Plus Content

Next-Generation Digital Service Providers: The Who, What and Why for Services Procurement [Plus+]

An increasing number of digital, platform-based service providers are appearing today, and while they now represent a small category far outside the scope of most contingent workforce and services (CW/S) procurement programs, the spend they account for is growing.

Back around 2010, traditional BPO providers sought to introduce clients to digitally turbo-charged offerings. Though similar in concept, the providers appearing today represent a whole new generation of platform-based service providers, many of which were startups or didn’t exist in 2010. They did not arise with the scale and legacy of the BPO providers, nor did they occupy the category of major service providers of which procurement was aware and already oversaw.

Far from a passing fad, these next-generation digital service providers will become an increasingly significant segment of services consumption and spend over the next 10 years. We base our projections on solid, long-term trends evidenced in both the consumer and business sectors.

This Spend Matters Plus article defines this new generation of digital service providers and poses the entirely open question of whether they require the attention of procurement organizations tasked with managing services spend at this time. This question may be especially pertinent, given the significant similarities of digital service providers and traditional ones.

Why the Staffing and Contingent Marketplace is Failing Procurement [Plus+]

In our prior analysis of the services procurement market, we looked at the evidence showing how the staffing marketplace is failing procurement organizations. Today, we turn our attention to the “why” and the factors holding organizations back from gaining more value from their services procurement spend. This value includes greater savings, of course, but also reduced risk, increased compliance, improved talent management and recovered time to focus on innovation, continuous improvement and business outcomes.

We are not purporting any grand conspiracy of sorts here. Rather, the fundamental challenge with services procurement and the staffing industry centers on a supplier-led industry dynamic that has been able to break free from the bounds of how procurement manages all other spend areas, directing the buy-side rather than having to adjust its own sell-side driven business to maturing procurement expectations and requirements.

In this Spend Matters Plus analysis, a refresh of our 2014 series, we consider the “why” of the problem and go beyond the standard “fox watching the henhouse” issues with the traditional MSP/staffing market. Finally, to conclude this series, we will offer a prescription for changing the market from the inside out with procurement-led initiatives.

The Contingent Workforce and Services Insider’s Hot List: June 2018 [Plus+]

Welcome to the fifth edition of Spend Matters’ monthly feature, “The Contingent Workforce and Services Insider’s Hot List,” available to PLUS and PRO subscribers.

In the CW/S space, new developments are observable every month. These can include:

  1. New innovative, technology solutions (sometimes hybrid technology and services)
  2. New entrants (some self-styled as disruptive) that have typically been the originators of No. 1
  3. Established supply chain players responding to Nos. 1 and 2, some more effectively than others
On a month-to-month basis, these kinds of developments ebb and flow, but there are always at least a few interesting developments (e.g., a new technology solution provider; a supply chain player or an enterprise trying something new; an alliance with, investment in or acquisition of a still young and innovative provider). If we were to go back 10 years, we would find an entirely different world where truly innovative, technology-driven developments were rare. But today the CW/S space is continuously percolating with new concepts, applications of technology, supply chain participants responses and other developments that go largely unnoticed.

Let’s have a closer look at some of what we picked up on our radar this past month.

The Evidence: How the Staffing and Contingent Market is Failing Procurement [Plus+]

There’s an incumbent ecosystem in the services procurement universe that has made a business out of delivering the bare minimum to keep customers satisfied and maintain the status quo. No, we’re not referring to the “tools” providers but rather the sad fact is that within the more capable vendor management system (VMS) tool sets today, much of the more advanced capability in these solutions goes untapped or is only partially used.

Who is to blame? It’s easy to shoot the messenger (i.e., staffing firms and the incumbent MSPs). But the blame rests with numerous other parties, as well, including consultancies, outsourcing firms, staffing researchers and, perhaps most serious of all, procurement itself.

In this two-part Spend Matters Plus analysis, a refresh of our original 2014 series, we highlight the contributing factors to how and why the staffing and contingent market is failing procurement, concluding with a prescription to start addressing the challenge. In Part 1, we present the evidence of how the staffing and contingent market is failing procurement.

A User’s Guide to the Gig Economy for Procurement Practitioners [Plus+]

The gig economy has been talked about so endlessly that the term has become nearly meaningless. Yet contingent workforce and services procurement practitioners know there is something going on beyond the buzzwords, something that is beginning to matter to the work they do. It is difficult, however, for many practitioners to distinguish what is essential and of importance in the context of their procurement goals. To aid in that effort, this Spend Matters Plus brief explores how practitioners can make the gig economy work for them.

