Procurement technology is exciting, full of promise, and creating a lot of buzz. But for procurement leaders trying to make sense of it all, the real challenge is knowing what’s worth investing in… and what’s just hype.
In this blog, Jonathan O’Brien, CEO of Positive Purchasing, shares insights from a recent conversation with Pierre Mitchell, Chief Research Officer at Spend Matters. Together, they explored what’s really happening in the world of procurement tech and what it means for those building a strategic procurement function.
What Is Procurement Technology
At its core, procurement technology is meant to help us make smarter decisions, build better supplier relationships, and deliver more strategic outcomes. That’s the promise. But the reality is more complicated.
The market is flooded with solutions, especially those built on generative AI. It’s easy to pilot them, and even easier to demonstrate short-term value. But the question procurement leaders need to ask is whether these tools offer a future-proof strategy.
There’s a growing disconnect between what’s available and what’s actually useful. Many teams are overwhelmed by the sheer volume of options. And while some tools do deliver transformation, most fall short of creating sustainable change.
Procurement technology should align with business goals, integrate seamlessly with existing systems, and provide meaningful support for the Procurement function.
How Technology is Changing Procurement
Procurement leaders are under pressure. Savings still matter, risk still matters… and expectations are only growing. But the tools we’re using to manage all this are changing fast.
The shift from traditional rule-based systems to large language models (LLMs) is already underway. These tools can process vast amounts of data, spot patterns we’d never catch, and deliver insights in real-time. However, LLMs are not perfect and can hallucinate, meaning they might be confidently wrong, just like humans.
That’s why we need a human in the loop. Someone who understands how the system works, what data it’s trained on, and how it makes decisions.
AI is already helping with supplier discovery, contract analysis and policy operationalization. It’s turning messy, unstructured text, into structured, usable data. But without oversight, it can lead us astray. Leaders need to ask hard questions, such as: What models are being used? How does the tech sync with business logic? What’s the real value?
Procurement is becoming one of the most advanced users of AI. Not because it’s overfunded, but because it’s underfunded. We’re being asked to do more with less, and the pressure to do more with less is what’s driving innovation across Procurement. But it also demands caution. Without a clear strategy to guide decisions, it’s easy for teams to get swept up in the hype and lose sight of what actually delivers value.
A recent Forbes article highlights how Procurement teams are becoming indispensable partners in shaping strategic decisions. Procurement technology now has the potential to be central to business performance.
What Could Procurement Tech Look Like
Tech alone doesn’t make a strategy. What matters is how it connects with your systems, your data, and your people.
Gartner’s research shows that Procurement teams are prioritizing foundational technologies that ease core work. While only 8% are investing in AI, 69% are using tech for spend analysis and procure-to-pay. This tells us that the focus is shifting from flashy innovation to practical integration.
So what does the future of procurement tech actually look like? Below are some of the most promising functionalities we are seeing today.
AI Retrieval Augmented Generation (RAG)
One of the most exciting developments is Retrieval Augmented Generation, a technique that combines trusted internal data with LLM’s to enrich and make it searchable. It allows procurement teams to “talk to their data” in a secure, structured way.
We’re already doing this with Capella and Ruby. Instead of pushing data out into the wild, we’re working within a walled garden environment. This gives us a different level of confidence and lets us experiment safely, build trust, and get real results.
Contract Analysis and Policy Operationalization
AI is now capable of scanning contracts, extracting key terms, and identifying risks, all in seconds. It can also help operationalize procurement policies by turning static documents into dynamic, searchable frameworks.
Pierre highlighted how this functionality is helping teams move from reactive to proactive. Instead of waiting for issues to surface, Procurement leaders can utilise AI to flag inconsistencies, monitor compliance and inform decision-making, in real-time.
Supplier Discovery and Risk Profiling
Finding the right supplier used to take weeks. Now, AI can scan thousands of profiles, match capabilities, and even assess risk, all before a human gets involved.
Pierre explained how this is transforming supplier discovery. AI can identify potential partners based on performance data, ESG credentials, and even geopolitical exposure.
Agentic AI
Agentic AI is still in its early stages, but it’s developing rapidly. These software agents go beyond simple automation. They’re designed to interpret instructions, unpack what needs doing, and figure out how to get it done across systems.
Pierre described them as intelligent orchestrators. For example, if you ask one to generate a workflow, it doesn’t just follow a script, but builds a process based on your category, your data, and your goals.
But here’s the reality. For agentic AI to work reliably, it needs a mature environment – one where AI-based reasoning can be trusted to make decisions. That’s where the research is heading, and there’s some fascinating work happening. But it’s not ready for primetime. Not yet.
Are we chasing tech and ignoring talent
One of the most powerful insights from our conversation was about people. At the Digital Procurement World Amsterdam event last year, many visitors to our stand expressed concern that they’d been too focused on chasing new technologies and had neglected to train their staff.
This reflects a wider pattern… companies have been distracted by the newest tools and, in the process, have either forgotten about their people or assumed they were no longer essential.
But the truth is, even the best tools are limited by the skills and vision of the people who use them. Without investment in talent, training and guidance, the technology will not deliver.
Forbes highlights the same issue. Shrinking workforces and widening skill gaps are intensifying competition for talent with analytical and data capabilities. Procurement leaders must partner with HR and technology teams to build a digitally skilled workforce.
We’ve created sophisticated procurement tools and handed them to people who may only be used to riding a bicycle, and now we’re giving them a self-driving car. That’s not sustainable.
What procurement leaders need to do
Pierre didn’t offer a checklist. He offered a mindset. One that Procurement leaders need to adopt if they’re serious about navigating the tech landscape with clarity and confidence.
Here’s what that mindset looks like:
- Stay curious
Procurement professionals must continuously learn – not just about Procurement, but about how technology enables it. That means understanding business processes, how data is structured, and how emerging tech fits into the picture.
- Apply tools to the right problems
Leaders mu st ensure their teams understand what the tools do, how they work together, and how to apply them meaningfully.
- Manage knowledge, not just data
Procurement isn’t just about process and data. It’s also about knowledge. Leaders must invest in systems that preserve and curate organizational wisdom.
- Ask hard questions
When a vendor says “we do AI”, dig deeper. Ask questions such as: Where exactly is AI being used? What models are involved? How does it sync with business logic and user experience?
- Keep people in the loop
AI can sort, suggest, and even generate workflows, but it can’t replace human judgement. Leaders must empower their teams to work alongside AI, not be replaced by it.
Final thoughts
Procurement technology is evolving fast. But we mustn’t lose sight of what matters. The tools are powerful, but they’re only as good as the people who use them.
We need to build procurement tech strategies that combine tech with talent, innovation with wisdom, and automation with human insight.
Because in the end… Procurement is still about people.
Jonathan O’Brien, CEO of Positive Purchasing Ltd, is a leading expert on procurement and negotiation. He works with global blue-chip organizations to equip them with the latest generation of strategic procurement platforms, and drives deep transformation of capability.