Best Procurement Software Of 2024

By Amrita Chakraborty, Content Writer and Market Analyst at SelectHub

Everyone knows that time is money. An afternoon spent on tedious, time-wasting tasks is equivalent to throwing cash out of the window. Procurement software is a valuable time-saving solution meant to keep resource waste at a minimum. 

The procurement process is full of clerical duties that can keep valuable employee time from being adequately maximized. A procurement system is critical for efficient, consistent support of the B2B purchasing value chain — especially considering the rise of digitalization.

At a minimum, procurement management software is a time-saver. Each situation calls for its own solution, however, so take some time to consider what you are looking to accomplish. By the time you have finished this guide, you should have enough knowledge to begin pursuing your procurement system!

Executive Summary

• Boost productivity and move away from time-consuming duties with software.
• Procurement software boosts organization and speeds up direct and indirect spend tasks.
• Procure systems provide helpful core features and more advanced features for complex operations.
• Asking vendors questions will help you decide on a final product. Check out some examples in this guide.

What Is Procurement Software?

In a nutshell, procurement management software handles supply chain management tasks related to the central management of purchasing, sourcing, vendors and suppliers, invoicing, maintaining optimal inventory amounts, and more.

Like many supply chain focused solutions, the features present in these platforms can vary. Software encompassing all processes is commonly referred to as “procure-to-pay” solutions.

Improving communication is another key piece of procurement systems. Running smooth and optimized processes requires clear lines of communication between stakeholders like vendors, suppliers, procurement officers and more. They also leverage automation to reduce time-intensive tasks that can bog down valuable employees.

Finding the best value for materials, improving purchasing cycles and ensuring that purchase orders are optimized for increased revenue are all within the capabilities of a procure system.

In short, procurement solutions:

• Automate and streamline purchase processes, including purchase order creation and distribution.
• Ensure invoices and orders match up to avoid costly errors down the line.
• Provide valuable visibility into all purchases while maximizing spend management.
• Optimize approval workflows with automation and mobile approval acceptance.
• Document and verify payments.
• Connect with vendors, suppliers and more while managing communications between partners.

Procurement vs. Sourcing

These terms often see interchangeable use in conversation, but there are some key differences between the two to keep in mind:

• Procurement: Procurement is an overarching set of processes that is the lifeblood of supply chains worldwide. Before you manufacture products, you have to procure them — sounds simple enough. Procurement, in a nutshell, involves placing, confirming, paying and following up on product orders.
• Sourcing: Sourcing, while part of the procurement process as a whole, happens before any of the above processes begin. Before you can procure items, you need to identify a source to purchase them from. Think of sourcing as the entry point into the rest of your procurement processes.

It’s worth noting that both of these vital tasks can be handled separately or together. Similarly, your procurement teams can take over sourcing, and your sourcing teams can procure — it’s really up to you and your business. However, it’s generally accepted that separating them helps reduce errors and simplifies each.

Deployment Methods

Most software today falls within two camps — cloud-based or on-premise solutions. The market has seen a massive influx of cloud-based procure systems due to their many advantages. However, on-premise platforms do have a few advantages that help keep them relevant. Here is a quick breakdown of some pros and cons of these two deployment strategies:

Cloud-based Advantages

Like most supply-chain-based industries, procurement teams have been moving their platforms to the cloud in large numbers, and here’s why:

• Lower Costs: Cloud-based software usually offers SaaS subscription models for pricing instead of the large, upfront investment required for an on-premise procure system. Low monthly payments also open the door for smaller businesses that cannot drop large amounts on integrating software.
• Increased Collaboration: Software hosted in the cloud opens up communication between departments regardless of geographical location. Mobile apps ensure that parties can give important approvals from anywhere and users can view and manipulate data on the go without being chained to a desk.
• Flexible and Scalable Platforms: While customizing the nuts and bolts of a cloud-based platform isn’t a readily available feature, businesses can integrate their procurement systems with other tools to optimize their workflows. As your business grows, you can adjust database and transaction volume changes to suit the needs of your business as it expands its market reach.
• Better Performance: Cloud-based platforms leverage the resources of their hosting providers to handle spikes in traffic. Instead of manually upgrading an in-house solution for busy times of the year, you can increase your usage as needed and scale down afterward.
• Optimized Disaster Recovery: Leveraging third-party sources to help manage your procurement and sourcing tasks can save you huge amounts of time and money in the event of a disaster or catastrophic failure of equipment. Most vendors offer backup options. On-premise systems can also back up important information, but only if your backup devices are in the same physical location.

