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Below, we feature some more excerpts from Part 2 of our PRO analysis exploring how managed services providers (MSPs) might lose out to business process outsourcing firms (BPOs) in the drive to deliver value for complex services procurement categories. For subscribers, access the original here: Holding Managed Services Providers (MSPs) Accountable to a BPO-Based Standard (Part 2).
All Spend Matters readers can click here for Part 1 of the "PRO preview" commentary.
The second area that we see BPOs having a leg up over MSPs in the broader attempt to capture more of the services management pie is the level of broader category-specific approaches and category-specific enabling technology that they can bring to the table. Marketing spend is an ideal example in this regard. Traditionally, BPOs focused on tackling lower-value marketing spend and, in the best of cases, limited measurement, management and oversight of agencies of record.
But as the procurement outsourcing market has evolved, BPOs are increasingly taking on responsibility for more advanced opportunities to drive savings and value by engaging directly with agencies to tackle the following types of questions and initiatives:
- How do we quantify the value we are getting for our marketing spend (on both broader campaign levels down to the individual customer click)?
- Are we examining all types of marketing spend and putting it through a rigorous analytics process (not just higher-level categorization, but print, digital, VOD, etc.)?
- How are we evaluating formats in context across channels?
- Do we have a complete package of our performance and programs that would allow us to more easily change our agency of record, if required?
- How is our competition performing compared to us (both on absolute and relative dollar bases)?
We are not aware of any MSPs with a track record of answering these types of questions in the marketing spend area, yet numerous (we know at least four) BPOs can engage at this level of granularity or deeper.
The broader question is what level of engagement can a BPO make in a category, and can it answer the fundamental business and philosophical questions that can drive better procurement engagement? In the case of marketing spend, visibility and analytics is at the center of the battleground for better results and better category management. A BPO should have a point of view on this. For example, who is best suited to manage the information flow? An agency of record vs. a neutral third party? The answer to this question might seem obvious, but the vast majority of customers trust information management to agencies.
Changing this holds the key to enabling the right decisions and the more effective BPOs know this (similar questions and answers hold true across services categories; legal, accounting, systems integration, strategy consulting, operations consulting, BPO, call center, etc.) If a BPO can step in and help customers make more effective and potentially game changing decisions that elevate the role of procurement, everyone wins, versus an MSP-centric approach that tends to focus on compliance and handling all the proverbial requisition balls tossed over the wall.
As a closing thought, we will share with you one anecdote that illustrates the expertise and solution capabilities required to engage in the marketing area effectively. Consider how, as one industry expert told us, Leo Burnett (a specialist in "old media") will never tell a client to shift spend to Facebook, and on the other side of the coin, a social agency will never tell a client to shift spend to TV.
Being able to challenge these assumptions is the key! And if a BPO is not equipped to do this with the right team, tools and processes on a category-by-category services basis, we would seriously question their potential efficacy and ability to drive sustainable returns. We hope to learn about MSPs that are doing this, but have yet to see examples outside of the core contingent and foundational SOW/project-based areas.
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