Secrets to Procurement BPO Success? Spend Matters Questions TPI’s Bill Huber (Part 4)

Please click here to Part 1, Part 2 and Part 3 of this interview series with TPI's Bill Huber.

When it comes to offshore BPO providers today, Bill categories the typical firm as housing "smart people who are really motivated." Some also have "significant" and "differentiated strengths" they can bring to the table. Going forward, these providers are more likely to "integrate technology with solutions" on a path to driving "true technology-enabled BPO." But right now, many are as focused on attempting to bring "a new level of analytical rigor" to the BPO space. They can do this because they can afford to. Indeed, the cost of strong analysts in India remains materially less than similar, senior procurement analyst-type roles in the West. As Bill observes, "Indian providers will tell you they can more cost effectively invest resources in studying data sets and coming up with insights." For some providers, this is "core" and "embedded as part of their offering" like Genpact with its "SEP methodology." Others "charge for it" on a value-added basis.

Going forward, Bill sees a greater vertical orientation of offshore BPOs in "moving up value chain not just in terms of driving out cost, but enabling new insights in given industry. We'll also see them continuing to go global as much as anyone else. It's not just about India going forward – it's about exploring and enabling procurement capability in new geographies." On this note, I asked Bill about his view about procurement BPO in Latin America going forward. He suggested that "Latin America is a tough market for procurement ... it is very relationship based, much more so than other parts of the world. You need to watch out for criminal elements in certain regions. The key is going is slow while introducing better transparency and process; bringing better visibility can beget reduced chances of improprieties and improve accounting."

Our discussion concluded by looking at the top three lessons learned around procurement BPO that we should never forget. I asked Bill in his experience, what these three lessons are. He responded as follows:

  • The first lesson is the same as anything else -- be careful not to over-commit. Give yourself margin and time to achieve benefits. It will always be more challenging that you think. If you set modest expectations and achieve, you'll build good momentum
  • The second lesson is to over-invest in governance. If you have a good contract, you should have some air cover. Invest in oversight, manage internal clients and service providers to the max to reduce the chance of anything going in the wrong direction
  • The third lesson is to pick your battles and don't attack everything all at once. Find the areas where those in the business are most willing to work with you. Achieve successes in those areas first. Build momentum there. Above all, stop trying to be all things to all people. Success in procurement comes down to strategic selection. Some get buried in weeds because a provider offers to take you in one direction that will distract from a larger objective to win over the business.

Bill shared a fourth piece of advice -- for both BPO providers and internal executive managers overseeing an engagement -- that is timeless: "Don't be more bureaucratic that the bureaucrats you replace."

I had to give Bill a chance to plug himself and his firm at the end of the conversations. Of course he was as humble as ever (despite the depth of his knowledge in procurement and procurement BPO). Here he offered, "we're on top of the capabilities of each provider" which can enable us to "help bring out strengths in implementation." Moreover, "an external perspective can give credibility to a strategy." He adds: "it's very difficult to pursue a BPO engagement internally if you don't have a good internal reference point...and you need to really understand the procurement space to do this well." Which no doubt, Bill does, in spades.

Jason Busch

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