Disadvantages

No system is perfect, and as beneficial as cloud-based ones are they come with their own sets of pitfalls:

• Smaller subscription-based payments make these systems accessible, but these charges increase over time. If you’re expecting to use a system for a long time, be sure that you aren’t losing money in the end.
• Since these procurement platforms are hosted by vendors through the web, you’ll need an active internet connection to work with them. Power outages and service interruptions can throw a wrench into your processes and slow down your transactions.
• Customizing and scaling these solutions can lead to unexpected costs with your vendor. Since the vendor runs the system for you, you must go through them for any additions or changes your business requires.
• It’s easy to see why the cloud and procurement go hand in hand. However, those looking to exert total control over their systems should look to an on-premise platform.

On-premise Advantages

Even though on-premise deployments are falling in popularity, they have some advantages worth mentioning:

• Customization: Nothing beats an in-house platform when it comes to fine-tuning software from top to bottom. Since everything is contained within the actual physical business, the solution can be built to meet the specific requirements of a business.
• Security: Housing your solutions within your business ensures that they are safe from outside attacks. Walking across the building and physically looking at your network is comforting in the world of software security.
• Internet Connectivity: Internal systems don’t require the internet to function; while you may need it to send and receive data from external sources, you can still perform in-house functions without a strong connection.

Disadvantages

• On-premise procurement software is costly for several reasons. You’ll need to physically implement hardware and software to run the solution, on top of hiring IT professionals to keep things running and to solve any errors that arise.
• Cloud-based systems benefit from rapid implementation. On-premise solutions take much longer to get up and running due to their physical presence at your operation. Expect much longer timelines to get your procurement tools ready to go with this type of deployment strategy.
• Operating an on-premise system also requires some in-depth knowledge of procurement processes and how they work; this includes your external partners. Cloud-based platforms benefit from the vendor’s experience.

It’s worth mentioning that cloud-based systems aren’t exactly wide open to attack. Providers are always looking for ways to update and patch their security networks to protect their users’ solutions.

Ultimately, your company’s unique requirements should guide your choice of deployment strategy.

Primary Benefits

Now that you have a basic idea of procurement software, let’s dive in a little deeper.

Discussed below are some of the primary benefits of procurement software:

Centralize Data

Procurement systems built as a single source of truth ensure that there are no data discrepancies across all processes and workflows. Instead of piecemeal modules, a single source of truth takes all disparate procurement and sourcing information and disseminates them across the platform.

Improve Inventory Control

Up-to-date inventory information and demand preparation are critical to smooth processes. Integrating a procurement tool frees you from pen-and-paper inventory organization, automates reordering and provides real-time stock level notifications.

Increase Spend Visibility

Procurement systems usually come stocked with analytical tools that users can leverage to get valuable insight into their spending. These features can help highlight places where spend is outside of established protocols to mitigate risk. The data gleaned from spend analysis can show users how to cut costs and improve their supplier relationships.

Cut Costs

Digitizing processes comes with numerous advantages, especially when it comes to saving money. Secure backups of important documents help avert potential conflicts with vendors and suppliers, while vital data is visible through electronic organization.

Standardize Workflows

Standardization throughout procurement processes lets users build flexibility and control into their workflows to ensure their tasks flow efficiently, maintain accuracy and account for special transactions that require unique handling.

Enhance Supplier Management

Strong supplier relationships are vital to a thriving procurement operation. These solutions give you the tools to communicate and measure critical performance KPIs.

Implementation Goals

Before fully integrating a procurement tool, you need to identify the essential goals you wish to accomplish. The success of a procurement system depends on what critical needs it fulfills for its enterprise.

Here are some common goals that procurement management software should meet to streamline your purchasing tasks.

Basic Features & Functionality

While procurement software comes in many different forms, you can expect many of these core features to be present. Many providers offer all of the following functionality, albeit at varying levels of maturity and proficiency, while some specialize in offering a subset.

Even when companies do provide a broad range of functionality, it is wise to investigate whether they are fully integrated at the code level or were consolidated under one brand and interface through the acquisition of point solutions.

Advanced Features & Functionality

The core features of procurement software will begin as your one stop shop for improving procurement practices. As you become familiar with your software suite, you will want to keep in mind some more advanced features that can enhance other aspects of the process.

Below are some extra pieces of functionality to keep in mind, though you should ask procurement software companies about availability in their products.

Current & Upcoming Trends

With 2023 just around the corner, it’s time to take a peek into some of procurement software’s recent and upcoming trends.

