The Age of Dis-Aggregation: Technology Will Drive New Procurement Strategies

At the recent roundtable we chaired, "The Future of Contingent Labour", hosted by services provider Comensura, the final part of the lively discussion was on the topic of the new technology that is arriving in the sector. Technology solutions generally termed "work intermediation platforms" (WIP) are enabling (in theory at least) the "end users" of contingent labour to link up more directly with the providers.

There is an ever-expanding rage of these tools, and Andrew Karpie of Spend Matters US is probably the world's leading expert on this market, so if you are interested, do follow his writing. They enable you for instance to find someone to do a short IT assignment; a piece of marketing design work; sit in for an admin person for a few days; or even more personal tasks such as walk your dog, do the garden ... and so on.

Why are these platforms gaining traction for business users and not just individuals? There were always people who could have done this work, but previously the cost for a corporate of finding them, handling the engagement and paying them outweighed the likely benefit you could get. Imagine you want someone to do literally a few hours' work on a project. Even with the Internet and telephone, you could spend hours locating them, then have the risk of not really knowing much about them, and you have to sort out the admin and payment.

But the platforms make all of those tasks much quicker and easier. So now it becomes feasible and cost-effective to take advantage of that service, even if it is just for a short period of time and pretty low cost, and that applies to both the business and household worlds. But we're not sure most organisations have caught on to what this really means, and this is what we got onto at the roundtable.

Think about many of our corporate contracts - whether it is with our marketing and advertising agency, a facilities management provider, an IT services firm. What we are actually buying is a range of services, perhaps quite different really, delivered by different people, but bundled together under the single supplying firm. Why do we do it like that? Well, there may be reasons of consistency and service integration, but often it is just convenience. We ask the marketing agency to get that design work done because it is easier than finding a designer ourselves and going through all the hassle we described above.

But what if it isn't easier anymore? What if our WIP means we can find a great designer and engage them in minutes, with payment very straightforward too? And that may be at half the cost of doing it through the agency, who at the very least have to add on their own overhead costs and profit.

So these tools are opening up an exciting prospect, and one that procurement can and should be leading on in our organisations. And as we can't find anyone else via Google using this expression, we'd just like to say our description of this is ©Spend Matters Europe Ltd - we are entering THE AGE OF DIS-AGGREGATION.

You can probably tell we're rather pleased with that! But think about it - a huge procurement trend over the past 20 years has been to aggregate spend, generally for good reasons. But now, technology is giving us the opportunity to change that, not in every area but in many categories. Indeed, as well as the WIPs, there are other technological developments, such as 3D printing, which will take us in the same direction - towards dis-aggregation and an unbundling of previously highly aggregated spend areas.

Anyway, more on this to come without a doubt. And as always, do let us know what you think.

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Voices (3)

  1. Nick @ Market Dojo:

    We’ve seen a lot of this recently too with an increasing number of clients picking up rapid online negotiation techniques (e.g. eAuctions) to spot buy at the market rate amongst a pool of approved vendors.

    These auctions, of which there may be 20 or 30 per day, typically last 10 minutes or so, get about 50 bids from around 6-12 suppliers on very capacity-driven spend areas like print, freight and passenger transport services and drive considerable savings.

    In the past you might have aggregated all this spend, formalised a thorough multi-year contract, run your full-blown strategic sourcing project etc. to negotiate a market rate today that is out of date tomorrow.

    1. Peter Smith:

      That’s another great example of “the age of dis-aggregation” (or is it the “age of disintegration?”) Technology supporting a very different approach to a market strategy….

  2. Phoenix:

    Isn’t aggregation usually about amassing demand for similar, generally commoditise-able goods or services, rather than complementary ones, like marketing and design? I think your piece would be better entitled “The Age of Disintegration”. Sounds better, too.

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