Spend management -- software that provides greatly improved visibility to what a company actually spends, where, and with what vendors -- remains on track to grow by 10% this year, despite the downbeat economy. That's a good indicator of the overall procurement market, which is bracing for a rough year in 2008.

Analyst firm Forrester says the market for ePurchasing software, also known as Spend Management, was expected to grow at a rate of 10% in 2008. But the analytical firm made that call last year, before the credit crunch and the slowing economy.

That doesn't mean there won't be some changes in the procurement market this year. Over at the invaluable Spend Matters blog, author Jason Busch lists five changes the market can expect to see this year.

  1. Reinvigorated efforts around sourcing (and re-sourcing)
  2. Greater consideration of moving from fixed to variable cost structures (which will also, in theory, help companies scale up and down procurement efforts more quickly)
  3. A newfound mandate to focus on overall supply chain risk
  4. Ongoing and increased efforts to cut services procurement and non- production related expenditures
  5. A greater embrace of the words in Lord Byron's famous quip: "Cash is virtue"

Writes Busch: "In declining price markets, it's not only a great time to re-source -- or invoke de-escalation clauses -- because commodity prices are falling. It's also a good time to source because there's a chance that a new set of suppliers will be more interesting in filling capacity just to stay busy and will accept a margin hit on new business. This also holds true in services and indirect categories as well, considering that rising inventories and newly available capacity will create greater competition in competitive sourcing environments where previously, constrained capacity might have led to reduced savings opportunities. So as we gear up for a downturn, get your sourcing pipeline ready for 2008. And don't be afraid to revisit categories that you recently sourced. There might be savings in them there recessionary hills!"

Forrester had said that more mature sectors like eProcurement and eSourcing, will grow in the single digits annually. Larger enterprises are still much more likely to have acquired ePurchasing solutions, but adoption is starting to occur among small and medium- size businesses (SMBs) and is not complete even among the largest firms, with more than 25% of the Global 2000 not using eProcurement or eSourcing, Forrester says.

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William Dorn

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