New data projects that the US procurement software market is headed for a strong decade, nearing $5 billion by 2032.

The US procurement software market is exhibiting strong signs of growth driven by both technological innovation and increasingly common disruptions affecting the supply chain. New data projects that the US’ procurement software market will grow from around $2.24 billion last year to almost five ($4.97) billion by next decade. This represents a CAGR of 9.26% between 2024 to 2032. 

Software solutions to procurement’s thorniest problems 

Procurement software solutions are attracting investment as they aim to solve some of the procurement sector’s most pressing issues. Ten years ago, procurement was a largely reactive, tactical function — filling purchase orders in response to requests from other business departments. Today, in response to increasingly common disruptions to global supply chains, procurement teams are being forced to take a more strategic approach, and leveraging digital solutions is a key part of the function’s transformation.  

Most procurement software solutions automate and centralise several parts of the procurement process. Traditionally menial tasks that took place within siloed departments. For example, processing purchase orders, invoices, and supplier management and sourcing were all typically handled manually. This made them time consuming, expensive, inflexible, and prone to error. All are strong contenders for automation and consolidation within a single unified platform.

Organisations can increase the effectiveness, precision, and openness of their procurement processes by combining these tasks into a single platform. This, according to new data by Research and Markets, has wide-ranging applications in many different industries. Essentially, better digital procurement solutions give businesses a thorough understanding of a multitude of factors affecting their source-to-pay chain. This ranges from vendor performance and availability, to pricing, allowing them to manage their supplier relationships more effectively.

Investment signals sector-wide growth 

The more successful procurement software companies are already attracting significant investment. In October, AI-powered procurement orchestration platform Zip was the recipient of a $190 million funding round. The cash injection represents the largest single round of funding for a procurement technology company in over 20 years. It brings Zip’s valuation to $2.2 billion, a significant increase from the company’s $1.5 billion valuation in 2023. 

Procurement is broken,” said Rujul Zaparde, Co-founder and CEO of Zip in a recent press release. “Companies are wasting billions of dollars and countless hours navigating byzantine approval processes, dealing with security risks, and manually entering data. Zip has already proven that we can fix that, saving our customers billions of dollars and thousands of hours of time — and our new round of funding will allow us to continue to revolutionise business spending.”

Speaking with CPO Strategy at DWP 2024 in Amsterdam, Zaparde claimed that Zip has helped its customers save around $4.5bn of spend over the last two years. “One customer of ours, Snowflake, achieved over $300m in savings alone,” he added. “We’ve seen tangible benefits already. The way procurement is evolving isn’t a hypothetical thing – it’s really happening.”

AI, disruption, and digital transformation define the decade ahead 

There are several key factors driving the procurement software market’s growth. Among them are: the growing use of technology, the COVID-19 pandemic’s effects, a focus on cost optimisation, growing sustainability concerns, the rapidly growing e-commerce industry, the integration of AI and machine learning (ML), and supply chain disruptions. 

Research and Markets researchers note that many organisations are responding by pursuing digital transformation in procurement. These businesses aim to not only improve decision-making, but also decrease manual labor, and increase transparency. This, if done correctly, can lead to increased productivity and responsiveness. Making this change, they claim, is essential to being competitive in an ever-more-complex environment that moves faster than ever before.

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