Building a successful public sector spend capability requires similar core capabilities as found in those sold to the private sector, as well as additional ones. But more so than simply checking the feature/function box as a vendor – or in software/solution selection processes as a user – implementing the right public sector spend analysis approach requires taking a slightly but critically different mindset compared to what is tried and true in the private sector. In Part 2 of this Spend Matters research series (see the first installment here), Jason Busch, founder and managing director, continues to explore what these unique motivations, requirements, and approaches are.
The final installment of the series (Part 3 – forthcoming) will continue to profile one of the specialist vendors in the sector, Spikes Cavell, which appears to have cracked the code on what federal, state, and local organizations most value in understanding their expenditures, reporting on activities, and tying data to actual programs to drive better constituent outcomes. There are clearly lessons in this regard for public sector procurement organizations and overall leadership (employees and elected officials), other technology and solution providers expanding their public sector presence, and, surprisingly perhaps, the private sector as well.more ▸
What Makes Public Sector Spend Analysis Different: Lessons From Spikes Cavell in the US and UK (Part 1)
Spikes Cavell, a spend visibility provider perhaps best known in the UK for serving public sector clients with a broad-based spend classification and analytics offering, has spent significant time and effort expanding on a growing beachhead in US public sector procurement at the state and local level. This research brief begins to explore the basics behind Spikes Cavell’s approach to public sector spend analysis and what makes serving this challenging sector of the market different. In this first of a two-part Spend Matters PRO series, Jason Busch, founder and managing director of Spend Matters, also examines what unique spend visibility approaches and attributes are useful and/or required depending on specific public sector dynamics, based on lessons from Spikes Cavell and other experts in public sector procurement – as well as private sector takeaways and lessons from these situational requirements.more ▸
Earlier in the month, we had a client ask us if we could offer specific guidelines or methodologies for creating a spend category taxonomy within the automotive and industrial markets. The question resulted in a discussion among a number of us with industry experience. And since we didn’t have any research already published on the topic, we thought we’d invest the time to document our findings. In this second installment of a two-part Spend Matters PRO research series, Chief Research Officer Pierre Mitchell explores how granular procurement should go in creating a spend taxonomy and concludes with practical tips for implementing a program.more ▸
We had a question from a client of ours about whether there were any guidelines or an overall methodology to coming up with a spend category taxonomy. It’s a simple question, but there isn’t a simple answer. So, we thought we’d offer some insights to help guide your efforts. But before we say what to do, there’s a quick recommendation on what not to do. In this first of a two-part Spend Matters PRO research series, Chief Research Officer Pierre Mitchell explores how to think about creating a spend category taxonomy, pitfalls of incorrect approaches, and how to embrace an approach that cuts across categories and spend types.more ▸
Purchase Price Variance (PPV) in Procurement and Savings Strategy: Limitations and One Potential Use
There are many reasons why purchase price variance (PPV) is not the best metric to track procurement performance. In last week’s Spend Matters PRO research brief, Why Purchase Price Variance (PPV) Should Be Banished From Procurement Measurements and KPIs, Jason Busch (Managing Director) and Pierre Mitchell (Chief Research Officer) gave 10 reasons why PPV can be misleading and how smart procurement organizations in the market have long since moved past it. These reasons include the fact that declining and rising cost variables outside of a buyer’s control can have a significant effect on individual part costs not reflected in the actual performance of a procurement manager and the fact that PPV fails to measure true lifecycle costs. In today’s Spend Matters PRO research brief, Jason and Pierre start by providing a summary of the first analysis and then explore a scenario where PPV may actually be a useful means of measurement, courtesy of Tungsten’s new network analytics capability.more ▸
Earlier today, GTCR and Opus Global Holdings collectively announced they had acquired Hiperos, the supplier (and other third-party) management vendor. Hiperos is originally a supplier performance management (SPM) focused provider from Southborough, Mass. It has since expanded to deliver a broad range of third-party data collection and supplier lifecycle management solutions – and will now operate as a business unit under Opus Global. Opus Global in turn is a JV between GTCR (a private equity firm from Chicago) and Doug Bergeron. Bergeron was until 2013 the CEO of VeriFone and is now the CEO of Opus Global. GTCR and Bergeron go back to VeriFone – which Bergeron (together with another investor) had bought from HP for pennies on the dollar ($50 million for an asset which HP has paid $1.3 billion). When Bergeron resigned after 12 years as CEO, the company had a market valuation of $3.5 billion. (We thought Bergeron’s long-term ownership and patient growth focus background is important to note.) Note also that Bergeron’s background is from the financial services industry – where Hiperos has a strong presence. In this Spend Matters PRO analysis, VP of Research Thomas Kase and Managing Director Jason Busch take a closer look at Hiperos (including a detailed SWOT analysis), private equity/buyout implications, the prospects for the supplier and third-party management market, and what the acquisition means for customers, prospects, and competitors.more ▸
One of the biggest challenges to overall program impact and improvement in all but the most advanced procurement organizations are the raw elements that many procurement organizations measure themselves against: key performance indicators or KPIs. One of these, purchase price variance or PPV as it is often known, is particularly obnoxious in all but certain cases. PPV measures the difference in price paid for across a range of purchases for a similar SKU, part, or service.
