2024 is Procurement’s Moment

What began with a seemingly straightforward request to acquire a Microsoft Excel license within an organization staunchly aligned with Google sheets, quickly inaugurated me into the convoluted world of procurement. The hurdles seemed endless: layers of bureaucracy, paperwork that disappeared into black holes, approvals that needed approvals of their own, and the constant interdepartmental back-and-forth that turned what should be a simple process into a Herculean task.

This experience, personal yet not uncommon, illuminated the operational complexities of the policies, procedures and people that make up corporate purchasing. In an era defined by relentless innovation, legacy procurement solutions often feel underwhelming. Today, organizations (and employees) find themselves entangled in the complexity of outdated systems, fragmented data sources and dissatisfying UX resulting in frustrating and sluggish experiences for everyone involved.

The mismatch between the potential of modern technology and the reality of existing procurement processes highlights both a critical disconnect and massive opportunity. As such, we believe that 2024 will experience an accelerated adoption of next-gen procurement technologies, as companies continue to recognize tech’s role in broader strategic initiatives and value creation.

We’ll provide an overview of the procurement space, our perspectives on how to categorize the landscape, and some of the most promising product characteristics to deliver on this future.

Procurement Tech Landscape

Over the past few years, the procurement landscape has seen an explosion of innovation, reaching an $11.5B market opportunity in 2023 (Forrester), as business leaders across industries have come to recognize procurement’s value as a mission-critical component of success. While significant on its own, we believe that the future opportunity within procurement is much broader due to its cross-functional nature, as outlined below.

The rapid evolution of technology and the ever-changing competitive landscape necessitates a fundamental reimagining of procurement from the ground up. This market map seeks to provide an overview of the Procurement Technology landscape. This map is by no means exhaustive, but integrates both legacy and next-generation vendors.

Below, let’s quickly break down the four components of this landscape: Strategic Activities, Transactional Activities, Supporting Activities, and Key Integrations.

Strategic

The term "Strategic Procurement" carries multiple interpretations and frequently ignites spirited discussions. In this blog post, we use it to refer to a process aimed at achieving long-term outcomes through data-driven insights and the creation of value, as opposed to focusing on immediate actions. Thus, the “Strategic Activities” portion of the procurement process refers to the collective set of “upstream” steps taken regarding the diligence on, selection of and engagement with suppliers. With that in mind, this value chain covers four key steps including:

1. Demand Forecasting & Budgeting - The first step towards making any decision is the identification of a need. This phase centers around tools that enable and empower organizations to better understand their business, its needs, the costs associated with decisions, and the key levers they can pull to influence change.

2. Strategic Sourcing & Selection - This step encompasses supplier identification and evaluation including, but not limited to, RFIs (Request for Information), RFPs (Request for Proposal) and / or RFQs (Request for Quotation) to support a selection decision.

3. Contracts, Negotiation and Legal - Once a supplier has been selected, organizations must negotiate terms and build a formal contract to be approved by relevant, often cross-functional stakeholders within an organization.

4. Supplier / Vendor Management - The last step, Supplier / Vendor Management, involves the ongoing management and evaluation of existing vendors post-signature.

Transactional

“Transactional Activities” encompass the portion of the Procurement lifecycle related to the actual execution of a purchase and spans the following activities:

1. Intake & Approvals - Once organizations identify and onboard a supplier, they must enable an intake and approvals process, ensuring that the requested resources are deployed in an efficient, compliant and deliberate manner. Intake & approvals software serve as the “front door,” enabling users to submit procurement requests.

2. Purchase Order (PO) Management - Following the intake of a purchase request, a “purchase order” must be generated to track the request through to completion. A PO outlines the details of the purchase (the price, quantity, terms, supplier information etc.) which can then be tracked throughout the downstream procurement process (ERP, Invoice Management, AP Automation etc.) all the way to payment.

3. Invoice Management - During the invoice management phase of the procurement process, bills must be verified and approved for payment. Invoice management software helps organizations to automate data entry, streamline necessary approvals, track progress, and gain greater insight and control over supplier invoices and bills.

4. Payments - Lastly, the organization must ensure that the associated payment for goods and services is delivered in a structured and rapid manner.

Supporting

The “Supporting Activities” segment of the procurement landscape encompasses three additional, procurement-adjacent functions that supplement and enhance the capabilities of the strategic and transactional tools including:

1. Data Driven Analytics - Further augmenting the procurement process, analytics and data-driven tools offer actionable insights into spending patterns, supplier performance, cost-saving opportunities and market trends.

2. Third-Party Risk Management (TPRM) - TPRM software focuses on identifying, assessing and reducing risks associated with third-parties (vendors, partners, contractors, suppliers etc.). These solutions deliver value to organizations through increased regulation compliance, improved security of data and confidential information, better risk mitigation and cost reductions.

3. ESG - Environmental, Social and Governance software helps to measure and disclose the various factors that impact an organization’s sustainability efforts. The types of data that can help to build this picture include greenhouse gas emissions, workforce diversity, compensation, labor practices and more.

Key Integrations

Lastly, integrations play a vital role in expanding and enhancing value found throughout the procurement lifecycle. By seamlessly integrating with a wide range of internal datasets, procurement teams can develop a holistic, 360-degree view of the business, enhancing decision-making and strategic insights. Though often overlooked in Procurement landscape discussions, integrations are consequently critical to the success of the technologies discussed above.

