The Services Spend Challenge

In the past month, I've spoken with a number of folks about the challenges of Services Spend Management and services procurement. Nearly everyone in this sampling (including vendors, analysts, consultants, and end-users) agrees that while services spend management is a growing opportunity, it has failed to cross into the mainstream. And no clear market leaders -- or approaches -- have taken a commanding position.

Why? The majority of organizations get started with Spend Management by tackling basic procurement and sourcing before going after more challenging -- but often higher value -- areas. While Services Spend Management represents a great opportunity for many organizations, only early adopters have deployed solutions that specifically address the entire services spend lifecycle.

That's not to say that many organizations are not sticking their toes in the services water. But bidding out individual categories (e.g., temporary labor, car services, janitorial services, etc.) via an online negotiation, as many companies have done, is not Services Spend Management. There are certainly one time savings to be realized by introducing competition, but quite often, implementing and managing services spend on ongoing basis is where the biggest savings and efficiency gains are to be had. That's why a platform that tackles the Services Spend Management lifecycle -- rather than services procurement, sourcing, contract management and other areas independently -- is absolutely critical to maximize savings.

They’re a number of places to go to learn more about Services Spend Management. Ariba wrote a whitepaper on the subject that offers prescriptive guidance about tackling Services Spend Management as a complete category. I could not find it on Ariba's site, but they were passing it out at LIVE, and a Google search located it here.

Ariba's strategy is to go after Services Spend Management as a set of categories that can be tackled independently -- with embedded category knowledge -- yet should be rolled up in a common platform that reaches the frontlines of organizations. Other vendors like Rearden Commerce also push a similar message of platform standardization. Rearden Commerce has tried to position itself as a better mousetrap in the Services Spend Management arena, but time will tell if they significant gain traction. Smaller vendors often preach a best of breed sermon that commands practitioners to purchase different solutions for different categories (often in a hosted environment). One such vendor is Fieldglass. They've written quite a bit on the subject as well, and you can read one of their whitepapers here.

But whether you examine Services Spend Management platform providers like Ariba or Rearden Commerce or targeted providers like Fieldglass, there are a number of places to go to learn more about Services Spend Management and the vendors capable of providing solutions. Aberdeen Group has written a ton of great material on the subject over the years. Forrester has also written a few useful pieces as well.

Stay tuned, as we continue to explore Services Spend Management here at Spend Matters in the future.

-Jason Busch

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