Best Practice Tips For Implementing Dynamic Discounting and Other Trade Financing Programs [Plus+]

In this Spend Matters Plus analysis, we investigate some of the key best practice tips for dynamic discounting implementation and trade financing programs. In a follow-up post, we will also share “worst practices” that far too many procurement and AP organizations are pursuing with dynamic discounting and trade financing programs because they don’t know better.

The Digital Evolution of the Contingent Workforce Supply Chain: What Does It Mean? (Part 1) [Plus+]

contingent workforce

Driven by the effects of new digital technologies and other factors (talent availability, generational change, etc.), contingent workforce procurement — and the contingent workforce supply chain — will be noticeably evolving over the next 10 years. The last impetus to change in the supply chain and procurement was the advent of VMS over 15 years ago, a set of developments that is well known by now. Given how much the world of commerce has changed since that time, we probably should not be surprised that another round of change has now begun. This time, given the range of drivers — technical, economic and social — that are converging, we should also not be surprised if the new round of change may give rise to new kinds of technology-enabled labor/services intermediaries and technology-based innovation across the existing contingent workforce supply chain (staffing suppliers, VMS, MSP and others). This Spend Matters Plus brief helps contingent workforce and services procurement professionals form a broad, strategic perspective on how technology, specifically, may bring about changes to the contingent workforce supply chain and how that may unfold. However, as will discuss later in this series, this is not just the “long game,” as both specific opportunities and threats will arise along the longer path forward.

Services Procurement History: Staffing Firm Dominance Faces a Challenge [Plus+]

In this Spend Matters Plus research brief, Jason Busch, founder and managing director, introduces the reasons why staffing firms will begin to increasingly share overall contingent market share with alternative models including the direct hire of freelancers/independent contractors, talent marketplaces, individual “out-tasking,” alumni and shared interest pools and related models. We also provide a readiness checklist for procurement organizations increasingly tasked with managing services spend that will offer a quick, honest assessment to show if they are ready (or not) for new models.

The Contingent Workforce and Services Insider’s Hotlist: May 2018 [Plus+]

Welcome to the fourth edition of Spend Matters’ monthly feature, “The Contingent Workforce and Services Insider’s Hot List,” available to Plus and PRO subscribers.

Today, based on our own observations and our discussions with supply chain participants, change in the CW/S space (both its scope and pace) appears unprecedented; moreover, it may also be accelerating. The staffing industry of 10 years ago was mature, stable, highly concentrated and hardly innovative. But between then and now, much has been happening.

Change, up and down the supply chain, is being driven not only by enterprises beginning to require more effective solutions in the current environment but even more so by other external forces (e.g., new technology/solutions, workforce demographics and so on). While it is important to consider these external factors/sources, it is also important to watch how the core/traditional supply chain is responding to them. There is little, if any, disruption occurring, but there are many signs of assimilation, adaptation and, in some cases, innovation. For more on this, see our discussion, under the heading “Wildfire? Or Slow Burn?," in last month’s Hotlist.

Given the above, the past month did not disappoint, with developments in both the core/traditional category and the external/innovation category. We’ll start with developments in the first category and then proceed to those in the second.

Services Procurement History: The Rise of the Staffing Industry Model [Plus+]

interview

By just about anyone’s numbers, the staffing industry still maintains dominant market share when it comes to placing temporary or contingent labor at companies (and often government agencies and departments). In this multi-part Spend Matters Plus analysis we take a look at the growth of the temporary labor market and how staffing firms emerged as a dominant model — and the context with which they accelerated their growth in recent decades. Finally, we introduces the ideas behind why Spend Matters believes staffing firms will begin to increasingly share overall contingent market share with freelancer models, talent marketplaces, alumni and shared interest pools, independent contractors/consultants and related models in the coming decades and what this means for procurement organizations increasingly tasked with managing services spend.

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.

Holding Managed Services Providers (MSPs) Accountable to a BPO-Based Standard (Part 2) [Plus+]

In the first post in this series, we explored the changing managed services provider (MSP) ecosystem and suggested what we believe will be a new battle between business process outsourcing (BPO) firms and traditional, often contingent-focused MSPs for the management and program oversight of broader services procurement initiatives for organizations looking for an outsourced services procurement option.

In our view, the more effective BPOs we track are making substantial investments in senior client-facing resources that become effective members of the company procurement team. These individuals often focus on opportunities to drive results that extend far beyond basic sourcing or compliance opportunities. In contrast, MSPs often bring limited subject matter expertise outside of contingent labor or basic SOW-type procurement initiatives.