Proxima: Procurement BPO With a Category and Customer-Intimate Twist (Part 1)

Earlier this year, two members of the Spend Matters team (Peter Smith and Jason Busch), had the opportunity to spend a good amount of time getting to know Proxima, the procurement business process outsourcing (BPO) formerly known as buyingTeam. In a multi-part series introducing Proxima to the Spend Matters community, we'll aim to cover quite a bit of ground, beginning with figures, facts and background information. We'll then consider Proxima's approach to procurement BPO on a more in-depth basis, including examining the client experience. We will conclude our series on Spend Matters PRO, with summary analysis, recommendations, and comparative assessments examining Proxima in the context of other procurement outsourcing providers.

Proxima is better known throughout the UK (and European) market than the US. But it has expanded into North America in recent years, not only serving global clients in the region, but also signing new accounts. Proxima's philosophical approach to procurement BPO appears to be closest to Procurian's (formerly ICG Commerce) and Accenture's, including the former Ariba/FreeMarkets sourcing operation, in orientation. With a focus on category depth and intelligence, applied sourcing and contract management knowledge, and customer intimacy (e.g., putting expert resources, not just PMO-type managers or more generic sourcing types, on-site with clients) it would be easy to confuse Proxima with others.

Yet when getting to know the firm, it's clear they're different, and bring yet another voice to a market that desperately needs additional firms with an expert orientation (rather than just an operational or off-shoring one). For one, Proxima's closely held private company orientation comes through in the management's entrepreneurial, yet professional, drive to engage, learn and adjust their course/direction as necessary. In recent years, for example, Proxima opted to focus on accounts where it could make a different in a true outsourcing "changed the business" sense, rather than simply building a base of support through limited procurement efforts. This customer rationalized effort did not hurt the top line, but did give the firm a more targeted list of clients who could focus on true procurement change.

Today, Proxima has roughly 225 procurement outsourcing FTEs supporting client projects. The largest number of these (almost 50%) comprise client site-based category sourcing experts/specialists, with around 20% based in the US. With roughly $10 billion in spend under management at the time of our briefing earlier this year, Proxima covers a broad range of categories with a market basket of direct spend and industry-specific categories comprising the largest overall percentage of spend (nearly 19%). On a category specific basis, the largest individual categories (many of which can be broken down into smaller buckets) Proxima manages on behalf of clients include office, facilities and maintenance (17%), professional services (14%), marketing/sales (11%), IT/telecom (10%), HR/recruitment (9%) and logistics (6%). Utilities, financial, travel, print, packaging and fleet make up the remaining categories.

Proxima typically engages with clients across these categories of spend over 3-year contracts with 4-year agreements as well as 2-year agreements rounding out its portfolio of customer agreements. Proxima usually runs engagement from a specific geography, often corporate headquarters, but with global on-site teams to support procurement in local markets. Proxima's publically announced clients include Universal ($1.3 billion in spend under management), Activions Blizzard, Morrisons, BG Group and British Airways.

Aside from category experts, the rest of the on-site BPO organization is divided up into other groups, including one type of individual that Proxima describes as a "business partnering" executive, who can also work from the client-site. These are not just project management office (PMO)-type resources, but are focused primarily on driving spend under management through helping clients continually "sell" the value of procurement internally to key spend stakeholders and owners, while also ensuring savings adoption. Proxima also maintains a small group of professionals focused on "service transition" who also work on a client's site. These individuals focus on transitioning client spend to capture and implement savings.

Additional Proxima shared services resources not on client site include a group of "hub buyers" and transactional buying support. The group of hub buyers focuses on "less complex sourcing projects" and medium-to-lower value contract renewals while transactional teams focusing primarily on buying compliance, including the usage of client procurement and ERP systems. Proxima also has a group of roughly 40 shared-services resources focused on analytics, RFx creation/enablement, catalog management and category/market research. These individuals provide scale and leverage for the on-site teams.

Stay tuned as our analysis continues.

- Jason Busch

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