I don’t have to bother [my team]. From an overall picture of a global program with more than 7,000 projects, I can drill down to any specific initiative and actually get the details.”

Improved supplier management

Supplier management is the heart of procurement. However, the details live in the data. Procurement teams with fragmented, spread out, or simply raw data are limited in what they can impact. However, spend intelligence software takes the manual effort out of turning this data into insights that teams can use to:

Identify the best contract opportunities
Negotiate with vendors
Correct performance and availability issues
Leverage volume for enhanced pricing
Manage spending by category instead of vendor
Make decisions based on trends instead of snapshots in time

Streamlined procurement processes

In the past, much of the strategic procurement process was spent analyzing data, inventorying opportunities, and figuring out which projects would have the greatest impact. Technology can automate most of these steps. Now, teams can devote more time to initiatives that drive value.

The right technology stack also streamlines procurement leadership tasks. A global pipeline of opportunities and expected results makes it easy to keep the entire team aligned with business goals. Likewise, custom dashboards can keep progress KPIs front and center so managing goals doesn’t take time away from creating new value.

Improved decision making

The modern procurement tech ecosystem gives teams a wealth of data on nearly every aspect of the job, from legacy spend optimization to ESG and third-party risk management. Now, teams don’t have to act on hunches or jump to conclusions. Strategic procurement software solutions will reveal the most impactful projects.

Enhanced collaboration

Procurement inherently requires cross-functional collaboration. Unfortunately, siloes, poor data hygiene, and strict purchasing policies have been a roadblock in Procurement’s cross-business relationships.

However, armed with intel from a procurement software solution, Procurement can place transparency and cooperation at the heart of these relationships. Spend analytics and intelligence make the state of business spending transparent so identifying needs and making decisions can become a collaborative process.

Simultaneously, performance management keeps stakeholders involved in the execution phase of projects. Even if those stakeholders aren’t active participants, the increased visibility deepens trust, increases Procurement’s reach, and speeds up execution.

Better visibility into spending

Procurement technology is the only way to have any degree of spend visibility. However, even with legacy ERPs and suites, most procurement organizations have large amounts of their spend unaccounted for. SpendHQ can double that number, categorizing 97% or more of a company’s spend with regularly refreshed insights.

Reduced procurement costs

Although strategic procurement technology is an investment, it can save significant people hours, which can then be dedicated to other projects. Independent research firm Hobson & Company conducted a study on SpendHQ customers and found that spend intelligence and performance management can give teams

90% reduction in ad hoc reporting requests
80% reduction in data consolidation and categorization
30% faster diversity reporting
60% quicker project management
30% faster resource allocation and prioritization

Together, these improvements can significantly reduce talent costs, freeing up budget for other investments or simply decreasing Procurement’s financial footprint.

See the specific areas where SpendHQ’s procurement software can reduce your costs and boost your bottom-line impact.

Increased agility

Without software, Procurement’s impact is limited by how quickly it can recognize problems as they develop. This means the function may sometimes have “undiscovered water leaks” that do serious damage to the bottom line. In some cases, these issues may not show up until quarterly or year-end business reviews. In other cases, undiscovered risks may blindside the company with a major crisis.

Strategic procurement management software can prevent these issues altogether. Spend analytics and intelligence will reveal potential issues before they become problems. SpendHQ’s analytics module also has several third-party risk integrations that score and monitor suppliers’ cyber risk, financial risk, and ESG factors related to corporate social responsibility (CSR) risks.

In the case that an issue does arise, sophisticated project tracking and reporting is a must for an agile response. A performance management solution will enable leadership to rally their team, coordinate resources, manage progress, and report realized financial results in a single solution. Additionally, SpendHQ’s performance management solution integrates with several e-Sourcing platforms for easy and fast sourcing event execution.

Improved supplier relationships

The more you know about your vendors, the better your supplier relationships will be. Strategic procurement management software compiles supplier data and makes it easy to evaluate from multiple angles including:

At the organization, category, sub-category, or supplier level
As part of tail spend
Compliance rates
Supplier depth, fragmentation, and single-sourced spend
Contracts and contract opportunities

Using this kind of data, teams can more effectively choose vendors, negotiate the best possible contracts, and manage compliance.

Improved categorization

Looking at spend from a high-level, organizational view will only reveal so much. The real opportunities—maverick spend, supplier fragmentation, contracts—live in categories. Procurement software reveals them by automating the organization process.

However, it’s important to choose a solution that approaches categorization the right way. Many options use taxonomies like UNSPSC codes, GL codes, and business unit designations. But these are accounting and inventory systems, so they aren’t ideal for Procurement. They often form categories that are inefficient and misleading for sourcing purposes. By contrast, a sourcing taxonomy builds custom categories based on your purchasing behavior.

Learn more about taxonomies and spend categorization.

Increased compliance

Maverick spend, also known as non-compliance, is one of the leading causes of savings leakage. Without strategic procurement technology like spend intelligence, non-compliance is difficult to find. In many organizations non-compliance goes undetected until someone stumbles across it, or their forecasted savings don’t line up with realized spending reports.

Using a spend intelligence solution prevents this problem. The solution flags maverick spending automatically along with the category it originated from, historical trends, and impact on spending among other data points. Having all of this information tracked automatically takes most of the work out of compliance monitoring and makes it easier to enforce.

What to look for in procurement software

Despite the benefits of procurement management software, it’s important to pick the right option for your needs, maturity level, and stakeholder relationships. We’ve outlined a few important considerations to take into account.

Intuitive design

To maximize adoption, you should choose a procurement software solution that is easy to learn no matter who you are or what role you play. Otherwise, you won’t see the buy-in you need to make the solution worthwhile. Some factors that make a solution intuitive are:

Strong visual design
Customizable dashboards
Clear navigation and workflows
Advanced filtering and analytics

Integrations

Because the procurement tech ecosystem is so large, no one solution can do it all (or do it well). True value is amplified by combining best-of-breed solutions. This is why it’s essential to make sure you choose a provider that integrates seamlessly with other solutions.

SpendHQ, for example, integrates with more than 40 leading solutions, in order to give our customers the option to build an ecosystem that’s tailored to their workflows, needs, and goals.

Procurement expertise

In most cases, the best solution for your needs will come from someone who faced your problems and built a solution to solve them. SpendHQ is a great example: our spend intelligence module was built to help sourcing consultants maximize value and visibility. Our procurement performance management module was born out of Chief Product Officer Pierre Laprée’s need for a better way to manage and coordinate his procurement team and their projects.

Before investing in a piece of software, ask about the provider’s background and what inspired their solution. Not only will the answer tell you how well the solution will fit your day-to-day work, it will also tell you about the support you’ll receive during and after onboarding.

Regular data refreshes

A strategic procurement solution that doesn’t have a way to refresh data regularly and easily will not meet your needs long-term. This is such a crucial point that SpendHQ’s spend intelligence module has a dedicated AI model specifically built to ensure teams can refresh their data at least quarterly.