Increase in Cloud-based System Adoptions

Procurement thrives off of real-time data, and cloud-based solutions give users robust reporting and analytics capabilities to stay on top of demand without holding onto too much stock. As we said earlier, the low cost of entry associated with SaaS platforms is also driving interest in cloud-based services and giving smaller businesses a chance to leverage the power of a procurement system.

The global procurement software market was valued at $7 billion in 2021. It’s expected to reach $14.9 billion by 2029, growing at a CAGR of 9.86%.

With the market value expected to double by 2029, here are some of the trends you can expect to see grow with it.

An Increasingly Volatile Market

Online shopping is in even more demand than expected, and customer demand can change in an instant. Procurement software that can scale up and down as needed to meet the nebulous needs of the market is more important now than ever.

Environmentally-minded Procurement

As more businesses try to become more carbon neutral, procurement software providers are jumping into the ring with ways to push supply chains toward being green. These systems help procurement teams work with suppliers to find the most environmentally conscious procurement strategies while avoiding anything that is sourced unethically.

Procurement is one of the best sections of the supply chain to start making these kinds of changes due to its close proximity to the materials required to keep the supply chain running.

A Focus on Supplier Relationships

Maintaining healthy relationships with your suppliers helps keep the supply chain agile and able to absorb disruptions without grinding completely to a halt.

Improving communication with your suppliers can help you avoid issues by ensuring you can contact them at a moment’s notice to implement changes or adapt to disaster.

Procurement Processes as Risk Mitigation Support

Digitization is sweeping the globe and letting procurement officers empower buyers with the ability to source and purchase on their own. Procurement software gives users powerful purchasing templates that can cut down on the need for time-intensive oversight. Visibility into sourcing operations is also becoming a key factor in eliminating hidden or unnoticed supply chain risks.

Software Comparison Strategy

When you begin your search for a procurement system, there are a few things to keep in mind when measuring up the competition:

• Integration capabilities with legacy systems
• Specific modules or end-to-end features
• Analytical and reporting capabilities
• Customizability
• Mobile apps and accessibility
• Vendor support
• Approvals and authorizations
• Supplier identification and communication
• Invoicing
• Negotiation tools

Procurement tools come in a variety of flavors, so be sure to construct a list of make-or-break features that your final solution has to offer. Take a look at our procurement requirements template if you need some help getting started on a list of must-have features.

Some platforms handle specific portions of the procurement cycle, like procure-to-pay, spend management and purchase order software. You can also go with an end-to-end procurement system to ensure you get all the features you need to meet your requirements.

Pricing Considerations

Depending on your deployment strategy, the cost of your procurement tools will vary. Most cloud-based systems vendors charge by the user on a per-month basis. The overall costs of your system will also include any additional services your vendor provides on top of the access levels your users require. Adding modules or scaling up also comes with extra costs.

Like we discussed earlier, purchasing an entire system for an on-premise deployment will cost significantly more upfront, but could save you more down the line depending on how long you plan to use a system.

Questions To Ask Yourself

You may be tempted to dive into the market and line up a short-list of vendors to solve your inefficiencies, but take a minute to slow down and assess your business. Asking some of these simple questions can help start you off with a strong foundation of what you need in a new procure system:

• Do I need a full procure-to-pay solution or specific modules?
• What do my procurement and sourcing teams need?
• What does the new solution or module need to accomplish?
• Is now the best time for a new integration?
• What are the features required?

Questions To Ask Vendors

As you finish narrowing down specific vendors and software packages, you may have a few lingering concerns about making the right choice. Before making a final decision, come up with questions you can ask vendors related to any remaining confusion you have.

Here are a few examples to you get you started:

About the Software

• How will this software integrate with your complete supply chain?
• Does it help with sourcing as well as procurement?
• How does the solution scale with my business?
• How much does the solution cost?
• How is the software deployed?

About the Vendor

• How does support work, and are there self-learning tools?
• How long does implementation take?
• Do you offer training and support options?
• Who are your competitors?
• Do they offer paid or free integrations?

Final Thoughts

Efficient procurement and sourcing are vital to a healthy supply chain. Take your time when considering new procurement software, line up your requirements, talk to your teams and check out our procurement comparison guide for a more in-depth look at the software market. We created this guide hoping to give users a solid foundation for choosing their perfect procure system, good luck and happy hunting!

Product Comparisons

• Coupa vs. Workday Spend Management
• Oracle Services Procurement vs. Coupa
• Ariba vs. Oracle Services Procurement
• Basware vs. Workday Spend Management
• Ariba vs. Basware

Additional Resources

• Sourcing vs Procurement
• What is Digital Procurement?
• Top eSourcing Software
• Best eProcurement Software