For much of 2008, it seemed like many of the procurement outsourcing deals that were getting signed were focused on a single area (e.g., A/P outsourcing, category/indirect specific outsourcing). But this announcement from IBM proves that the multi-tower outsourcing deals -- the type that includes indirect procurement as one of a range of functions -- is alive and well. According to the news, "IBM today announced that it has signed a seven-year agreement with Sara Lee Corporation … to manage and maintain pieces of the consumer products company's global back office operations. IBM will manage a portion of Sara Lee's North American and European Finance (transaction processing) and Global Information Services (applications development and maintenance) groups, as well as the company's global indirect procurement activities." Included in the indirect outsourcing tower are such areas as "indirect procurement processes, strategic sourcing, category management, and transactional processes that are tightly integrated with accounts payable to enable compliance and drive savings."
I suspect that we'll see more large procurement outsourcing deals in 2009 once the dust settles on the current economic implosion. But whether they are stand-alone arrangements or are part of larger multi-tower deals is a big question mark. I reckon that as the New Year kicks into high gear, that we'll see a lot of CEOs and CFOs engage Acccenture, IBM and other large outsourcing providers on the broader concept of cost reduction, included but not limited to procurement. If this happens, my guess is that multi-tower will have broader appeal as a way to hedge cost reduction bets across a range of functions. What do you think?
- Jason Busch