This morning, I would like to welcome two guest bloggers from the Everest Research Institute: Katrina Menzigian, VP of Research, and Saurabh Gupta, Research Director. This is their first guest post on Spend Matters.
The announcement earlier this week that Genpact and ICG Commerce will combine forces to go after the source-to-pay (S2P) market is both timely and compelling.
The confluence of these two companies, both strong players in F&A outsourcing (Genpact) and Procurement outsourcing (ICGC), aligns nicely with the growing trend we at Everest Research Institute have reported over the past year or so; namely, an expanding requirement for suppliers going after PO opportunities to have strong capabilities in both sourcing and P2P processes. Companies buying PO services have increasingly moved towards a more modularized approach of starting in one procurement area and expanding across the cycle to other areas. To date, suppliers in the PO market have either focused on sourcing or P2P, with only a few market leaders having capabilities to respond to client needs by expanding service scope across the full S2P cycle. In response to this dynamic we've seen suppliers pairing up, with HP/Ariba announcing a similar relationship a few months ago.
Enhancement of scope and geography capabilities also plays a role in this partnership. ICG Commerce's strong sourcing and category management expertise provides the front-end to Genpact's ability to globally manage large volumes of complex procurement and accounts payables transactions. In this way, the two players complement each other and will not be stepping on each others' toes. From a geographic perspective, joining forces with Genpact provides ICG Commerce the opportunity for an expanded presence in the European market, thereby providing a platform on which to build even greater regional category and supplier expertise. This level of regional expertise is generally difficult to achieve in PO, but once within grasp, offers a very compelling value proposition to clients seeking a global procurement solution.
Lastly, this relationship has already taken a test drive with two prominent clients, Kimberly-Clark and Hertz. While collaboration involving two distinct business models and company cultures always involves adjustment, it's likely that many of these challenges have already surfaced and been addressed. This week's news is a reflection of work that's already been underway.
What's in store for the future? As we see it, this move puts the Genpact/ICGC partnership within the same realm as more prominent players such as Accenture and IBM, who are well positioned to pursue global deals with larger clients. Given that options for this category of clients had been limited to date, it's likely we'll see new S2P deals announced over the next year involving large buyer organizations.
Spend Matters would like to thank Katrina Menzigian and Saurabh Gupta for contributing their thoughts on the recent Genpact/ICGC announcement. They can be reached at kmenzigian [at] everestgrp [dot] com and sgupta [at] everestgrp [dot] com.