Procurement transformation 2025: Why invest in procuretech and how to make the case – SAP

In readiness for our Q1 2025 theme of Procurement Transformation, which will include how to even start your digital journey, how to make the case for it, how to shape your digital roadmap and how to survive it, we have received input from some solution providers on their own customers’ journeys.

Jeff Collier, Chief Revenue Officer, SAP Intelligent Spend and Business Network, shares what their customers are looking for from their digital procurement investment.

What customers prioritize when investing in procuretech

SAP customers prioritize specific ROI metrics and key performance indicators (KPIs) when selecting procurement technology, like cost savings, improved supplier collaboration and data-driven decision making. For instance, many of our customers have achieved faster turnaround times and more on-time deliveries. Metrics such as reducing supplier numbers, increasing digital contract usage and enhancing sourcing efficiency are common priorities. Advanced technologies like AI and generative AI play a crucial role in automating tasks, reducing errors and improving productivity. By integrating these technologies, organizations unlock efficiencies, enhance decision making and create more agile, connected supply chains, ultimately boosting their ROI.

How customers justify procuretech investment to stakeholders

When procurement teams talk to stakeholders about investing in technology, they often highlight how it can save money and reduce risks. In a world where disruptions are common, businesses need tools to keep their inventory steady and ensure they can adapt quickly to changes.

To justify spending on digital procurement solutions, customers focus on metrics that align with stakeholder priorities. KPIs like risk reduction, shorter procurement cycle times, savings on supplier contracts and improved on-time delivery rates help show why technology investments are necessary. Sharing stories and case studies from other companies can also be very convincing, as they illustrate how the solution can cut costs. These examples tend to resonate well with stakeholders who are mainly concerned with long-term stability.

For instance, a case study from a global manufacturing company revealed that after implementing a digital procurement solution, they reduced their procurement cycle time by 30% and achieved a 15% savings on supplier contracts. This not only improved their bottom line but also enhanced their ability to respond to market changes. Such stories provide concrete evidence that can reassure stakeholders about the value of procurement technology investments.

Their key challenges in transitioning to procuretech

When companies transition to procurement technology, they often face challenges related to change management. If they don’t get buy-in from stakeholders throughout the organization, they might experience lower adoption rates, slower implementation and reduced return on investment. Without widespread support, there can be resistance to new workflows, misalignment on priorities and underutilization of crucial features like AI or generative AI.

To tackle these challenges, it’s crucial to involve all teams early in the process, explaining why the technology is important and providing thorough training to address specific pain points. Partnering with a comprehensive provider like SAP can help ease many common issues procurement teams face.

For example, one of our European customers in the chemicals industry faced challenges with the adoption of e-sourcing processes due to the tool not being mandatory. By engaging employees in sustainability efforts and focusing on digital transformation, the company was able to overcome these hurdles and excel in today’s business landscape. Similarly, one of our customers, a large American food and beverage company, improved visibility and efficiency in managing external workers by streamlining processes across multiple ERP systems and procurement functions. These examples highlight the importance of early involvement and comprehensive support in overcoming transition challenges.

Industry trends and regulatory shifts driving urgency for procuretech investment in 2025

AI-driven procurement strategies, evolving requirements and changing demographics are pushing procurement teams to rethink their approach as we head into 2025. This industry transformation is prompting organizations to focus on nurturing existing talent, upskilling their workforce and attracting bright young professionals to the field.

The stage is set for junior procurement leaders who proved their capabilities during the challenging Covid years. We are looking to these individuals — especially those who can demonstrate tangible achievements in sustainability, AI integration or risk management — to step up. We anticipate a year marked by new names, fresh perspectives and a reshaped procurement industry in 2025.

For instance, one of our large European customers in the consumer products space has been at the forefront of integrating AI into its procurement processes. By leveraging SAP Ariba solutions, the company has enhanced its sustainability efforts and improved risk management. Highlighting this shift, one of its procurement leaders said: “The integration of AI has not only streamlined our processes but also empowered our team to make more informed decisions, aligning with our sustainability goals.” This example underscores the urgency and benefits of embracing procurement tech in response to industry trends and regulatory shifts.

Many thanks to SAP Intelligent Spend and Business Network for sharing this insight with us.

Members can read our in-depth analysis of its solution here and here.

As always, reach out to discover how Spend Matters can help with your procuretech ambitions for next year.

Consult TechMatch – our tech selection tool that helps procurement and finance technology buyers quickly explore the market and identify best-fit solutions.