Companies Challenging the Status-Quo

Levelpath: Built by the same founding team from ScoutRFP (acquired by Workday in 2019), Levelpath is on an ambitious journey to build the modern procurement platform. Aimed at making procurement delightful, Levelpath’s AI & mobile-first approach is designed from the ground up with the end-user in mind. Their platform is built upon a first-of-its-kind unified data model, enabling seamless integrations across the broader tech stack and unlocking novel insights (such as comparing money spent vs. money earned from a particular counterparty). Other offerings, like their supplier enrichment tool -- powered by OpenAI -- supercharges supplier data, thus driving business to preferred suppliers, simplifying supplier data collection, and providing easy access to supplier profiles anywhere, anytime.

Disclaimer: Levelpath is a portfolio company of WiL.

Syrup: Syrup.tech leverages AI to optimize inventory management, allocation, and supply planning for brands and retailers. Syrup’s platform uses historical, transactional, and real-time data to accurately forecast demand down to the granularity of a single SKU. Increased accuracy results in reduced over production (i.e., waste) and stockouts (i.e., lost revenue), increasing margins for businesses and benefiting the environment.

Candex: Candex is a spend management application that helps Global 2000 companies with their “tail spend”, which typically comprises ~20% of company’s indirect spend but accounts for 80% of transaction volume. Multinational corporations have tens of thousands of small vendors (i.e. vendors that account for less than $150k in annual purchases) in dozens of markets. These small vendors are expensive to vet, onboard, and bill due to compliance rules faced by public companies and the added complexity of B2B international payments; however, with Candex, a company can onboard a new vendor within 24 hours and leave the invoice management and payments to Candex.

Disclaimer: Candex is a portfolio company of WiL.

Patch: Patch, a carbon offsetting API platform intended to manage and reduce an organization’s carbon footprint, was launched in 2020 with the mission to democratize access to carbon removal. Their unique API-first approach combines ease of use with supply aggregation, enabling more brands, across various sectors and size, to begin the path to carbon neutrality. The company’s carbon removal platform allows businesses to both calculate their carbon footprint and offset emissions through removal projects, automating sustainability goals. As ESG initiatives continue to rise the ranks of business priorities, Patch will serve as a key part of the digital infrastructure required to meet net-zero goals.

Looking Ahead

As you can see, it’s an exciting time in procurement! The landscape is rapidly evolving, driven by technological advancements and pioneering strategies that revolutionize conventional methods. Companies at the forefront of this movement are setting new standards for efficiency, user experience, sustainability and strategic value creation. It’s clear the future of procurement technology is bright, promising even greater opportunity for those willing to embrace this next wave of innovation.

In the next installment of our series, we’ll explore the distinctive product features and innovations that are redefining value within the procurement tech stack including:

1. Simple & Modern UX/UI

2. Process Orchestration & Automation

3. Mobile-First Design

4. A Unified Data Model

5. Impact and Integration of Artificial Intelligence

6. ESG

7. Risk Management

To read part two of our Procurement Series, click here. If you’re building in the space, we’d love to hear from you! Send us a note - [email protected] & [email protected] or connect with us on LinkedIn below:

• Olivia Hedding

• Clifford Cohn

The information presented is proprietary to WiL, LLC, WiLSP, LLC or any affiliates and subsidiaries (collectively, “WiL”). This material is not to be reproduced in whole or in part or used for any purpose except as authorized by WiL.

This material does not constitute an offer, solicitation or recommendation to sell or an offer to buy any securities, investment products or investment advisory services. Any offer or solicitation will be made only pursuant to a confidential private placement memorandum and subscription documents (the “Offering Materials”) and will be subject to the terms and conditions contained in such Offering Materials.

Any reference to a specific company or security does not constitute a recommendation to buy, sell, hold or directly invest in the company or its securities. It should not be assumed that the recommendations made in the future will be profitable or will equal the performance of the securities discussed in this document.

The logos featured throughout this presentation are trademarks and service marks belonging to the respective companies shown. None of these entities has reviewed or approved any investment considered by the Funds, and none of these entities is endorsing WiL or any affiliate or fund or client thereof.

Certain information contained herein constitutes “forward-looking statements” which can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “target,” “intend,” “continue,” or “believe,” or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties, actual events or results or the actual performance of any entity or transaction may differ materially from those reflected or contemplated in such forward-looking statements. The information contained herein is believed to be reliable but no representation, warranty or undertaking, express or implied, is given as to the accuracy or completeness of such information by WiL, its directors, partners or employees and no liability is accepted by such persons for the accuracy of completeness of any such information.

Certain information set forth in this presentation is based upon data, documentation and/or other information obtained from various sources believed by WiL to be reliable. Neither WiL nor any of its affiliates has independently verified any such information and they shall not have any liability associated with the inaccuracy or inadequacy thereof. All of the information herein is subject to change without notice. Portfolio characteristics and other information are provided as of the dates set forth herein. Current or future characteristics and other information may vary significantly from those provided herein and the firm undertakes no obligation to notify the recipient of any such variances. Unless otherwise stated, all representations in this presentation are WiL's beliefs based on sector knowledge and/or research.