Procurement

What is the best procurement software in 2021? New Procurement Leaders research trends best-of-breed

The procurement technology market is evolving rapidly, it is hard to keep up. According to Procurement Leaders, there are more than 200 verified software solutions available to aid procurement’s ambitions towards digital transformation. There are more than 40 product offerings in the risk and sustainability area alone!

It wasn't long ago when the trend was for procurement organizations choosing one software solution for all their needs. Recent research from Procurement Leaders shows this trend for a one-size-fits all solution subsiding. 48% of leadership teams with “single-suite” model aspired towards a “best-of-breed” approach.

Lego Rotate by Sheepfilms

A full-suite solution illustrated with lego bricks. One software solution covers end-to-end needs of procurement. 

This all seems to point to the fact that full-suite systems are not delivering the innovation the market is looking for. An increasing number of procurement executives will agree ERP all-in-one systems have never easily fulfilled the complex needs of procurement. ERP-lead solutions have also suffered from long-drawn-out implementations, customizations and erratic updates and fixes. Hence the growth of new solutions, or specialist suites for source-to-contract (S2C) or procure-to-pay (P2P).

So, what is best-of-breed software?

What exactly is this growing trend for best-of-breed procurement software?

Here is one definition:

“The best system in its referenced niche or category. Although it

performs specialized functions better than an integrated system,

this type of system is limited by its specialty area.” 

                                                                                         Technopedia

Specialists in their niche or category have an in-depth understanding of their area of expertise and have developed solutions that do one thing well. Because the scope of solution is smaller, implementation is often quicker and nimbler. Their agility allows for upgrades and improvements to be actioned swiftly. Best-of-breed solutions can also have more attractive and flexible cost structures. Risk is reduced when a proof-of-concept (POC) is offered. Organizations are increasingly implementing best-of-breed systems in specific functional areas in procurement and linking them together.  Best-of-breed systems are now being designed with integration in mind, allowing data and information to pass from one system to another.

Chris Gannon - Giphy

A best-of-breed set of solutions illustrated with lego bricks. Different software solutions combine together for to fit the needs of procurement.

What is the best approach to sourcing a technology solution in 2021?

There is no top 10 list to refer to for procurement software, or a clear choice between full-suite vs. best-of-breed. Classifying like-for-like offerings is difficult with so many solutions available. A “product” can cover one or more functions in a limited category e.g., managing sustainability or invoice processing. Some product portfolios cover any number of operational and support functions in the source-to-pay process, spend analysis and contract lifecycle management. 

Finding the right solution for your business requires research. This means reading ratings by trusted industry sources such as Gartner, Forrester or Spend Matters, reviewing recommendations and talking to experienced users in events hosted by expert communities like Procurement Leaders.

Trends in the procurement software marketplace

One common trend in procurement software is the move to cloud computing where data is accessed over the Internet on-demand instead of data hosted on-premise servers by the business. Companies of all sizes, across all industries, are discovering the benefits of more agile, cloud-based, software-as-a-service (SaaS) solutions. The trend for cloud-based solutions enables a number of key benefits supporting the trend towards best-of-breed solutions.

Collaboration 

In a single-suite solution you typically have a bundle of interconnected solutions specifically designed to work well together without need for outside services. Increasingly, niche service providers with complementary services are getting together to help their clients to match the specifications of single-suite solutions. Source-to-pay products can work with, for example, spend analytics or contract management modules, to provide procurement with an integrated bundle of connected solutions.   A mix-and-match method and approach, piecing together specialist solutions, introduces flexibility that is not widely available in full suites.

Integration

There was also a time when there were limits to how data was security shared between systems. A safe approach was a single ERP solution with all data hosted locally at the customer's chosen location. Concerns about integration challenges are becoming less evident through improvements in data security processes.   Best-of-breed specialist software vendors understand that a smooth integration with other systems and seamless reporting are both vital success factors.  There is a growing sub-group of procurement technology providers that specialize in providing integration services, for example, through secure application programming interfaces (APIs).  

Innovation

Smaller niche start-ups in procurement technology are filling gaps and disrupting the market in areas where single-suite providers can't prioritize or develop fast enough. Many of these start-ups are introducing more competition into the conventional functional areas by improving the user experience. Some emerging players are focusing on micro-niches in specific industries like healthcare or manufacturing, and in customer sub-groups such as small and medium-sized enterprises (SMEs) or large enterprises.  Many new offerings involve emergent technologies such as machine learning or blockchain. 

Top tips for selecting a new best-of-breed solution

Here are a few considerations for procurement executives considering best-of-breed solutions to compliment or replace their existing procurement software.

  • Do they have the correct functionality to solve your problem and is it easy-to-use?  
  • Investigate their depth of experience and reputation in their specific segment as well as financial stability
  • Consider how well the solution integrates with your existing procurement technology landscape
  • Research into their implementation capabilities and ongoing customer service support
  • Consider running a proof-of-concept (POC) trial before you commit

For more fresh views on key trends in best-of-breed procurement software see our recent guide Deep-dive into Procurement Data Ecosystems.

 

Photo credit: Benjamin Esham, Flickr. Sheepfilms and Chris Gannon on Giphy.

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