Growing the Market Pie: Expanding the Definition of Procurement BPO (Part 1)

The definition, history and future of Procurement BPO are topics that always engender scintillating debate and conversation amongst those in the sourcing community as well as on the provider side. Clearly, this is a market in transition -- in fact, it's one that is really in a constant state of evolution that began with select (and often sub-optimal) multi-tower deals back in the early days. Following these early market days, we entered what we sometimes describe as the BPO paper stack days -- when un-awarded RFPs would pile up following no- or extended-award decisions. Within this timeframe, procurement BPO continued to develop a reputation in many circles for what it could do wrong as much as what it could to right. This negativity continues to dog procurement BPO today and is one of the reasons fewer providers are using this description (or at least leading with it) to explain what they do.

Yet the negativity towards procurement BPO, we believe, isn't worth further ink in the least. Rather, we must center the conversation on expanding what procurement BPO encompasses. For us, the market for procurement BPO services and related areas goes far beyond the label of simply outside the outsourcing of a majority of indirect spend or accounts payable on a blanket basis. Yes, it can include these areas, no doubt. But procurement BPO also encompasses (at least by our definition) complex category management as a service (e.g., marketing services, capital equipment, IT services, legal sourcing), spend visibility (e.g., the outsourced management of data classification services and refreshes), the hosting and management of P2P platforms (e.g., Hubwoo, CGE&Y/IBX, Infosys), catalog management as a service and even supplier management BPO.

As we explore procurement BPO definitions and terminology, we need to change the broader definition around what the term entails -- from the most tactical to the most strategic. Within this context, it can be helpful to learn from historic parallels and examples across procurement and logistics that present BPO and managed services models that may look more similar to how we'll define procurement BPO in the future (hopefully in an entirely positive light) versus how we've labeled it in the past.

- Jason Busch

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