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How is European Digital Procurement Market Shaping Up?
Developing technologies are determining the trends and empowering European digital procurement providers to achieve better profitability and efficiency.
FREMONT, CA: The traditional process of procurement is wearing a new look today, thanks to the technological advancements that have fast-forwarded its development in the European region. The emergence of a new wave of startups and the eagerness of incumbent companies to adopt digital functionalities is currently determining the market trends for procurement services in Europe. The field of procurement is well on its way towards better efficiency, productivity, and business opportunities, driven by evolving technologies like IoT, AI, machine learning, and blockchain. As service providers are keen on offering automation-enabled solutions to clients, there has been a rising demand for several classes of software products and technology vendors. This explains the recent spurt in funding for procurement startups. Automation has been one of the leading goals for most of the European player in procurement.
According to a report by Oliver Wyman, Europe has seen the foundation of the second-highest number of procurement startups in the world between 2011 and 2017, which accounts for 24 per cent of the global numbers. There is a big gulf between North America and Europe when it comes to the number of new procurement companies that came into being before 2017, with North America giving rise to about 400 startups, and recent surveys have shown that European firms are better prepared for the ongoing digital transformation. In a study conducted by Jaggaer, which was aimed at finding and reporting about the evolution of digital procurement between 2017 and 2019, several interesting statistics have been published that show the impact technologies are having on the sector. From North America, 20 per cent of respondents companies said that their knowledge of procurement digitalisation was non-existent, whereas only 5 per cent of European respondents came under that category according to the report. One can conclude from here that European players will achieve digitalisation faster.
In the same report by Jaggaer, 47 per cent of European respondents stated that their knowledge regarding digital procurement was up to date. Although the report does not throw light upon how 'up to date' can be defined, it does point at the fact that procurement in Europe is poised to achieve digital capabilities rapidly in the next couple of years. While the industry prepares and implements new models, investors are lining up with their kitties owing to attractive market prospects. Europe today, possesses a set of companies and a distinctive market with solutions that are dedicated to digital procurement.
The technologies that European procurement companies and service providers want to adopt have varied over the years. Currently, most of the companies are favouring artificial intelligence, and IoT for deployment, as these provide a significant return on investment in lesser time apart from helping companies deliver services quickly and efficiently. While IoT deploys end-points to accumulate data, AI offers the faculty to convert the structured and unstructured data into essential bits of information that drive core processes, decision-making, as well as interactions and communications. Be it category management, supplier relationship management, or risk management, the ability of AI-backed solutions to grant better controls are unmatched from the firm's perspective in the field of procurement. IoT has been finding applications in procurement due to its ability to facilitate the tracking of commodities. Since procurement involves several parties and caters to complex supply chains, the connectivity, and visibility that IoT grants become strategic.
Although digital procurement in Europe has seen a steady start, organisations are looking forward to quicker growth as an increasing number of businesses demand agile, reliable, and cost-efficient procurement services. Only with a digital ecosystem in place, the other industries can streamline the process of procurement, which often impacts their overall profitability.
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