Traditionally, procurement was considered a cost center but, of late, procurement has become a strategic business function within enterprises. As a result, the role of a Chief Procurement Officer (CPO) is evolving from reducing costs to maintaining supply chain resilience in addition to deriving higher value from their sourcing and procurement function. The priority is not new; however, varied supply chain disruptions are bringing it to the forefront. Further, companies are engaging domain experts and investing in AI, automation, and analytics to generate higher value from the procurement function. They are increasingly leveraging service provider support to parallelly transform people, processes, and technology. As a result, procurement business process transformation deals have grown by over 15% between March 2022 and March 2023.
Both demand- and supply-side trends are covered in Avasant’s Procurement Business Process Transformation 2023 Market Insights™ and Procurement Business Process Transformation 2023 RadarView™, respectively. These reports present a comprehensive study of procurement business process transformation service providers and closely examine the market leaders, innovators, disruptors, and challengers. They also provide a view into key market trends and developments impacting the procurement services space.
We evaluated service providers across three dimensions: practice maturity, domain ecosystem, and investments and innovation. Of the 20 providers, we recognized 15 that brought the most value to the market during the past 12 months.
The report recognizes service providers in four categories:
- Leaders: Accenture, Genpact, GEP, IBM, and Infosys
- Innovators: Capgemini, HCLTech, TCS, and Wipro
- Disruptors: Tech Mahindra and WNS
- Challengers: Capita, Corbus, Dragon Sourcing, and LogicSource
Figure 1 below from the full report illustrates these categories:
“Procurement function is no longer a cost center; it has evolved as a strategic value lever for enterprises,” said Avasant Partner Shobhit Patnaik. “For true value addition, CPOs are focusing on supply chain resilience, digital adoption, domain expertise, and ESG initiatives.”
The reports provide several findings, including the following:
- Over 67% of CPOs report strategic sourcing and category management as one of their top three concerns. As a result, enterprises are focusing on strategic process transformation by hiring dedicated category managers with domain expertise and leveraging market intelligence tools.
- Over 30% of CPOs report supply chain risk management as one of their top three concerns. To mitigate risks, organizations are diversifying their supply chains, relying on local vendors, and investing in third-party, supplier, and cyber risk management.
- Digital transformation of the procurement business function is growing. Nearly 75% of procurement engagements involve the adoption of automation and analytics, and nearly 40% of engagements involve the adoption of AI.
- Enterprises are focusing on defining their ESG road map and moving toward a sustainable supply chain by investing in sustainable raw materials, supplier diversity, monitoring scope 3 carbon emissions, and dedicated ESG reporting.
- Service provider procurement business process transformation revenue grew by over 15%, and clients grew by over 7% between March 2022 and March 2023. The growth is primarily driven by midsize (USD 50M–500M revenue) enterprises.
“To meet CPO priorities, enterprises need to digitalize processes and improve both domain and digital skills of sourcing professionals,” said Ritika Nijhawan, senior research analyst with Avasant. “Service providers with dedicated category managers, digital tools, regional expertise, and ESG services have an edge in supporting CPO priorities.”
The Procurement Business Process Transformation 2023 RadarView features detailed profiles of 15 service providers, along with their solutions, offerings, and experience in assisting enterprises in their procurement services.
This Research Byte is a brief overview of the Procurement Business Process Transformation 2023 Market Insights™ and Procurement Business Process Transformation 2023 RadarView™ (click for pricing).