For years, procurement success was measured by one number, savings. The lower the price, the better the performance.
But in 2025, that definition has changed. CFOs and CEOs are no longer asking “how much did we save?”, they are asking “how much value did we create?”
Modern procurement is about visibility, control, and impact. It is about transforming spend data into business intelligence and ensuring that every riyal spent contributes to the company’s long-term goals.
So what KPIs are modern CFOs and procurement leaders looking at today? Let’s explore the metrics that define procurement success in the digital era.
1. Spend Under Management, The Foundation of Control
You cannot control what you cannot see.
Spend Under Management (SUM) measures how much of the organization’s total spend flows through controlled, visible, and approved procurement channels.
When procurement is managed manually or through fragmented systems, large portions of spend remain invisible, creating what is often called “maverick spend.”
In best-in-class organizations, over 80% of spend is managed through digital platforms. In traditional setups, that number rarely crosses 40%.
The impact of visibility is not theoretical, it is direct. More visibility means better negotiation power, faster decision-making, and reduced risk.
With Penny, enterprises get real-time visibility across departments and categories. Every purchase request, quotation, and invoice becomes part of a unified spend view that empowers both procurement and finance to act with clarity.
2. Procurement ROI, The Metric That Matters to the Board
CFOs care about returns. Every technology investment is now evaluated through the lens of Return on Investment (ROI), and procurement software is no exception.
Procurement ROI measures the value created compared to the cost of running the function. It includes savings, cost avoidance, process efficiency, and supplier value.
According to Gartner, digitized procurement functions can deliver an ROI between 300% and 500% within the first three years of adoption.
This happens not only because of reduced manual work, but because of smarter sourcing, better payment terms, and automated supplier collaboration.
Penny’s customers consistently report measurable ROI through:
- Faster purchase cycle times.
- Reduced supplier management overhead.
- Direct savings of 6.11% and cost avoidance of 27.5%.
- Improved working capital visibility through connected systems.
ROI is no longer about cost-cutting, it is about cost mastery.
3. Procurement Cycle Time, The Speed of Business
In an age of instant everything, speed is a competitive advantage.
Procurement cycle time, from requisition to purchase order approval, is a crucial KPI for measuring efficiency.
In manual environments, cycle times can take anywhere between 7 to 15 days depending on internal approvals. Digital-first organizations using automated workflows can reduce this to 1 or 2 days, sometimes even hours.
When approvals, quotations, and purchase orders happen in real time, organizations become more agile.
They can respond faster to market changes, secure better supplier prices, and prevent project delays.
Penny enables this through automation that routes approvals instantly, not through endless email threads. Procurement teams gain speed without sacrificing governance.
4. Supplier Performance and Reliability
Suppliers are not just vendors, they are business partners.
Their performance directly affects product quality, delivery timelines, and ultimately, customer satisfaction.
Tracking supplier KPIs such as on-time delivery, price competitiveness, and compliance is now standard practice for modern procurement functions.
A digital platform like Penny collects supplier performance data automatically from purchase orders and invoice records. It helps procurement teams identify their most reliable partners and those that need attention.
High-performing organizations integrate supplier analytics into strategic decision-making. They understand that the health of their supply base is directly tied to their market resilience.
5. Cost Avoidance, The Invisible Victory
While direct savings are easy to quantify, cost avoidance often goes unnoticed.
This KPI measures the potential costs the organization avoided through smarter sourcing, negotiation, or early procurement involvement.
For example, when a procurement team negotiates better payment terms or uses volume bundling to reduce inflation exposure, those are cost avoidance wins.
At Penny, cost avoidance is a core metric.
Across customers, the average cost avoidance achieved is 27.5%, calculated as the difference between the accepted offer and the average of competing offers.
Cost avoidance proves that procurement’s value goes beyond cutting prices, it is about protecting financial health.
6. Maverick Spend Ratio, The Hidden Leak
Maverick spending happens when employees buy goods or services outside approved channels. It leads to uncontrolled costs, compliance risks, and reporting inaccuracies.
In many organizations, up to 20% of spend falls under maverick purchases. The main reason is a poor user experience in procurement systems that drives employees to bypass them.
Penny solves this by design. With its intuitive interface and user-friendly experience, employees prefer to use Penny instead of avoiding it. This naturally drives adoption and governance without enforcement.
Reducing maverick spend improves compliance, spend visibility, and ultimately, savings.
7. Spend Forecast Accuracy, The CFO’s Peace of Mind
Accurate forecasting is where procurement meets finance.
CFOs need predictable spending patterns to manage cash flow, budgets, and supplier payments effectively.
Digital procurement systems provide real-time data that improves forecasting accuracy dramatically.
When spend is centralized and structured, finance leaders can forecast commitments, supplier payments, and future needs with confidence.
Penny’s analytics and dashboards give CFOs instant insight into upcoming obligations and spending trends, making planning easier and more reliable.
8. Sustainability and Local Content Compliance
Procurement KPIs are expanding beyond cost and speed. Sustainability, local content, and ethical sourcing are now board-level priorities.
In Saudi Arabia, for example, the Local Content and Government Procurement Authority (LCGPA) mandates tracking and reporting local spend contributions.
Penny helps organizations automatically measure and report their local content compliance.
By digitizing supplier data and spend classification, companies can demonstrate alignment with Vision 2030 goals while also improving transparency and public trust.
The Modern CFO’s Perspective
CFOs today see procurement as a strategic lever, not an administrative function. They look for data that connects procurement activity with financial performance.
The question has shifted from “how much did we save?” to “how much value did we create?”
Procurement teams that embrace this shift are transforming their roles entirely. They are becoming internal advisors, value creators, and decision enablers.
The Penny Advantage
At Penny, we believe that modern procurement success is defined by intelligence, not intuition.
Our platform helps enterprises:
- Gain full spend visibility.
- Automate approvals and compliance.
- Track savings, ROI, and supplier performance in real time.
- Align procurement KPIs with business growth metrics.
Digital procurement is no longer a tool, it is a strategy. And those who adopt it today are building tomorrow’s competitive advantage.
Final Thought
The world of procurement is changing fast, and so are the KPIs that define success.
Savings still matter, but they are no longer the full story.
Procurement leaders who measure what truly matters, visibility, speed, compliance, and ROI, are the ones shaping the future.
Book a personalized demo today and discover how Penny Software helps you measure, control, and multiply the value of every riyal spent.
