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By: IBISWorld Analyst, Torsten Edstam
Strategic Questions for Choosing the Right Supplier
The procurement software market has grown in recent years due to its popularity among procurement professionals. A large number of buying markets use the software – ranging from manufacturers to government agencies, healthcare providers and financial services firms – to automate and manage all stages of the purchasing process. As such, market providers are expected to generate over $6.5 billion in total revenue in 2017 according to IBISWorld estimates. Most procurement software suites are composed of several modules that are combined into a customized package to meet the specific needs of the buyer’s operations. Typical features include a variety of tools for automating different aspects of the purchasing process, such as drafting requests, selecting vendors, managing projects and contracts, invoicing, tracking payments, conducting spend analysis and verifying receipts.
Although procurement software has been rising in popularity because of its ability to increase operational efficiency, the number of providers has been falling during the past three years due to increased merger and acquisition activity. Consequently, the procurement software market has become more concentrated as the largest providers have acquired smaller competitors. IBISWorld estimates that there are currently about 300 providers operating in the procurement software market in the United States, including software giants SAP, IBM and Oracle, as well as smaller, more specialized providers, such as BravoSolution, GT Nexus and Zycus. Because a few companies control a significant share of the market, buyers often require assistance negotiating for a procurement software package that can meet their needs at a reasonable price. Below are key questions that IBISWorld recommends buyers ask during the negotiation process.