Spend Matters Compass — New Report: Managing Non-Contingent Services Procurement Categories

Spend Matters research suggests that organizations collectively spend over a trillion dollars per year on a range of services categories. From legal to marketing to print to outsourcing, organizational spending across a breadth of often complicated and hard-to-manage services categories typically is large -- significantly larger than most companies realize before analyzing it -- and decentralized. When companies first start to tackle complicated services categories, one of the major challenges they discover is that price is often just one component of many that factor into services spending decisions. In addition, few organizations have any visibility into actual or total cost (rather than cost based on a unit of measure) for services categories until they receive an invoice from a contracted supplier.

Indeed, no one said that managing complex -- and in some cases, not-so-complex -- services categories was easy. After all, this is one of the reasons why procurement organizations often are involved in managing the sourcing and supplier relationship lifecycle for such categories as marketing, legal, and print only after they've tackled numerous other categories first. But the cost and non-cost rewards for tackling non-contingent services categories are often significant. The latest Spend Matters Compass series research brief (the second in our initial four-part series examining services procurement), examines the costs and opportunity of pursuing service. It's titled Services Spend: Beyond Contingent Labor -- Achieving and Implementing Savings Across Previously Unmanaged Categories.

This Compass Series paper provides strategies and approaches for pursuing non-contingent services categories, including recommendations for what to look for in technology and services partners. It also provides nine recommendations to procurement and finance organizations interested in getting a better cost and value handle on services spending. These include the importance of:

  • Educating the broader organization on services procurement by demonstrating that it's not just about driving to the lowest possible cost, but that its primary objective is to maximize value, as defined by category.
  • Soliciting the input and guidance of category experts rather than of generic, process-driven consultants, and why having a general "toolbox" to apply across services spend categories is not always the best strategy.
  • Considering alternative specialized services-procurement solutions (often on a per-category basis) in addition to standard VMS platforms designed specifically for contingent spending.
  • Investing in analytics capabilities (beyond those offered by procurement vendors) that can provide a highly granular slice of services spending data -- including performance and reporting -- in key categories (e.g., marketing).

The paper suggests that "in the future, new advances in services-procurement technology capabilities as well as functional integration between services procurement, spend analysis, sourcing, optimization, and contract-management suites will help organizations achieve even greater levels of savings, compliance, and provider value across the spectrum of services procurement categories." Learn how to get started today by reading the Spend Matters Compass brief, Services Spend: Beyond Contingent Labor -- Achieving and Implementing Savings Across Previously Unmanaged Categories. Simply click here to register to download your free copy.

Jason Busch

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