In part 1 of this series examining Genpact's capabilities in procurement, I took a look at their broader capabilities and positioning in the sector. In this post, I'll double-click on their unique processes and approaches to delivering procurement BPO results in the source to pay arena. Within this area, Genpact breaks their capabilities down into two areas: Source to Contract and Procure to Pay. Within the former, Genpact focuses on spend analytics (it currently uses its own technology in this area), category management, decision support information, market intelligence, sourcing strategy and negotiations. Within the source to contract area, Genpact's specific offerings include supplier profiling, supply market analysis, RFQs/auctions and negotiation as well as sourcing analytics. In the P2P area, Genpact focuses on data management (e.g., catalog management / MDM), tactical planning for PO management, material receipt matching and accounts payable (including invoice management and automation).
On a high level, this offering sounds like what all the other large BPOs offer in the procurement outsourcing arena, targeting both price and non-price levers to get savings for clients. But what separates Genpact's approach is what they term their Smart Enterprise Processes (SEP), which, in their words, focuses on analyzing key business outcomes, mapping core business processes at a granular, enterprise-wide level, linking business outcomes and benchmarks to key performance measures and drivers, testing the effectiveness of a client's processes (resulting in a client-specific diagnosis and roadmap) and finally, executing recommendations through a combination of "process insights, analytics, reengineering, and technology."
In other words, on the surface, SEP sounds remarkably similar to the type of benchmarking approach that a firm such as Hackett, AT Kearney or McKinsey might take a company for (either as part of a programmatic/subscription or customized engagement). Still, it's quite granular; moreover, it's seems quite clear from the looks of it that Genpact developed it in tandem with McKinsey or another strategy firm, which should lend further credence to it.
One of the lasting goals of SEP, in Genpact's words, is to provide a diagnosis and program which "offers deployment flexibility and performance-based commercial models which are self-funding and P&L neutral" while also "prioritizing high impact price and non-price levers for savings." As an example of the level that SEP dives into the spend trenches, consider the granularity of how they slice a client's spend analysis and category savings opportunities.
Genpact gathers SEP data through a combination of quantitative diagnostics (e.g., spend assessments, process metrics analysis and benchmarks) and general systems landscape and data extraction, in their words. The SEP assessment process also includes "qualitative diagnostics" including "interviews with stakeholders." With SEP, I believe Genpact really does get into reasonably deep KPIs, including benchmarking how companies stack up around % of spend extracted accurately (e.g., classification and cleansing effectiveness), % of suppliers for which spend is categorized accurately, number of suppliers per billion in spend, external benchmarks and price indices uses, % of spend under contracts and % of vendors with discount terms. Overall, the sophistication -- at least from a methodological approach -- is at a similar level to the better operations consultancies I've observed over the years, yet it is by no means unique within procurement.
The proof, however, is always in client engagements and implementations. And here, there's not enough of an established track record to make any definitive conclusions. Moreover, one of the potential dangers of SEP, in my view, is that the spend fox might be getting a little too close to the henhouse when it comes to suggesting benchmark recommendations tied to Genpact's ability to not only consult in their execution, but manage the execution process on behalf of a client in its entirety. I'm not sold on the neutrality of having a BPO conduct such an analysis (I'd feel the same way if this was IBM, mind you).
Still, I think Genpact's SEP approach shows that this is one offshore-based BPO that considers far more than labor-related areas in benchmarking the opportunity for client savings. Stay tuned as we investigate Genpact from a competitive standpoint in the final post in this series.
- Jason Busch