Analytics—Bedrock of Procurement Outsourcing—is Driving Sustained Double-digit Industry Segment Growth, According to Everest Group | Press Release
Analytics, artificial intelligence and robotic process automation see strong adoption as CPOs demand digital-first procurement ecosystem.
The role of chief procurement officer (CPO) has expanded beyond driving down the overall spend and operating costs to delivering greater strategic value to the enterprise, leveraging both technological solutions and supplier-enabled innovation, according to new research from Everest Group.
This imperative is further reflected in the demand for a digital-first procurement ecosystem, which centers on the power of digital tools such as analytics, robotic process automation (RPA), artificial intelligence (AI), the Internet of Things (IoT) and blockchain.
Everest Group reports that analytics, in particular, has become the bedrock of procurement outsourcing.
“Analytics is changing the way that sourcing and procurement happens,” said Rajesh Ranjan, partner, Business Process Services, at Everest Group. “Analytics is now at the heart of procurement decisions, particularly with respect to spend management, vendor management and even procurement operations. We’re also beginning to see integration of IoT and AI with analytics. For example, AI is being used to enable faster contract analysis, fraud and duplicate payment prevention and conversational support. IoT is being used in a variety of ways as well, such as automating order placement and improving traceability in the supply chain. A few visionary enterprises see this as a strategic area for internal development, but the majority of enterprises are looking to service providers to deploy these solutions.”
As a result, the global multi-process PO market is expected to witness a growth of 11-12 percent in the next three years to reach US$3.6 billion in size by 2020. Technologies such as AI and analytics will witness increasing adoption over the next two to three years. RPA also will witness strong adoption, especially in the procure-to-pay (P2P) process. IoT and blockchain are in the early stages of adoption.
These results and other findings are explored in a recently published Everest Group report: “Procurement Outsourcing (PO) Annual Report 2018: Driving Strategic Value from Procurement.” The report provides comprehensive coverage of the global PO market including detailed analysis of market size and growth, buyer adoption trends, key emerging themes, solution characteristics and service provider landscape.
Other key findings:
- North America continues to lead the PO global market. Increased scope of deals in Rest of Europe and United Kingdom led to high growth in these regions. APAC grew slightly above market rate while Latin America grew at a very high rate.
- Two sectors—manufacturing as well as consumer product goods (CPG) & retail—the leading adopters of PO, witnessed flat growth in 2017. In contrast, emerging buyer segments—including financial services, healthcare and pharmaceuticals, and media—were the high growth drivers for the last two years.
- The degree of onshoring in PO contracts is increasing, as buyers are expanding the scope of work to include more sourcing processes that require significant onshore presence.
***Download a complimentary report abstract here.***