ProcureTech hosted its 2023 Predictions & Purpose: a webinar revealing the way ahead for digital procurement as provided by the 2022 ProcureTech100 pioneers.
Joined by an expert panel of leading corporates, they discussed the 70+ predictions from the pioneers.
“We’re looking for automated technology to help with negotiation sourcing… We need to do this better, faster and with fewer functions to free up time and space for other things requested of us in our environment.”
Mark Smith, (Procurement VP – Digital & Talent Supply, BP)
The webinar elicited engaging conversations between the panel, each sharing their own experiences, successes and struggles of using and looking for the right digital solutions.
The 2022 ProcureTech100’s predictions were separated into 5 different categories:
Commercial & Productivity closely looks at how companies will need to focus on new solutions and practices in 2023. We asked them:
- What is going to share digital procurement in 2023 and beyond, and why?
- What is going to be most important for your category over the next few years, and why?
No-PO-No-Pay becomes the most significant trend in purchasing in 2023
The Recession will shift executive focus towards control, cost savings and risk reduction. A full P2P process becomes the best way to achieve this. As a result, companies will demand that all purchases must have a PO authorized in advance with an electronic invoice that must be accepted before payments are made.
Procurement is going to continue front and center as quite a few companies have over supply
As supply chains work to find new sources from China, procurement is going to take a new role in helping identify new global production centers by being boots on the ground
The old school is going to get left behind as old cost savings methods (tax locations)/contracting/etc won’t work as well as digitalization and competition is heating up. Organizations who leverage, internal process improvements, digitalization and hard work will see the most success.
Tarek Alaruri, COO and Co-founder, Fairmarkit
Amidst recessionary conditions, there will be increasing pressure on procurement organizations to cut costs and where possible, and find digital innovations to turn cost centers into revenue generators.
The most important opportunity in the coming years is to connect procurement to key corporate operations and functions, including sustainability (sustainable procurement alongside sustainable investment), marketing (brand positioning that demonstrates social impact), and human resources (employee recruitment, retention and recognition).
Paul Polizzotto, Founder & CEO, Givewith
Indirect spend will become the focus of C-suite efforts to improve the bottom line as they continue to fight inflationary pressures.
Indirect has been historically overlooked as a place to look for savings as most organizations don’t have a very good handle on these which account for 20-40% of a company’s spend – at the average Global 2000 company this amounts to billions of dollars of cost that dramatically impacts net income.
In 2023 as the economy moves towards a recession and companies face rising costs and lower revenue, we will see businesses adopt autonomous negotiation to turn data into savings and therefore unleash new value.
2023 will be the year when companies realize the power of AI and Chat to their advantage.
As we are creating a category on its own – Autonomous Negotiation – it will be important that we continue to educate the world about its advantages and how companies can create immediate value.
Martin Rand, CEO and Co-founder, Pactum
In 2023, we are going to see supplier default rates increase.
Post-pandemic effects of inflation, recessionary pressure, increased funding costs, harder to raise capital, and operational degradation are all factors that will squeeze private suppliers’ ability to perform in the coming year. In 2022, Chapter 11 increased 38% and of companies that declared bankruptcies, 60% were private. Roughly 70-75% of Fortune 1000 companies’ suppliers are private companies, meaning that if private suppliers feel the heat of 2023’s economic conditions, the world’s largest corporations will feel it too.
James Gellert, Chairman & CEO, RapidRatings
Strategic sourcing and spend under management will accelerate as supply chain issues become less volatile—so we expect to see a return to traditional sourcing strategies and heightened interest in moving further into tail spend vendors for cost savings
Tail spend solutions, which have been focused on LCCS outsourcing, are already shifting to a more tech-focused approach with consumption-based commercial models. With the advancement of composable procurement, innovators are realizing tail spend as a significant value by tapping into specialized tail solutions that operate in conjunction with existing systems.—making tail spend management a board-level priority.
David Bush, CEO, Simfoni
Procurement teams will require a sophisticated data set to effectively manage supplier contracts
The macroeconomic environment has put financial pressure on procurement teams to cut cost and spend, and consolidate suppliers where possible. This is impossible to do without the right data that’s not only visible to consume, but also easily actionable. Companies cannot afford to throw heads at the problem due to hiring constraints, so they will turn to technology to solve for it.
Justin Hiatt, Chief Growth Officer, Terzo
Growth companies will need to update processes and tools to be able to optimize for profitable growth
Given the current macroeconomic climate of economic uncertainty, looming recession and continued supply chain challenges, tech leaders across the board will need to prioritize only the most revenue-generating initiatives in 2023 to stay afloat. Businesses will also need to develop strategies to reduce costs while maintaining or increasing productivity. As with any period of economic challenges, the market will reward companies that grow efficiently. Some companies will learn to be lean and others will struggle. I also expect there to be increased M&A activity in the year ahead, as companies look for new ways to quickly expand service offerings and revenue streams.
In 2023, there will be a continued shift to increased pricing transparency in B2B software procurement – similar to the B2C market. This will empower buyers to more accurately calculate ROI and value attribution. The ongoing emergence of SaaS procurement tools will further streamline the buying process, putting the buyers back in the driver’s seat.
Clear and transparent B2B SaaS pricing is critical for both buyers but also for vendors, as relatively few software suppliers (26%) can gather product usage data “very well” and only 32% indicate that the price of their software is “totally aligned” with the value delivered to customers (according to a report by Renevera).
Ritish Reddy, Co-founder, Zluri
Look out for the full predictions from the 2022 ProcureTech100 pioneers!
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