Jason Busch When Spend Matters and HfS Research decided to jointly cover the procurement BPO market in this research series (this paper is the first in a multi-part research agenda), the first thought through our collective minds was simple: what’s gone wrong in a market that should have grown much faster than it has in the past five years? After all, for the vast majority of companies we frequently engage with, indirect spend, which represents the bulk of procurement BPO focus, remains a non-core area of purchasing and supply chain focus. And the honest truth is that the majority of Global 2000 firms aren’t all that strong at managing all of the categories that come in under the SG&A line.
Jason Busch rocurement BPO engagements aren’t about dating. They’re about getting married, something we actually think many people don’t realize. Remember this one point, and your chances of success with procurement BPO will increase on a log scale. Never mistake a BPO relationship for advisory or software. You can scrap a consultant’s deck and trash a software package overnight, but BPO is different. Just as in a marriage, you can’t fundamentally fix things if they’re already broken going in. Sure, you can invite a consultant or software vendor to paper over a broken process. But it’s not the same when it comes to transferring ownership of the outcome and, in practice, sharing your proverbial corporate bedroom with another party. Moreover, when things go wrong in a marriage or BPO context, they can really muck up the rest of your life – or your company’s life. There are a number of prescriptive organizational, operational and technology components that companies all too often don’t fully think through before heading down the BPO path and pulling the trigger on a relationship – not to mention while evaluating their potential partner. This jointly authored Spend Matters / HfS Compass Series paper explores a number of insider tips in great detail, albeit in a fun and informal way.
Phil Fersht, Founder and CEO, HfS Research and Deborah Kops, Research Fellow, HfS Research & Edited and with Additional Commentary by Jason Busch, Spend Matters We’ve been holding our collective breaths since about 2005, waiting for a barrage of giant Procurement BPO deals to clutter the analysts’ quarterly listings. Yet when it comes to larger BPO outfits in particular, big engagements are still few and far between, with only a few definitive new contracts announced each year, most often focused on direct spend or sometimes pseudo-Procurement engagements pretending that accounts payable can be spun as a “Procurement outsourcing” gig. Part of the challenge holding back Procurement BPO growth from what it should be is that it’s a market myth that Procurement is an “easy-peasy” function to source and implement. After all, carving out a corporately centralized process with some imposition of rules and hopefully a few tools should be a piece of cake to convey to a third party, right? Not exactly. Procurement BPO presents a minefield of challenges right from the start. And only the few who have been brave enough to implement it across the enterprise are much the wiser. This paper explores the traps that every CPO should think about when considering a procurement BPO program.