The BPO Category

Holding Managed Services Providers (MSPs) Accountable to a BPO-Based Standard (Part 3) [Plus+]

Consider that during the initial years of a services procurement outsourcing initiative involving legal spend, that pursuing e-billing programs that enable rate management and better invoice tracking along with formal rate management programs and related benchmarking, rate/value alignment and volume discounting is most likely to deliver optimal near-term results. Yet in most cases, in the out-years of a multiple-year legal spend management program, it makes sense to move to such areas as law firm selection, alternative fee arrangements, resource optimization and document discovery as the next areas to tackle.

SAP Ariba Procurement Desk: Shared Services and Center of Excellence (CoE) Enablement [PRO]

category management

Procurement shared services groups can take different shapes and can add different sources of value. Shared services tend to focus on procure-to-pay (P2P) and accounts payable support, including supplier enablement, supplier master data maintenance, transactional purchasing, transaction processing, invoice automation and exception management. CoEs focus on both a classic shared services model (i.e., supporting processes on behalf of the business units) or a more transformational CoE model (i.e., giving business units tools, training and focused resources like third-party services). 

The former tends to focus on tactical buying like spot buying and tail spend management, and the latter tends to focus on strategic procurement areas such as analytics, sourcing, category and supply market intelligence, and contract management support. Increasingly, a number of CoEs are focused on both areas, whether run and administered internally or in an outsourced manner — sometimes only in part — by a business process outsourcing (BPO) partner such as Accenture or GEP.

Yet even with the help of these outsourced partners, procurement shared services teams and CoEs have not had up to this point a purpose-built technology solution to manage their own operations. SAP Ariba is hoping to change this with its new Procurement Desk product. Available in March to limited release customers and in the summer months to all SAP Ariba customers, Procurement Desk has big plans to improve the capability of shared services teams and CoEs to deliver value and drive continuous improvement.

Based on demonstration sessions, presentations and analyst discussions at SAP Ariba Live in March 2018, this Spend Matters PRO research brief introduces the initial release of Procurement Desk, explores some of SAP Ariba’s ambitions for future releases based on the product roadmap and offers our initial analysis of the new offering, along with recommendations for SAP Ariba customers. A subsequent PRO research brief will provide a generalized CoE operating framework spanning all areas that procurement shared services groups can address with SAP Ariba’s current and planned capabilities for targeting this market.

Group Purchasing Organizations: Supplier Perspectives and the Evolving GPO Landscape [PRO]

Joining a GPO is like getting a Costco membership. You know you’re not going to get ripped off, so you probably won’t put much thought into joining. But therein lies the rub for GPO members. Like Costco, a GPO is a one-size-fits-all marketplace where you may overbuy when you get there or underbuy by not getting there at all.

In an increasingly Amazon-dominated world, however, this model is not the only available option.Today, the assortment and pricing of items available to consumers are tuned to the user and monetized most efficiently by intermediaries that can source better and optimize for lowest total landed costs better than individual buyers. Procurement organizations are now looking to bring this experience to the complex world of B2B purchasing. And where GPOs fit into this more sophisticated equation is not a simple answer (many are still trying to figure it out themselves). 

But that doesn’t mean GPOs will go the way of the 1980s big box retailer. Instead, GPOs will have to take on a role beyond the race to the lowest price. This multipart Spend Matters PRO series explains what motivates GPOs and helps procurement organizations best decide when and how to engage them. In this second installment (see our initial GPO introduction), we explore GPOs from a supplier perspective and offer recommendations for vendors working through GPOs to make these relationships more successful. We also explore how GPO options and capabilities are evolving and segment the GPO market by model and type and provide case example looks at different GPO business models. These include vertical/industry independent, member-owned, horizontal, affinity, category-specific and procurement technology led GPO models. 

An Introduction to Group Purchasing Organizations (GPOs) [PRO]

purchasing

Group purchasing organizations (GPOs) are not a new idea. Agricultural cooperatives aggregated the buying power of farmers hundreds of years ago. That said, GPOs have evolved quite a bit, and the infusion of new digital capabilities is taking that evolution to an even higher level. This evolution also means that procurement organizations must go in “eyes wide open” to best utilize this important tool in the procurement tool belt.

Not all GPOs (or GPO models) are the same. Understanding the differences will make you a more educated, and thus likely more successful, buyer. Therefore, we’ve decided to delve a little deeper into this obscure sector of the procurement provider market and shed some light on how to best extract value from it.

This multipart Spend Matters PRO brief is designed to demystify GPOs and put procurement organizations on the same information playing field as the GPOs attempting to sign them up, expand their utilization of contracts and sell additional services. Within this series, we will explore GPOs by type, as there are several business models in play, and by industry segment, as GPOs are heavily embedded in certain markets and are little more than a supply option in others.

This first installment in our GPO coverage:

  • Defines what GPOs are (and are not)
  • Explains how GPOs operate
  • Explores GPO “spend coverage and fit”
  • Analyze the GPO market segments and how to engage them
  • Offers tips and tricks for engaging GPOs based on their own constraints/models
  • Provides both basic and advanced takeaways for procurement organizations that are thinking through GPOs as an alternative supply option
  • Offers a checklist of activities to consider when sourcing GPOs

Is the Tail Spend Problem Solved with Technology or with Managed Services?

