Spend management must become spend orchestration

As 2025 peers around the corner, one thing in procurement is certain: we are living in the spend orchestration decade.

This past year, orchestration went mainstream. 

Analysts and influencers established market guides, released the first rankings of competitors, and offered advice on how to navigate this evolving landscape. Procurement orchestration officially began its ascent on the Hype Cycle, positioned as a trend with potentially “transformational” benefits.

What started in 2020 as excitement about intake management revealed a larger set of procurement challenges. We needed to make our work more collaborative, more efficient, and, in many cases, simpler.

Now, with spend orchestration hitting its stride, it’s time to break away from outdated approaches. As our co-founders Rujul Zaparde and Lu Cheng declared at DPW, spend management is dead.

In this volatile and uncertain decade, we need a new framework to extend procurement’s influence and effectiveness across the business. The siloed, insular model of spend management no longer meets the expectations placed on procurement today.

What was spend management?

Spend management met its demise in part due to its age. The term first arose in the late 1990s and gained mainstream recognition in the 2000s, as the first wave of source-to-pay suites established themselves and businesses sought to drive cost efficiencies through more proactive management of supplier relationships. 

The historical context of spend management’s rise is essential for understanding its current limitations. In the wake of the 2008 financial crisis, many businesses fell into a necessary but myopic cost-centric mode. For example, here’s how the Gartner glossary defines spend management:

A closer reading surfaces several hints about spend management’s emphases and limitations:

• The bottom line: cost savings and efficiency are the focal points. All procurement decisions should orient toward these goals.
• Procurement is the focus (“primarily related to procurement”), and the role of other functions is not in scope.
• Spend visibility is what CPOs and CFOs are pursuing, irrespective of other factors related to the supplier relationship.

These factors, to be sure, are still the bread and butter of procurement. No CPO could plausibly claim that risk management, sustainability or innovation are the only guiding factors in procurement decisions. 

The problem is that the core challenges of procurement—cost, quality, speed—are still critical while the plate of procurement responsibilities only grows larger. We’re responsible not only for the bread and butter but the fruit salad, the coffee, and the presumably sustainable seitan bacon, too.

The 3 shifts that killed spend management

So how did we get to this point? Simply put, the world changed. 

Procurement no longer operates in a pre-digital environment where focus is only on core tasks, and workload issues are solved by throwing bodies at problems.

Consider the world in 2005; there were no iPhones, the internet was mostly catalogs and whimsical blogs, remote work was eccentric, if even possible.

This shaped what procurement needed to buy. Categories were fundamentally different. They were, in general, weighted toward physical goods. And in the cases where services were required, several large suppliers might have fully dominated a category. 

Take, for example, marketing. 

Back in the day, marketing spend focused on direct mail, billboards, and perhaps a handful of relationships with creative agencies. A business’ market presence was primarily physical, with only so many channels to distribute in. 

Today, those channels still exist—but there are more on top of them. There’s not only print advertising, but also digital advertising across media including websites, search, and social media. Marketing may still work with large creative firms, but also with influencers: a fast-shifting market where contracting, ordering and transacting needs to move just as quickly. 

Extrapolate this out to other departments and categories and you begin to see the shape of the problem. 

Much of this growth in spend originates from decentralized sources in the business outside of easy procurement influence, and the nature of these category changes make the spend itself more services-oriented and generally more complex.

But beyond this first problem, procurement’s scope has also shifted in the post-pandemic era. 

The social role of procurement has become an increasingly prominent topic, with factors such as supply sustainability, ethical sourcing—e.g., forced labor—and regulatory compliance putting procurement at the center of corporate responses. Regulation in particular has become an increasing burden, as procurement workloads shift in response to banking regulations, climate mandates, and evolving frameworks for how to manage the rollout of AI. 

Managing this complexity is challenging for any department, but especially for procurement. Sitting at the nexus of internal customers, business leadership, and external partners, a procurement team needs to coordinate and manage a diverse set of stakeholders with sometimes competing priorities. This only becomes harder when we acknowledge the third shift: talent. 

Organizations are not seeing headcount increases proportionate with their increase in responsibilities, and many are wrestling with the challenge of retaining interest in staying in the profession from younger employees. 

It is in this context that spend orchestration has not only arisen but become the path forward for procurement’s next evolution. 

What is spend orchestration?

Procurement's biggest challenges can’t be solved by technology alone. If they could, incremental improvement in spend management would have sufficed. Instead, what procurement needs is a new strategy, one that aligns people, processes, and technology to work together in harmony to deliver on these increased expectations.

That’s why Zip, which created the orchestration category in procurement, defines spend orchestration holistically:

We define spend orchestration at this level to emphasize a few key points:

• Orchestration is about sizing the prize of procurement’s responsibilities and executing on those priorities in alignment with business strategy
• Central coordination is the operative term, as many businesses have fragmented, distributed processes that span multiple systems, some of which are not owned by procurement
• People and process are just as important as data and workflows, and flexibly designing the processes and operating models for orchestration will be key to meeting new expectations

With spend orchestration, maintaining spend visibility is not the goal; rather, it is an enabling capability. 

Central coordination of spend and all activity connected to the supplier relationship across functions can deliver insights into not only what has been done, but also what can be done better in the future. 

In this way, spend orchestration is uniquely positioned to drive improvements in exactly the areas that procurement needs the most help in—driving process and behavior change with stakeholders to ensure regulatory compliance, continuously monitoring the performance and risks of current suppliers, and delivering on core savings and delivery metrics to meet the operational needs of the business. 

Approaching ‘Procurement 2030’

As we enter the second half of the spend orchestration decade, we must think differently about how procurement will respond to its expanded scope. 

As many of our customers—early adopters and pioneers of the spend orchestration strategy—can attest, spend orchestration is not a one-time fix or a silver bullet. It is an evolution that reshapes procurement to be “future ready.”

Spend management got us here, but it can’t get us to where we’re going. At Zip, we believe the next evolution of procurement will be driven by orchestration. And we’re excited to lead the way with you.