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“Services Procurement” or “Procurement of Services” — What’s in a Name?

01/16/2018 By

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Many of us will recognize this quote from Shakespeare’s Romeo and Juliet: “What’s in a name? That which we call a rose/By any other name would smell as sweet.” Now, at this moment, you may be wondering: What knave is this who starts an article about services procurement by quoting Shakespeare.  Fair enough.

But then you may think about it a bit and ask: Are we talking about engaging several recommended, expert flower arrangers for a major event? Or are we contracting with florists in three major metro areas to continuously keep our offices in each location fragrant and cheerful?

Ay, there’s the rub. Now we are closer to the truth.

Today,  the term “services procurement” comes loaded with a great deal of ambiguity. For many procurement practitioners, especially those who have been primarily focused on the procurement of materials and goods, “services procurement” is what is happening “in the room down the hall,” where folks are dealing with procurement of temp workers supplied by staffing and possibly some services from the McKinseys and Accentures of the world — that is to say, they are procuring contingent workforce AND services.

For some practitioners, the term “services procurement” may refer to both the procurement of contingent workers (e.g., floral arrangers used at an event) and services (e.g., florist businesses that provide a service). Moreover, since, until fairly recently, so-called “services procurement” has been almost exclusively focused on contingent workforce, the term “services procurement” has tended to be equated with just procurement of contingent workforce.

But for other folks, “services procurement” may refer only to the “procurement of services” (everything from maintenance services to consulting, legal services to call center BPO, etc.). Though perhaps not discussed much, in most companies today spend on services exceeds spend on contingent workforce (in some cases, by a factor of two or more), and most of this spend is not under management by procurement.

As if this double entendre was not enough, the ambiguity and confusion is compounded by the similarity of the terms “services procurement” and “procurement services” and can be further complicated by bringing “indirect procurement” into the mix. Indeed, it is enough to drive a procurement Hamlet mad.

This may seem like a trivial matter (a much ado about nothing). But, given the historical lack of attention to this large, complex and growing spend category, it really is not.  In fact, it is probably time for a good, thorough mental flossing (or public flogging…). Personally, I would like to banish the term “services procurement” from the procurement lexicon and, more importantly, start thinking in terms of “procurement of services.” That would include the category management, technology tools and good practices that must go along with it.  Why?  Because it is time to seriously focus on the procurement of services to drive potentially massive cost savings, improved services outcomes and more. It’s not just procurement poetry.

Juliet’s perspective was that a rose by any other name would smell as sweet, but it did not end well for her and her beloved. On the other hand, neither of them was a procurement practitioner with a penchant for precision. “Services procurement” or “procurement of services” — that is the question.