Proxima: Procurement BPO With a Category and Customer-Intimate Twist (Part 3)

Please click here for Part 1 and Part 2 in this series.

Proxima bills its top differentiator as "client intimacy," which includes "tailoring services for each client" and sees this in marked contrast to others that tout "operationally efficient" operating models. In our discussion with a strongly opinionated reference account (a senior executive with oversight of multiple functions, including procurement) for Proxima, this intimate yet opinionated approach came through loud and clear. However, in this case, Proxima was able to deliver the bitter medicine with a level of empathetic sweetness in a way that not only improved the capabilities and savings generation for procurement, but caused the business spend owners to want to work with them.

The challenge of client intimacy is that it does not necessarily scale like other BPO orientations. Yet it does set up relationships for success given the partnering orientation it fosters. Another differentiator Proxima touts ties directly to this point: "taking responsibility for business partnering and change management." This includes stakeholder engagement, influencing, general change management, and strategic direction even "up, to and including, the CPO role." As they see themselves, other differentiators include an on-shore orientation (if you count a shared-services operation in Wales as on-shore; not all Brits might), a "pure-play" focus on procurement and the need to "redefine procurement."

Who do these value propositions appeal to? Proxima targets organizations with a minimum of $150 million in "influenceable indirect" spend, an amount that typically requires "roughly greater than $1.5 billion in revenue." On an industry basis, Proxima tends to focus on those areas where customer intimacy and high service levels are the norm (a mirror of its own approach). Given this, a majority of clients have a services orientation and include those with businesses operating predominately in industries such as financial services and media & entertainment. Other industries served include CPG, retail, high-tech, software and energy. As with other larger BPOs, Proxima's overall champion tends to come from a higher level than procurement (e.g., CEO, CFO, COO).

One Proxima reference account we spoke with fit the above descriptions on both a professional demographic basis individually as well as a company basis almost to the T. This executive took over procurement (along with other functions) and did not want to build an internal competency on a category basis from scratch. In particular, the deciding factors in going with Proxima over other non offshore-based firms (The Indian BPOs were not considered) centered on deep category expertise and specialist capability (e.g., in different sub-categories). In particular, the manner in which Proxima applied key contract experts to such areas as marketing, IT and finance-based spending was important to the overall decision.

The on-site model that came as part of this package (which this executive wanted) included having 2-3 on-site Proxima employees in the marketing area alone. These on-site experts can further consult shared-services experts in the rest of the Proxima organization that "can also come in for a month or two as needed" for specific projects. All of these resources and the internal client organization leveraged Proxima's shared services facilities in Wales for cost analytics, spend classification, invoice-level analysis/auditing and other related areas to indentify opportunities, capture savings and report on results.

In total, Proxima dedicates roughly 10 employees to this client full-time with additional shared services resources brought in as needed. This number includes an overall program manager and other PMO resources, yet the great majority of resources are on-site category experts and managers. None of these resources are dedicated to using or building a technology platform capability on behalf of the client.

Proxima has not impacted this organization's technology systems. The company is running Oracle iProcurement in the background, but also uses select supplier sites and portals (e.g., configuration-based sites for IT hardware purchases). Proxima worked with their existing systems for transactional buying and compliance, but also brought their own analytics and tools to drive sourcing and contract efforts on a category-specific basis.

Looking at selection and results, it was clear that Proxima's lack of an overall technology or platform as a service orientation (unlike many of its BPO peers) would not hurt it. Yet other companies may feel differently about the level of technology and platform support that a BPO partner should bring as part of a core offering. Clearly, Proxima's orientation toward procurement requires that potential clients buy into their unique perspective and approach to what the procurement function should do -- and the manner of how it should achieve results. We'll conclude our series on Proxima on Spend Matters PRO, examining how the provider's capabilities stack up in a highly competitive procurement BPO market, including our perception of its strengths and weaknesses compared with others in the procurement outsourcing market. We'll also recommend what types of organizations should consider short-listing Proxima as procurement BPO vendor.

- Jason Busch

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