Regardless, I gave the opening external keynote presentation at the Vegas event, covering the latest in broader services procurement trends and happenings (including a deep dive on driving adoption across SOW and complex categories). The second keynote of the day came courtesy of Forrester's Stephanie Moore, who spoke on next generation business intelligence in services procurement. I had not met Stephanie before, but I've always enjoyed the services procurement insights of her lanky, bridge playing colleague, Duncan Jones. Stephanie's primary coverage area is outsourcing and BPO, though the information she shared on the services procurement area from a largely IT and vendor management perspective was fascinating, especially the primary survey research data Forrester has recently collected in area.
Looking forward, Stephanie argued that "pervasive, integrated vendor management" will be key. But what's most interesting (that we'll get to in the next installment in this series) is how vendor management offices are now turning their attention to contingent services, looking beyond IT consulting, software/hardware and BPO engagement management. But first some context. Today, VMO growth "remains strong but overall adoption is divided" with 47% of companies having a centralized VMO and 11% rolling one out in the next year, according to Forrester's recent survey day. From a reporting and structure standpoint, VMOs split between IT and procurement. 41% reside in IT, 41% in procurement. And they're "typically staffed with between two and ten people" in typical organizations.
Among other VMO trends, it's no surprise that sourcing and vendor management groups tend to focus on "strategic" vendors rather than the majority (i.e., the 80/20 rule is in effect here, as it is in sourcing). On the product (e.g., SAP, Oracle and IBM) side of the VMO equation, "rate negotiations and spend analysis scrutiny is at an all time high," Stephanie noted. In contrast, with outsourcing vendors, tracking broader risk management metrics (as well as rates) also factors into the equation. Perhaps most important, the top performing VMOs have already picked the proverbial low-hanging fruit. They're now looking for new value levers, Stephanie suggests. Stay tuned as we investigate the contingent workforce area as perhaps the most intriguing one in more detail, suggesting the pattern of evolving a VMS program to complex categories/SOW does not necessarily just head in one direction only.
- Jason Busch