Tail spend is a thorny problem — and an important one.

Tail spend is an amalgam of more granular spending: one time, low dollar, maverick, tactical by design. It doesn't even have a common definition understood by all, and it is generally a mess.

So, how to solve this problem? The design ideal is the concept of guided buying, where you start with the end customers (i.e., employees who need something) at the time of need and then guide them down to get what they need to accomplish their goals (but also within corporate policy). It’s an entryway to all procurement, not just the procure-to-pay (P2P), process, so you need to get it right and make the experience count.

But, who is the guide? Is it a tactical buying group in shared services or outsourced provider? Or is it a technology solution? Let’s discuss.

WNS Acquires Denali: Acquisition Summary and Market Analysis [PRO]

Tradeshift Baiwang

Earlier today, WNS announced it had acquired Denali Sourcing Services, a procurement solutions provider. Denali was one of the pioneers in procurement managed services. But more recently, the firm has expanded its broader practice in such areas as spend analytics, market intelligence and training. Not all of these capabilities will transition over to WNS — some will remain with the original Denali group, which will be rebranded in the coming months.

Denali brings a number of capabilities to WNS, including a center of excellence (COE)-driven managed services capability for spend analytics, strategic sourcing, category management and supplier management. In short: It adds many “baited hooks” to chum the waters for the broader business process outsourcing (BPO) and outsourcing nets WNS is casting in the market.

But perhaps most important from a market perspective, the transaction will put pressure on other offshore BPO firms, including Genpact, Infosys, HCL and Tech Mahindra, looking to accelerate penetration in North America and Europe through the addition of onshore expertise and capability. For this reason — among others — Spend Matters believes this deal is likely a harbinger of more acquisition activity to come in 2017. In the near term, however, Spend Matters believes the acquisition will do little to blunt the leadership positions of Accenture and GEP for procurement BPO and managed services.

This Spend Matters PRO First Take Analysis provides an overview of the capabilities Denali brings to WNS, key takeaways, an overview of procurement managed services and insight into select additional acquisition candidates that could contribute to further consolidation in this market.

Sponsored Article

Outsourced Services: The Next Big Challenge

Spend Matters welcomes this sponsored article from John Dreyer, CEO of The Shelby Group.

In the delivery of complex outsourced services, there is often a disconnect between the prices negotiated during the procurement phase and the actual costs of what is delivered over the term of the contract.

Selecting and Working With an MRO Service Provider: A Conversation with Michael Croasdale (Part 2)

MRO as a service

When it comes to managing maintenance, repair and operations (MRO), involving an MRO service provider can be key. But how should procurement organizations go about selecting an MRO service provider, and how does the organization show value in working with a third party? Michael Croasdale, senior project manager at Source One Management Services, LLC, a procurement service provider based in Pennsylvania, shares his insights on these questions.

How Procurement Can Tackle MRO Effectively: A Conversation with Michael Croasdale (Part 1)

MRO as a service

Maintenance, repair and operations (MRO) is a critical part of the supply chain. Unfortunately, it is also an often overlooked business function. To gain a better understanding of MRO, we reached out to one expert in the area: Michael Croasdale, senior project manager at Source One Management Services, LLC, a procurement service provider based in Pennsylvania. Croasdale, 26, was recently recognized among the winners of the Institute of Supply Management and ThomasNet 30 Under 30 Rising Supply Chain Stars Recognition Program.

Next-Generation Supply Chains Will be MRO-Powered: The Value of MRO as a Service (Part 4) [Plus+]

MRO as a service

Maintenance, repair and operation (MRO) is not just about managing parts to keep things working. It's about managing assets that have an impact on organizational performance. When you get down to it, the entire procurement function is about managing assets for organizational performance. Just replace the word “asset” with the word “resource” and consider a definition for supply management used by the Institute for Supply Management: the identification, acquisition, access, positioning and management of resources and related capabilities the organization needs in the attainment of its strategic objectives. Machines, spares, facilities, trucks, IT equipment and other items are clearly assets, but direct materials and purchased finished goods are also assets. Indirect materials, such as pencils, papers and laptops for the data crunchers, are assets. So are key employees and the IP they create. The bottom line is that as physical assets increasingly get wrapped with sensors and software, they can become much more valuable.

What Procurement Can Learn from IBM (Part 1)

IBM

Many people have different opinions of IBM. Most tend to view it as a sprawling technology and services powerhouse that is too big to fail, but it also seems to constantly be fighting every technological shift that many predict will bring it down. But IBM is also an extremely innovative firm and is actually the world’s top generator of patents. I’m personally very excited to see what they’ve been cooking up lately when Dan Carrell comes to our upcoming procurement technology conference in March to share some of IBM’s developments.

Sponsored Article

Peer Learning: Overcoming the Biggest Procurement Challenges in Grocery, Retail

Spend Matters welcomes this sponsored guest post from Brian Miller, vice president of services at Intesource, a PROACTIS Company.

The grocery and retail markets are highly dynamic and exceptionally competitive. Facing historically tight margins due to the extensive resources it takes to keep product quality high, procurement teams in these sectors need to be on top of their game in order to compete and remain financially viable. Business today isn’t easy, but in the face of all these pressures, many grocers and retailers are thriving. What’s their secret? Incorporating a sophisticated, strategic approach to sourcing as part of their overall procurement strategy.