Procurement plays a
critical role in cutting costs of acquiring the raw materials and other
materials for the company’s operations. Company’s across the globe have automated
this process and deployed advanced software technologies to effectively manage
their procurement operations there by reducing costs and also surviving in the
highly competitive markets. For offering the products and services at the
lowest possible price and with good profit margins business managers have
realized the importance of strategic sourcing and procurement and deployed
software technologies to manage this critical business function. For materials
that are high value in nature, whose prices constantly change based on the
market conditions and whose availability is also highly competitive as
competitors too fight for the same materials strategic sourcing and procurement
is critical strategy.
According
to Gartner, supply chain management and procurement software market grew by 7.3
per cent to $8.9 billion (£5.27 billion) in 2013. SAP dominated with number one position for more than a
decade with a 23.9 per cent market share, growing its revenue by 24 per cent
from $1.7 billion (£1.02 billion) in 2012 to $2.14 billion (£1.27 billion) in
2013. Oracle is second in the market with a market share of 16.3 per cent, down
on 17.4 per cent in 2012, and revenue of $1.46 billion (£861.5 million), up
just 0.1 per cent on 2012. JDA Software remained in third place in 2013 and
according to Gartner a “year of transition as it worked through product rationalization
and integration of several years of acquisitions and the 2013 merger with
RedPraire. Gartner said the market grew because supply chain investments “kept
their priority”, even as IT budget managers “remained cautious”. Chad
Eschinger, research VP at Gartner, said: “Both influences have impacted strategic
planning processes and have resulted in stronger price-based competition and
smaller contracts. Cloud and subscription-based pricing is shifting revenue
streams and influencing growth.”
Investment in Procurement and
supply chain management software will lead to supplier relationship management,
reduction in errors and quality issues, efficient and timely supply of the
materials, reducing cost, reducing support costs. Even procurement managers
using software can improve their productivity, achieve the strategic goals,
negotiate efficiently, avoid unnecessary legal disputes and conflicts, manage
their work and provide the relevant and necessary reports to the finance teams
and top management. Procurement BPO is one of the critical process for the
Indian IT & BPO Vendors and companies that outsource this function to third
party vendors in India have over the years have seen significant cost
reduction. But Procurement BPO market has matured and the companies are looking
for vendors who will bring strategic impact to their business not only reduce
costs. For doing so the automation and software technologies play a significant
role and even Indian IT & BPO vendors are also developing products in this
segment.
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