02 August 2007 | Paul Snell
Buyers are expanding their use of procurement technology beyond transactional purchasing.
As a result, the market for strategic sourcing software is expected to grow rapidly over the next few years, as the technology becomes more popular, according to a study by AMR Research.
Sourcing software accounted for 33 per cent of purchasing technology market revenues in 2006, with programmes covering indirect procurement making up 32 per cent. But AMR Research predicts that by 2011 the gap will have increased, with sourcing software representing 37 per cent and indirect procurement falling to 20 per cent.
Mickey North Rizza, research director at AMR Research, said: "Everyone is looking at the global options. Buyers are trying to use technology to bridge the gap of time, space and distance."
She said sourcing technology had developed from simply sending out requests for tender and quotation, and the market has grown because buyers are looking to new areas of cost reduction, such as global sourcing.
The study estimates the market for procurement technology will grow by $1.2 billion (£582 million) over the next four years. It was worth $2.4 billion (£1.16 billion) in 2006 and is expected to reach $3.6 billion (£1.74 billion) by 2011. Europe provided the biggest growth in revenue last year, up from $200 million (£97 million) in 2005 to $244 million (£118 million) in 2006.
Oracle and SAP continue to dominate the market as, according to North Rizza, they sell purchasing software alongside their popular ERP systems. They also promote their programmes to technology chiefs, rather than buyers.