Faced with pressures to procure quality products at the best possible prices, companies are on course for double-digit increases in spending on internet-based purchasing software systems in 2016 and 2017, Forrester Research Inc. says in a new study.

“In the age of the customer, firms are stepping up their spending on the business technology portfolio of software and services for winning, serving and retaining customers,” Forrester says in the report, written by lead author Andrew Bartels, vice president and principal analyst serving chief information officers, along with other Forrester analysts. “But success in these objectives does not stop at the front office. To meet their customer expectations, firms also need to improve their back-office functions for acquiring from suppliers the goods and services that support their customer value proposition.”

The report, “Vendor Landscape: ePurchasing Suites, 2016 to 2017,” is based on worldwide market demand information Forrester gathered over the past 18 months from more than 60 providers of e-purchasing software. Forrester defines e-purchasing software as applications designed to help companies manage and improve the process of buying from their suppliers the goods and services they need to operate their businesses. It breaks out e-purchasing software into eight categories, including applications for procuring products and services, analyzing spending, managing supplier contracts and engaging with suppliers through online networks.

Overall, Forrester projects that companies worldwide will increase spending on e-purchasing software this year by 14%, to $7.014 billion from $6.172 billion last year; and next year by 13%, to $7.950 billion. By comparison, the annual rates of increase on spending for e-purchasing software in 2015 and 2014 were 5% and 9%, respectively.

Among the eight categories of e-purchasing, however, the sharpest increases in spending are for participation in online supplier networks, software for procuring business services, and management of supplier contracts, the report says. It notes that online supplier networks are in increased demand as companies rely less on electronic data interchange, or EDI, networks for exchanging purchase orders, invoices and other business documents with their suppliers.

Following are the rates of increased spending by e-purchasing category for 2016/2017:

Supplier network, 24%/17%;

E-procurement for purchasing services, 20%/17%;

Supplier contract life-cycle management, 17%/17%;

Spend analysis, 13%/16%;

Supplier risk and performance management, 12%/14%;

E-sourcing for finding and contracting with new suppliers, 7%/10%;

E-procurement for purchasing products, 8%/8%;

E-invoicing, 10%/14%.

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