It's not too often that a procurement BPO provider, consultancy or software firm presents a customer or analyst they're pitching with a diagram that attempts to explain themselves in the context of the competition. Here at Spend Matters, we've seen the occasional provider create their own Gartner Magic Quadrant or Forrester Wave type approach, always placing themselves in the "up and to the right" area. We've also seen vendors take existing quadrants from analysts and slightly reorient them to emphasis certain placement or areas. This is downright unethical in our book (but it happens, so watch closely and validate any graphics a provider might present to you that aren't from an approved reprint document).
Given the complexities of procurement BPO, it's no surprise that a single comparative ranking graphic from an analyst firm or created by a provider itself would be all but useless in a practical evaluation. But understanding the philosophical orientation of the vendor is definitely helpful. In its pitch to us, Proxima used a somewhat daring slide with a content-rich graphic to show its perception of its own model alongside competitors (including IBM, Accenture, Procurian, Capgemini, Xchanging and others). While we don't agree with every word Proxima uses in attempting to capture the philosophical procurement BPO orientation of its competitors in this graphic, it was a really thoughtful effort.
At its essence, Proxima takes one of the more daring stances in its core philosophy toward procurement BPO. While they suggest other BPO statements like "use our disciplined processes" or, my personal favorite, "buy like us" (guess who that one is) Proxima suggests that organizations should use procurement outsourcing to "change your business to get more value." There is a subtle but fundamental value statement at work here that procurement is broken in its current shape and form and that real change is necessary to fix it. Moreover, it's a daring core philosophy insofar as it does lend itself to placing a quiet foot in the door.
Candidly, before meeting with Proxima and getting to know the organization's team, capabilities and orientation, we often thought them a UK-based BPO mimicking a number of the approaches of Procurian and Accenture. But after hearing statements like this and digging into the offering, including customer references, we've since come to believe there really is something different in how Proxima approaches the discipline of procurement BPO.
In Proxima's words, "to achieve its true potential, procurement needs to be viewed by the business from a completely new perspective. And to achieve this, it has to think, act and communicate in a new way." Further, the reason businesses are not investing more in the area, given the obvious potential returns, is that they "don't believe in the value proposition." This results in the organization not knowing "what it needs or what is possible, so it carries on accepting the status quo."
The transformation that Proxima is after is both metrics and valued-driven. Proxima argues (and we agree) that gross margin is a better proxy for results than savings alone. Think of the implications of this statement as an input to a new charter for procurement (it opens up a number of new opportunities, to say the least). Other concepts Proxima touts include moving from "procurement conversations with stakeholders" to "engaging in business conversations."
For realized savings potential, one key shift is moving from a common approach focused on identified savings to one where a "shift in the cost base is achieved ... [and] the new cost base is then held to market." In other words, savings are not only implemented the first time, but are then maintained and confirmed, even if underlying shifts in the business or external marketplace occur.
Under the old model, procurement often sought mandates in a culture where "getting around procurement" was common. In comparison, Proxima suggests an ideal future where the business seeks out procurement because "it's easier, faster and more insightful; a better value for money." Proxima places less stock in sourcing as a core focus as well, suggesting that going forward, we'll see the "majority of time spent either side of the sourcing process."
Summing up Proxima's overall approach to changing procurement is not a simple endeavor, nor is it something we can boil down to just a handful of statements such as the above. This is in large part because they have refined it so significantly over the years as they've observed what types of clients have been the most successful. However, though their vision is certainly radical, and it's one we generally agree with -- let's fix the patient as opposed to giving them pain killers and bandages. In contrast, their current wrapper and go-to-market approach appears on the outside to be more conservative than such a radical philosophy would warrant. Yet such a Trojan Horse may be just what's needed to truly impact the business beyond procurement's limitations today.
To be continued...