Complex services are complicated — What’s procurement to do? (Part 1)

Spend on services by US-based organizations is estimated to be over $10 trillion. Contingent workforce (the engagement of temp workers and individual contractors) represents only a small fraction of total services spend. External spend in the other complex services categories (e.g., marketing, facilities management, IT, BPO, etc.) is vast, and it is complicated.

Numerous problems adhere to the (perhaps unrealistic) aspiration to holistically source and manage complex services across an enterprise. But even if that aspiration is set aside, effective sourcing and management of complex services categories remains complicated and challenging, and it can appear daunting to procurement professionals. At the same time, many of these professionals are aware of their organizations’ shortcomings in process and technology and the missed opportunities to achieve savings and other benefits.

But is the road to sourcing and managing complex services just a dead end and not worth traveling?

We don’t think so, if the matter is approached realistically. Rather than embarking on an unplanned trip around the world in an old car, taking some limited well-planned excursions with just the right vehicle may be the way to go.

For this reason, Spend Matters is pursuing research into the opaque world of sourcing and managing complex services with technology (beyond the now highly visible contingent workforce category). Shedding light on how complex services are or can/could be sourced and managed with existing and new technology will be a stepwise process, but the research should help practitioners to achieve greenfield cost savings and performance improvement in various services categories.

As a first major step in this direction, we have launched a buy-side survey of how technology is used to source and manage complex services; buy-side practitioners can take the survey here and obtain survey results down the line.

In this PRO analysis, we look at procurement’s challenge in improving management of complex services at a high level. In Part 1, we provide an overview of complex services categories, what makes them different and what process framework applies. In Part 2, we will review the state of supporting technology solutions and suggest different ways to frame and overcome shortcomings and challenges.