So What's Unique About Services Procurement?

Ariba's Dan Ashton recently penned a piece over on Supply Chain Management Review that does a good job summarizing the myths of services procurement. As an aside, with Geraint John departed from CPO Agenda, SCMR has now risen to the top place on my list of industry publications to read (I hope CPO Agenda can remain on the pile as well). But back to Dan's article. In it, one of the myths he suggests that companies subscribe to is that it's possible to manage services costs through an RFP process. But the reality is much more of a lifecycle question. To wit, "Sourcing is only one part of the equation. Half of all negotiated savings can be leaked during the purchasing process."

Another myth Dan dispels is that services procurement is just about managing temporary labor spend. In this regard, he notes that while "temporary labor may be one of the largest services categories that organizations purchase" it is "seldom the only one". Dan suggests that print spending can be significant as well, "accounting for as much as three percent of corporate revenues". I'd also toss in other large services categories for companies to consider actively managing as well, including marketing, legal, consulting and outsourcing spend -- all of which can be managed effectively by platforms from companies like Ariba, IQNavigator, FieldGlass, Emptoris (Click) and others. So what are you waiting for? It's time to take control of services spending and to get past the myths once and for all. The savings is real and the time is right, even if the categories are not as politically easy to pursue as others.

Jason Busch

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