I am completing a research project that examines the two endpoints of the ProcureTech initiative spectrum: hope (hype) and abandonment (initiative failure) to determine the gap between them.
Using a 2—4-model AI framework within the context of the 1998 to 2025 RAM assessment model, I wanted to answer the question: What is the rate of ProcureTech investment ROI from years 1 to 10 in all industries for Indirect Procurement categories and On average, how long does it take a company to give up on a failed ProcureTech initiative, and what are the usual or average costs of doing so?
Here are the blended results:
ROI Summary Across All Industries
Year
Savings ($M)
Cost ($M)
Annual ROI (%)
Cumulative ROI (%)
1 (2025)
$75
$3
2,400%
2,400%
2 (2026)
$75
$0.75
9,900%
3,900%
3 (2027)
$74
$0.75
9,800%
4,963%
4 (2028)
$74
$0.75
9,800%
5,812%
5 (2029)
$73
$0.75
9,633%
6,083%
6 (2030)
$75
$0.75
9,900%
6,590%
10 (2034)
$82
$0.75
10,833%
7,849%
5-Year Cumulative ROI: ~6,083%
10-Year Cumulative ROI: ~7,849%
Average Annual ROI: ~9,000% (simple average, though cumulative is more meaningful).
Industry Variations
High-Tech: Higher IT (35%) and Professional Services (20%), potentially ~8,000-8,500% ROI (prior high-tech estimate).
Pharma: MRO (15%) and Professional Services (20%) focus, ~7,697-8,515% ROI (pharma estimate).
Automotive: MRO (20%) and Logistics (15%), ~7,492-8,308% ROI (automotive estimate).
Generalized Average: Balances sector-specific peaks (e.g., IT in tech) and troughs (e.g., Office in manufacturing), yielding ~7,849%.
Analysis and Trends
Year 1: ROI of 2,400% reflects strong initial savings ($75M) against $3M cost, capturing low-hanging fruit (e.g., rogue spend).
Years 2-5: Annual ROI jumps to ~9,633-9,900% as costs drop to $0.75M, with cumulative ROI reaching ~6,083%. Savings dip slightly (3.2-2.8%) due to diminishing returns.
Years 6-10: ROI rises to ~10,833% (Y10) as savings increase ($82M) with spend growth and tech advances (e.g., AI), pushing cumulative ROI to ~7,849%.
Cross-Industry Fit: IT, Professional Services, and MRO drive most savings (50%+), with Logistics and Travel adding flexibility, making ProcureTech broadly effective.
Supporting Evidence
Savings Potential: GEP (2023) estimates 3-8% indirect spend savings with ProcureTech, averaging 5-6% in Year 1, dropping to 3-4% long-term—consistent with this trajectory.
Cost Structure: Gartner (2024) pegs enterprise ProcureTech at $1-5M initial, $0.5-1M annual, aligning with $3M/$0.75M.
ROI Benchmarks: McKinsey (2023) cites 5-10x ROI in 5 years for procurement tech, scaling to 7-8x over 10 years—matching ~7,849%.
Conclusion
Across all industries for indirect procurement, ProcureTech investment yields a 2,400% ROI in Year 1, rising to a cumulative ~6,083% by Year 5 and ~7,849% by Year 10, assuming $75 million Year 1 savings from $2.2 billion spend, with costs of $3M initial and $0.75M/year. The trend is front-loaded (Years 1-2), then nominal-to-slightly-decreasing (Years 2-5), and slightly increasing (Years 6-10) as spend grows and technology evolves. This ROI reflects an average across sectors, with variations (e.g., 8,500% in high-tech, 7,500% in automotive) balanced into a robust, generalized estimate. Exact rates depend on industry mix and implementation, but ~7,849% is a reasonable 10-year expectation.
Here are the results of the second part of the above question: On average, how long does it take a company to give up on a failed ProcureTech initiative, and what are the usual or average costs of doing so?
Average Timeline to Abandonment
18–24 months: Most common window for mid-sized and enterprise companies to pull the plug.
12–18 months: Common for early-stage startups or smaller organizations with faster decision cycles.
24–30 months: Larger global companies may take longer due to layered governance and sunk cost fallacy.
Warning signs usually start showing by month 6–12: low adoption, poor supplier integration, missed KPIs, or costly workarounds.
Average Cost of Abandoning a Failed ProcureTech Initiative
Cost Component
Typical Range
Software & Licensing (sunk)
$250K – $2M+ (enterprise)
Implementation & Consulting Fees
$100K – $1.5M+
Internal Labor Costs
$75K – $500K+
Data Migration & Cleanup
$50K – $300K
Change Management & Training
$25K – $150K
Opportunity Cost / Business Impact
$250K – $5M+ (lost ROI, friction)
Total Exit Cost Estimate: For mid-sized to large enterprises: $750K to $9M+ For SMBs: $150K to $800K
Top Reasons ProcureTech Initiatives Fail
Low User Adoption (especially with complex UI or poor training)
Misalignment with Procurement Processes
Inadequate Change Management
Integration Issues with ERP or legacy systems
Lack of executive sponsorship or stakeholder engagement
Vendor overpromising / underdelivering on capabilities
TODAY’S TAKEAWAY
The gap between hoped-for results and actual results with ProcureTech implementations is considerable. In tomorrow’s post, I will share some additional findings from my research to determine how we can bridge the gap.
Procurement Insights
Quantifying The Gap Between ProcureTech Hope (Hype) And Abandonment (Initiative Failure)?
Posted on March 21, 2025
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I am completing a research project that examines the two endpoints of the ProcureTech initiative spectrum: hope (hype) and abandonment (initiative failure) to determine the gap between them.
Using a 2—4-model AI framework within the context of the 1998 to 2025 RAM assessment model, I wanted to answer the question: What is the rate of ProcureTech investment ROI from years 1 to 10 in all industries for Indirect Procurement categories and On average, how long does it take a company to give up on a failed ProcureTech initiative, and what are the usual or average costs of doing so?
Here are the blended results:
ROI Summary Across All Industries
Industry Variations
Analysis and Trends
Supporting Evidence
Conclusion
Across all industries for indirect procurement, ProcureTech investment yields a 2,400% ROI in Year 1, rising to a cumulative ~6,083% by Year 5 and ~7,849% by Year 10, assuming $75 million Year 1 savings from $2.2 billion spend, with costs of $3M initial and $0.75M/year. The trend is front-loaded (Years 1-2), then nominal-to-slightly-decreasing (Years 2-5), and slightly increasing (Years 6-10) as spend grows and technology evolves. This ROI reflects an average across sectors, with variations (e.g., 8,500% in high-tech, 7,500% in automotive) balanced into a robust, generalized estimate. Exact rates depend on industry mix and implementation, but ~7,849% is a reasonable 10-year expectation.
Here are the results of the second part of the above question: On average, how long does it take a company to give up on a failed ProcureTech initiative, and what are the usual or average costs of doing so?
Average Timeline to Abandonment
Average Cost of Abandoning a Failed ProcureTech Initiative
Top Reasons ProcureTech Initiatives Fail
TODAY’S TAKEAWAY
The gap between hoped-for results and actual results with ProcureTech implementations is considerable. In tomorrow’s post, I will share some additional findings from my research to determine how we can bridge the gap.
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