The procurement analytics market is expected to increase at a compound annual growth rate (CAGR) of 25.3 percent from USD 2.6 billion in 2021 to USD 8.0 billion by 2028. The use of procurement analytics technologies and services is projected to be driven by a number of factors, including increased expenditure on marketing and advertising by businesses, a changing landscape of consumer intelligence to drive the market, and the expansion of customer channels.
The influence of COVID-19 on the worldwide procurement analytics market
COVID–19 has altered the nature of business processes over the world. Though the COVID–19 outbreak exposed flaws in business models across verticals, it also provided various chances for businesses to digitalize and expand beyond geographies as use and integration of technologies such as cloud, AI, analytics, IoT, and blockchain grew throughout the lockdown time. During the first and second quarters of 2020, the retail and manufacturing sectors experienced a severe drop in company performance. However, as vaccines become more widely available and the pandemic is better controlled, these industries are projected to see increased investment over the forecast period as procurement analytics solutions gain traction across various business functions.
Increased emphasis on improving procurement channels’ operating efficiencies is a driving force.
The procurement analytics market is driven by the growing requirement to predict losses and risks, enhance productivity, reduce operational costs, and achieve consistent business growth. Procurement analytics provides firms with data-driven knowledge that helps them lower total procurement costs and improve service levels. Procurement processes such as planning, design, production, delivery, and service have all improved as a result of the increased use of analytics tools. As a result, business growth has been hindered, resulting in a rise in demand for procurement analytics solutions. With capabilities such as plan compliance analytics, spend analysis, inventory optimization, vendor management, contract management, route and network optimization methods, and price optimization, the solutions help businesses to make well-informed decisions. The capabilities assist businesses in identifying relevant patterns in customer purchasing habits, company spending habits, and inventory management, which may then be integrated with optimization models to enable dynamic pricing over time.
Restraint: Enterprises are becoming increasingly concerned about data security.
Enterprises that use procurement analytics tools confront concerns about security and privacy. They hold sensitive information that must be safeguarded to avoid data breaches and theft, which could jeopardise an organization’s brand and revenue. The fact that analytical providers have access to such sensitive data has caused organisations to be concerned that their information could be leaked over the internet and accessed by unauthorised users; for example, the Transportation Management System (TMS) requires a multi-tenant architecture, in which a single version of the software runs on a server shared by multiple customers. Subscribers to an enterprise may be able to examine the data of competitors in this scenario. These data security risks involving unauthorised users would jeopardise the enterprise’s data security as well as its competitive business position. As a result, worries about security and privacy are growing among businesses. As a result, the procurement analytics market’s growth may be limited throughout the projection period.
Opportunity: The introduction of machine learning and artificial intelligence (AI) into the procurement process.
Organizations’ ability to acquire information, analyse it, and make informed decisions with minimal human interaction has improved because to machine learning and artificial intelligence (AI). These technologies are making their way into procurement platforms and technology to help firms improve their capabilities and offerings. AI technologies are being used by businesses to help them make faster procurement decisions. Changes in Governance, Risk Management, and Compliance (GRC) are analysed and suggested by the AI system. As a result, it aids in the monitoring and collection of data of sufficient quality to meet regulatory requirements. By analysing data acquired from different sources, providers have been able to better comprehend customers’ perceptions and organisation expenditure habits thanks to the advent and rising deployment of ML and AI. By studying customers’ purchase behaviours, businesses have moved their attention to providing a unified customer experience across channels and provide real-time offers. AI technologies assist businesses and suppliers by detecting supply chain disruptions, detecting fraud, and recognising and flagging supplier compliance issues, allowing for smarter procurement.
Lack of analytical knowledge is a problem.
Enterprises have been using procurement analytics solutions to improve their procurement portfolio since the introduction of analytical capabilities into organisational procurement platforms. Employees are usually in charge of the platforms when it comes to extracting insights from the data. To acquire precise insights, rapidly rising big data across industrial verticals must be correctly modelled, merged, wrangled, and then analysed. Data scientists need specific skills to recognise and uncover trends that help marketers make informed decisions, from data ingestion to data reporting. However, one of the key issues that diverse businesses confront is a lack of knowledge in recognising the relevance of procurement analytics. According to a Teradata report, in 2017, 48 percent of businesses had a big data analytics skills gap. In the coming years, roles such as information leader, chief data officer, data scientist, and information architect are projected to see increased demand. Due to budget constraints and a lack of awareness of the benefits of procurement analytics systems, SMEs have faced increased losses.
During the projection period, North America will account for the greatest market share.
In the procurement analytics market, North America is predicted to hold the greatest share. The rising technological improvements in the region are key factors encouraging the growth of the procurement analytics market in North America. Market growth is projected to be aided by the growing number of procurement analytics players across regions.