Procurement’s Top 10 Transformation Initiatives in 2025 & How SAP Helps – Part 2

Procurement can end up with a rather large technology stack compared to other organizational functions, whether through mergers and acquisitions, historical processes, or older technology that integrates with other systems.

However, The Hackett Group’s 2025 Procurement Agenda and Key Issues Study indicates a clear focus on service design and delivery projects, which comprise seven of the top ten initiatives on the 2025 transformation agenda. Moreover, Gen AI and/or AI technology initiatives have entered the top 10 planned initiatives for 2025 at eighth place.

In the concluding part of this series, we look at the remaining five of the top 10 improvements the procurement function is preparing to make this year, according to The Hackett Group study, and ways SAP can help.

6. Contract management

Since 2021, improving spending cost reduction and ensuring supply continuity have consistently ranked among procurement teams’ top priorities in The Hackett Group Study. Contract Management is among the initiatives leading capability development in this area.

By utilizing SAP Ariba Contracts, procurement teams can reduce manual paper-based processes and save time and money with centralized storage and automation. Organizations can digitalize contract requests, authoring, and workflows for negotiation, approval, and execution through this solution to lower costs and improve vendor relationships.

7. Third-party risk management

Although risk management remains critical for procurement teams, the Hackett Group Study shows that technological maturity remains lower than that of other service design and delivery functions, such as strategic sourcing or strategic business partnerships.

However, data transparency that reflects supplier risk is key to an agile supply chain and to mitigating disruption risks. Solutions like SAP Ariba Supplier Risk – that’s embedded in your source-to-pay process -can help organizations simplify their supplier management process, provide actionable insight into high-risk suppliers, and use focused risk alerts and third-party risk assessments to evaluate and mitigate risk exposure.

8. Generative AI (Gen AI) and/or AI technology

According to the report, procurement teams are increasingly focusing on Gen AI and/or AI technology in terms of technology development this year. This technology appears for the first time in the report in eighth place, though its technological maturity remains lower than some of the other critical development areas.

SAP Business AI for Procurement tools use AI to help organizations optimize spend, reduce risks, and maximize their supply chain efficiency. SAP’s AI-enabled procurement solutions help you harness valuable resources and services while optimizing time (avoiding bottlenecks) and budget.  The evolution of procurement chatbots from basic assistants to strategic copilots to agents is transforming the way organizations operate. Find out more during this webinar.

9. Sustainable procurement (e.g., environment)

While sustainable procurement ranks lower than areas like strategic business partnerships or talent management in terms of critical development capabilities, the focus on sustainability and ESG is high among emerging procurement technologies.

SAP Sustainability Management solutions enable more sustainable purchases for organizations by collecting Scope 3 emissions data, ensuring human rights compliance, and reporting sustainability data. This helps procurement teams also to transition from price-driven procurement to sustainable procurement.

10. Supplier performance management

Supplier performance management was ranked 10 in The Hackett Group report. This area remains a critical area of development, though its technology maturity levels within the procurement function remain lower than those of other areas within service design and delivery.

Procurement can improve its technological capabilities in this area by utilizing solutions like SAP Ariba Supplier Lifecycle and Performance. This solution offers centralized supplier management to support faster onboarding, up-to-date data, and compliant spending across the supply base. It provides a unified and comprehensive view of the most crucial supplier information and enables better buying decisions for the procurement team.

What This Means for SAPinsiders

Embrace SAP’s solutions for critical procurement capabilities. Procurement teams are focusing on service design and delivery, with initiatives like contract management, third-party risk management, and supplier performance management being top priorities. Procurement teams should leverage SAP solutions to automate processes, improve data transparency, and enhance overall procurement efficiency.

Capitalize on AI within SAP. The rise of Generative AI and AI in procurement is evident, and SAP provides tools like SAP Business AI for Procurement to enhance their use. SAP users can explore and implement these AI-powered solutions to optimize spend, reduce risks, and streamline their supply chain, allowing for increased visibility and automation to drive productivity.

Integrate sustainability into procurement with SAP’s support. While sustainability may not be the highest-ranked priority, it’s a growing focus. SAP Sustainability Management solutions can help organizations transition to sustainable procurement practices and meet increasing ESG demands.