There are many reasons why PPV can be such a misleading figure.
In this first of a two-part Spend Matters PRO research series, Managing Director Jason Busch and Chief Research Officer Pierre Mitchell explain why precisely PPV is a KPI that procurement organizations should stop measuring internal and individual performance against. Part 2 will present the one case in which it might be helpful to police suppliers more accurately (courtesy of a new, real-time network approach to gathering spending data from Tungsten based on actual line-level invoice information that we believe will eventually become standard across many supplier networks).more ▸
BPM stands for Business Process Management. If the business process is procurement (i.e., a collection of processes), then the concept is about managing procurement processes – including process design/definition, performance management (e.g., process outputs/KPIs, monitoring), and resource management. Of course, in the IT world, BPM has its own body of knowledge regarding the topic, focused mostly on “process workflow/integration on steroids.” This is the “system of process/interaction/engagement” that may sit on top of multiple systems of record (e.g., ERP, source-to-pay suites). But how can you approach this topic without your eyes glazing over? In this Spend Matters PRO research brief, Chief Research Officer Pierre Mitchell and Managing Director Jason Busch define BPM components and offer up practical ways to apply BPM to procurement, keeping the topic on a business level and issuing both warnings and best practice tips for companies deploying or considering BPM technology adoption within the function.more ▸
SAP, Fieldglass, and the Future of the VMS: Why MSPs and Staffing Firms Should Wake Up to a New Threat
It’s business at usual at Fieldglass. With their customer event this month and, as far as we’re aware, no big decisions having been made regarding combined product rationalization and roadmaps with SAP and Ariba, it’s clearly a post-merger honeymoon period. And they deserve it – Fieldglass has done a commendable job working and building trust with both customers and the incumbent managed services provider (MSP) ecosystem (Tapfin, Allegis, KellyOCG, Agile-1, Randstad, Bartech et al) over the years while also driving more competitive pricing in the contingent workforce marketplace. But at some point, change will come as SAP evaluates such areas as product integration, sales structure, partnerships/business development, marketing, pricing and the like.
All of this is to be expected. But those in for the biggest shock likely won’t be competitors (we think the acquisition will raise the profile of the humble VMS and services procurement generally – which is a good thing). No, those in for a shock will be staffing firms and their MSP arms as well as independent MSPs – which potentially have far more to lose than gain as technology automation and integration with broader procurement accelerates. In this Spend Matters PRO research brief, Managing Director Jason Busch takes a look at how and why the SAP acquisition of Fieldglass will eventually shake the services procurement and staffing ecosystem to the core – and the winners and losers likely to emerge.more ▸
Earlier this spring, Coupa provided a briefing and demonstrated a version of its latest inventory module to Spend Matters. Coupa sells its inventory module as an add-on to core procurement but separately from accounts payable, contracts management, and other suite components. But the question remains: in its initial release, does it provide enough value to justify the added cost and modular expansion for companies using other Coupa suite components?
After seeing it, Chief Research Officer Pierre Mitchell and Managing Director Jason Busch argue in this Spend Matters PRO research brief that Coupa’s new inventory management capabilities are likely to bring the company closer to marginalizing the expansion of an ERP value proposition in middle market deployments (but not necessarily a fit with larger customers who are likely to have more sophisticated processes than the tool can handle – let alone inventory management systems already in place).more ▸
Last week, Jason Busch, Managing Director of Spend Matters, joined a panel discussion at Beeline’s customer event. During the show, he had time to speak with dozens of practitioners, Beeline staff, and partners about the current state of contingent workforce and services procurement programs. He was also able to dig into the latest product enhancements and roadmap that Beeline shared not just on PowerPoint, but on actual demo servers with beta code. His conclusion? For parent company Adecco, Beeline is becoming more strategic by the day and will become even more so once SAP takes certain steps we think are inevitable by 2016 with Fieldglass. This Spend Matters PRO research brief explores the current state of Beeline and some of its planned enhancements as it builds out from its VMS foundation – and why we think that owning the asset will become even more strategic for the staffing and MSP giant.more ▸
Nearly all progressive organizations have some sort of Procurement CoE (Center of Excellence). A Procurement CoE is an internal entity that performs internally facing knowledge-based services on a one-to-many basis to procurement (and to broader stakeholders) in order to drive scale, repeatability, and best practice. What we’re talking about is the industrialization of the Procurement portfolio of services. In this Spend Matters PRO article, we will investigate 14 procurement competencies that are being enabled and improved in a Procurement CoE. We will evaluate the relative priorities across these based on some recent research and provides insight on how a Procurement CoE can not only make procurement processes more effective, but also align with broader enterprise services delivered in a “Global Business Services (GBS)” environment.more ▸