I'm in the process of beginning to research procurement BPO and outsourcing more seriously. Later this year, we'll publish some of this research on Spend Matters and also under the Horses for Sources label. At this point, I've thought about the following topics that I find relevant to procurement and finance organizations considering outsourcing part or all of the source to pay process:
- What exactly is procurement BPO? Where is the line between "full service" sourcing and category management and procurement BPO? Does it matter?
- Quantifying labor cost arbitrage vs. cost savings, margin and working capital improvements from different approaches and philosophies
- Outsourcing supply markets intelligence -- an overlooked area
- BPO Provider shortlists (general)
- BPO Provider shortlists (first tier providers based on specific strengths in the source-to-pay process, as well as technology expertise and partnerships)
- Ideal roll of technology in procurement BPO and procurement outsourcing
- Contracting and vendor management -- two key missing steps in procurement BPO
- Direct materials -- a procurement BPO area that few organizations even know about, and should consider
- Negotiating and structuring procurement BPO agreements
In my early analysis of this market, I've come away with the perception that all of the providers believe they're highly different than the rest, bringing unique skills sets and knowledge, knowing more about the role of technology, and in general providing a degree of capabilities no one else can match. In other words, there's a lot of hubris in this market -- or a lot of chest thumping. Part of this stems from the fact that many of the analysts who have covered procurement BPO before really haven't a clue about the nuances of how procurement operates, or why most procurement BPO opportunities end in a no-decision situation. These analysts have not been able to provide candid feedback to either their customers or providers, to sort through all the noise. Hopefully we’ll clear some of this up throughout 2010 as we examine this marketplace.
Please let me know if I'm missing anything within the top areas we plan to cover as part of our analysis of the procurement BPO market. Drop a line: jbusch (at) spendmatters (dot) com.