Procurement Outsourcing – current trends and developments (part 3)

We suggested in part 1 of this series last week that two major developments were changing the nature of the procurement outsourcing market. The first (yesterday) was the ability to tailor different commercial and operating models for the outsource.  The second point is the huge expansion in the variety of services that providers can offer and which we might term "outsourcing options".

This has actually blurred the whole definition of outsourcing. At one extreme, we might have Xchanging, ICG or buyingTeam taking on the entire indirect spend for a client, or Accenture managing an entire end to end P2P process.  But then there’s my friend Alan Gotto, and his firm Constellia, who provide solutions to help firms manage consulting spend better – very specific. But he has worked at times in what I would define as being pretty close to an outsourced service provider manner, bringing tools and expertise and in effect managing that category of spend for a period of time. So is that outsourced service provision? Or consultancy? Interim management?  Provision of solutions?

The point is - the boundaries are increasingly blurred.

Then we have organisations who are primarily software providers but offer services to support their products. So you need help implementing an optimisation platform? CombineNet or Trade Extensions will happily provide the tools, but will also support you or even run the whole programme for you. BravoSolution will provide an eSourcing tool to a public sector organisation - or run the whole process.

There is also the concept of outsourcing specialist parts of the overall procurement process. So a classic example of this might be using Dun & Bradstreet to carry out credit checks and risk analysis on suppliers.  Similarly, Achilles provides supplier information management (both the technology and associated services) and can run processes for clients such as pre-qualification of vendors – is that outsourcing?

Now in the case of D&B and Achilles, much of what they do has probably never been done by the client internally themselves, so arguably it isn’t “outsourcing”.  On the other hand it could be done internally, so there has been a choice made to buy the service rather than provide it in-house. So perhaps it is outsourcing!

In a sense, it doesn’t matter how we define it. But the point we’re making is that there are many services that can be provided to a procurement functions by external providers. The choice is not simply whether to outsource all indirect procurement, or the entire P2P management process.  It doesn’t have to be all or nothing – you have a vast range of options to consider.

Which leads us on to a final significant conclusion – we’ll save that for later.

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Voices (2)

  1. Outsourcing:

    I agree to you completely. Outsourcing is a phenomenon that has been coming down the years but it is more profitable and secure in todays world because of the different forms of Connections that are created. One must keep in mind during outsourcing that the quality of the work shouldn’t be compromised with. Eagerly waiting for your conclusion

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