Each year, organizations spend over $20 trillion globally on all kinds of services, according to some estimates. Services in the U.S. make up, on average, nearly 60% of organizations’ total non-payroll external spend (and that can be significantly higher in some industry verticals). The effective management of services spend has been a perennial topic of discussion (and limited action) over many years. And technology used to address complex services in an organization is not well understood.
Spend Matters and Sourcing Industry Group have partnered to field a survey of procurement professionals (CPOs, procurement directors, category managers, etc.) that is described briefly below.
The purpose of the survey is to better understand how and to what extent procurement is using enterprise procurement technology and other solutions to process and manage an organization’s service categories and with what level of satisfaction.
For this survey, the term "services" encompasses a broad range of spend categories, like consulting, facilities management, legal, temporary staffing, marketing and so on.
Procurement of Services — The Puzzle
Despite the size of this mega-spend category, procurement leaders we talk with have agreed that most categories of services are not, to put it kindly, optimally managed and there are few best practices.
There also seems to be agreement that purpose-built technology for specifically managing different services categories, strategically and tactically, is lacking.
One exception would be VMS for temporary staffing, a relatively well-managed spend category that represents just a fraction of organizations’ total services spend.
We know that services are processed in different ways across many types of enterprise technology solutions (for PO generation/approval, sourcing and contract management, invoice processing, etc.). But it is unclear to what extent procurement practitioners view current technology as a sufficient value-added enabler when it comes to sourcing and managing services.
Our conversations with practitioners only amount to anecdotal evidence, and our own direct observations are limited. Accordingly, we recognize the need to dig deeper.
The Survey — Clarifying Procurement’s Perspective
The purpose of this survey of procurement practitioners and stakeholders is to understand more about how organizations (1) source and manage "services" and (2) how they use technology to do so.
Only practitioner survey submissions from end-user organizations are considered valid. Practitioners include those who have a designated role — whether or not by title — in the sourcing and managing of an organization’s non-payroll purchases from third-party suppliers. Vendors (including MSPs, analysts and consultants) are not invited to take the survey (and their responses will be removed).
Some of the areas covered by the survey are:
- Procurement’s tracking and visibility into services spend
- Procurement’s level of influence over services sourcing and management
- Procurement’s view of how current technology is used to source and manage services
- Procurement’s aspirations for purpose-built technology solutions to source and manage services
There are approximately 25 questions. And the average time to complete the entire survey is about 20 minutes.
Respondents participating in this survey can benefit in a number of ways:
- Taking the survey will prompt respondents to think about how services are sourced and managed in their organizations.
- The survey results will be provided to respondents who complete the survey. This will allow respondents to gauge where they stand with respect to other organizations and may also stimulate new ideas and ways of thinking.
- Respondents are also invited to a review of the results in a webinar co-hosted by Spend Matters and SIG led by procurement services lead analyst, Andrew Karpie.
Procurement’s Next Frontier?
Services is a vast, diverse area of spend made up of hundreds of non-standard categories, creating much differentiation and complexity in the best practices for procurement management. It is further complicated by fragmentation of purchasing authority across organizations. Technology and best practices for the procurement of goods are well-developed; the same is not true for services.
Procurement of services procurement appears to be a bit of a puzzle. On the one hand, there seems to be enormous potential for performance improvement across many parameters. On the other hand, the challenge appears daunting to procurement practitioners, already stretched in terms of resources.
Whether technology can play a role in resolving the issues is an open question. And it may be secondary to achieving an objective understanding of how services are procured in organizations at the category level — and how they could be.
We believe that the time has come to not only begin to develop further research and insight into this area, but to start a focused, professional discussion among practitioners on what is crucial to address, where opportunities lie, what would constitute best practices and what will be needed in terms of technology.
The Spend Matters and SIG survey is a small first step on this path.
Andrew has over 30 years' experience working as an analyst, executive, and adviser at the business intersection of technology and services. His first brush with procurement came early in his career when he was a network planner for a Ford Aerospace telecom services subsidiary, responsible for leasing high-speed digital bandwidth facilities from emerging suppliers. In his long career, he followed the thread of information and communications technology (ICT) across a number of different service industry verticals and small to large companies in a variety of analytical planning and management roles (both buy- and sell-side). In more recent years, beginning as a research analyst at Staffing Industry Analysts, he has become focused as an analyst, writer, and adviser researching the rapidly changing services and labor supply chains (especially the impact of technology). Andrew holds an MS in Policy Analysis from Carnegie Mellon University, where he first learned to code in FORTRAN and developed a deep appreciation for the value of data and statistics. He lives in the San Francisco Bay Area, where he enjoys time with his family and volunteering as a Pet Assisted Therapy dog handler.