Understanding the procurement services market landscape (Part 2) — Our view and why it’s different

From our recent research into the procurement services market landscape, we have produced a set of knowledge-based materials to help CPOs tap into this complex and vast market. In part one of this article we discovered from chief research office Pierre Mitchell the drivers for initiating this coverage and why it’s important to procurement. Today let’s ask him about helping CPOs unscramble the market and structure it into the opportunities that will help them deliver more of ‘procurement as a service.’ We’ll also take a look at what makes Spend Matters an authority on doing so.

“As far as Spend Matters is concerned,” he said, “we are the newer players in this area and we have a bit of a different take on it born out of our deep knowledge of the procurement tech and vendor space and the need for procurement as a service.”

To apply that he takes a two-dimensional view:

“The first dimension is ‘transform vs operate and enable.’ Right now procurement is operating its processes using tools, but it wants to transform, get away from the tactical and into the strategic. The options are to get help from more resources, better tools or better intelligence (as it is doing now). Alternatively, it could try to add more strategic services and value to the business using a partnership with a third party.

“The second dimension is ‘people/process/tech.’ That is the people in the business, the  processes (like the operating model or the service delivery model, and whether they  are outsourced or insourced, centralized or decentralized) and the tech — which is where it gets a bit more complicated.

“The days of just considering what we want to achieve then picking a tool to help automate it have changed.  There’s no longer clear segregation. The tools and digital tech are becoming more powerful to enable the processes to be much better, faster and agile. Now procurement can construct a new set of services for its customers and add more value, and we can do it faster, whether onboarding new suppliers, getting to market more quickly or creating an instant supply base.”

The recent Deloitte study explains well how procurement can move at the speed of stakeholders, their customers and supply markets to increase value and reduce risk.

“Basically we are automating our processes internally, and by using better tech we can start to enable our stakeholders and open it up to our functional partners too. But the final piece is to tap the supply market power and bring this to bear for our external customers. This requires a much more powerful set of digital platforms, as we see in the most advanced companies using RPA and analytics, and building this engagement layer on top of all the apps. It’s allowing procurement to be a much more nimble service provider.”

The line dividing transformation and operations is dissolving

The monolithic apps suites and platforms are no longer separated from the people and process side, the silos are converging, and this means you have to really make good digital platform choices to allow you to reengineer and transform.

“The problem,” explains Mitchell, “is that the operating model, the people and process, vs the digital information and tech, is how the services market is clustered. So we have the big procurement transformation consultants who come in, help us to design strategies and our operating model, and leave. Then you’re on your own.

“But that doesn’t work anymore. People want results straightaway and they want the transformation advisors to teach them and help build their capabilities. What they want is a trusted partner.

“So these big firms have started to move into the managed service space (and we’ve seen acquisitions to support that like McKinsey hosting and delivering next-gen analytics tools that will eventually feature more of its own IP via the Orpheus acquisition). In a nutshell, the consulting firms are taking their consultants’ data-backed knowledge, putting it into next-gen solutions and delivering them, bringing continuous engagement and access so we can start running things ourselves. It’s rather like a subscription-based SaaS business.

“Similarly the big BPOs, who operate your infrastructure but aren’t the ones who can change it, are becoming smaller and more nimble. They are becoming more like digital transformation partners, rather than the large ‘lift and shift’ providers using their own resources in their own way, and are building ecosystems to help you transform. They are moving from the operations side to the transformation side.

“What’s driving these movements is ‘digital.’ Digital disruption means people and businesses are moving into each other’s spheres, and ultimately it’s the buyer who wins, if only they can tap into these trends using the right knowledge and intelligence.”

What Spend Matters is doing

Right now, there is no one looking at this procurement services area holistically. And because everything is a service, it really does need to be a holistic view. No-one is focusing as intently on the outsourcing market and the pure consultancy players outside of the big BPOs.

“We need to be able to see that beyond the high-end providers, the big BPOs and the big management consultancies, there are systems integrators and niche players partnering with the S2P providers,” says Mitchell. “It’s a market that hasn’t really been unveiled before to help the ‘user’ make sense of the extra value coming out of the smaller players and partner approaches of the big ones.”

So in our market reports we look at all providers from the small niche players to the 20 or so big consultants, from the Wild West of the MSPs to the long tail of hundreds, maybe thousands, of smaller, interesting providers. It’s a big landscape and we are the first to really look at it universally across all the areas where disruption is happening. In doing that we want to help you understand how to make sense of it and where you can plug into it.

“We’re providing analysis and segmentation models around processes and competencies to allow everyone in the ecosystem to have a place and understand where they might want to partner. We are helping the CPO to know the market in a much more robust way so that when they want to understand how to enable a process or deliver a service better, there’s a DNA behind the scenes, by process and by competency to inform their decisions,” explains Mitchell.

It’s early days for our coverage, and it’s important to be clear that we are intending neither to evaluate the service providers nor rank them. In fact we don’t intend to go into a solution or service deep dive and analyse them. This is a very different landscape and a very complex one — so through self-assessment backed up by case studies and references, we are methodically carrying out the market research on the players, so you don’t have to, and providing you with a more informed understanding of where to start in the ‘everything as a service’ marketplace.

We aim to help CPOs understand the art of the possible, like:

• How you can use the service providers, not just the traditional big ones, to think about things you hadn’t considered before, or didn’t think was possible
• How you can tap the innovation in the services ecosystem and more effectively bring that value to your organization and customers

We hope to help the procurement tech players understand:

• Who they might want to partner with
• Who will be playing, where and with what credentials

Use our research to help you navigate, because a lot of people are moving into the same space, and it’s going to get very crowded.

Procurement services vendor research

Part 1 — study findings and the 34 providers (see our services vendor directory to learn more about the providers and view the PDF profiles).

Part 2 — how procurement professionals can understand the market, the six market segments and the providers in those segments.

Parts 3-7 — first five services groups: S2P consultancies, regional consultancies, managed service providers (MSPs), strategy consultancies, and global consultancies.

Part 8 — BPO market details and 7 provider profiles.

Part 9 — The the grand finale of our “Procurement Services Market Landscape Report.” We summarize the results of our research, the trends in the evolving market of service providers, the developments in service provision and service productization and help the CPO make sense of a fragmented and volatile technology ecosystem. We also give a comprehensive list of recommendations for procurement leaders looking to extract more value from the ecosystem of providers.

We have also defined the market in its many dimensions and produced a Directory of who is playing and where.

If you’re a procurement professional and want to see if your current/potential service provider has the credentials you need, please get in touch.