This week’s piece was inspired by a LinkedIn post from well respected industry commentator Jon W. Hansen.
He’s predicting that 75% of AI (procurement tech) solution providers today will be gone by the end of 2025.
That’s a pretty bold statement.
Just for context, he made this back in September, so I appreciate I’m looking at this with a bit of hindsight.
I’ve known Jon for a while, and he’s very knowledgeable about the procurement tech space, being one of the original bloggers and analysts. However, I fundamentally disagree with him on what he’s saying here. I want to break it down a little bit and walk through why that’s the case.
I’ll also touch on where I think there may be some nuggets of truth in what he’s trying to say.
How much procurement tech consolidation should we expect?
AI-powered supplier discovery software will eliminate the need for B2B Marketplaces. They will only be relevant if they have enhanced functionality, beyond just an e-commerce or catalogue interface.
I’m still reasonably bullish on tech that powers group purchasing organisations (GPOs) or any kind of Tail Spend-as-a-Service type of platform.
But B2B marketplaces as standalone tech offerings? I suspect their days are numbered.
Sustainability and ESG tools
I’m bullish on all larger companies eventually adopting a Scope-3 carbon emissions analytics platform. Likewise, software that is designed to help achieve compliance to supply chain transparency laws, such as those in Germany and Norway, will continue to see growth.
However, there certainly seems to be a glut of carbon analytics, sustainability, and wider ESG-related software on the market. I expect some consolidation here. There seem to be a lot of companies essentially doing the same thing. With the pushback on ESG under the Trump administration, this will also create some headwinds.
Having said that, for those software companies who win this battle and emerge as the market leaders, I think they will win BIG! I’m just not entirely convinced that Procurement will be the buyer of these software tools…
Should we be concerned?
The march of tech is certainly going to have an impact on the size and the make-up of procurement teams as we head into the future.
What remains to be seen is whether the new breed of tech will nudge procurement teams to completely re-think their organisational structure. Or whether procurement teams slim down due to economic realities, and then turn to tech to compensate for them being forced to deliver more, with less resources.
Only time will tell.
But the procurement tech market is changing at a faster pace now than at any time I’ve seen during the 5 years I’ve been covering it.