Organizations spend tens of trillions of dollars a year globally on services. It’s not surprising why: The world is shifting from a goods and manufacturing-based economy to one where outcomes are delivered “as a service” — whether that’s traditional labor, complex services (e.g., BPO, professional services) or even the outsourcing of goods production through contract manufacturers. On average, services account for around 50% of spending on third-party suppliers, ranging from 20% to 80%, depending on industry and specific organizations.
Because of this vast overall expenditure and the distributed nature of services spending throughout the enterprise, there are potentially significant opportunities to reduce the cost of services. What’s more, in many organizations, services spend ownership is, in practice, distributed across the organizations’ functional units (e.g., legal, marketing, IT), and procurement involvement can be limited or even resisted. This creates opportunities to obtain savings and improve services outcomes by increasing visibility into and rationalizing and automating related sourcing and performance management processes.
Yet the question then becomes how to obtain these improved results. Over the past several years, procurement practitioners have told us repeatedly that processes and technology for the management of services are not as robust as those for goods and materials, meaning there is much more to do to gain better visibility, influence and control over services spend. Despite the tens of trillions of dollars, organizations spend on services each year, how organizations use technology to support their sourcing and management of services has not been analyzed to any meaningful extent.
State of Services Procurement Technology Survey
To address this, Spend Matters and SIG surveyed procurement practitioners to answer this and other related questions. In the resulting Spend Matters PRO briefs, we specifically examine the varying perspectives of respondents with high and low services spend influence, using their divergent pain points and approaches to this mega category to unveil applicable lessons for driving better services spend performance. We also explore the types of technologies each group currently uses to address different services spent and their relative level of satisfaction with its current toolsets.
While most standard procurement technology solutions on the market were not purpose-built for services procurement — with the main exception of VMS for staffing and SOW-based services — S2P, CLM and P2P/e-procurement solutions are nevertheless being used to process services spend in some way. In analyzing the survey results, we aimed to understand the level of satisfaction with managing services procurement in general (what are the levels of satisfaction with different facets? Are organizations looking to improve?). From there, we aimed to understand what technology is being used, how many solutions are being utilized, and see whether purpose-built solutions ranked higher in satisfaction than non-purpose built.
And from that analysis, a key theme emerged: procurement organizations are just beginning to scratch the surface of the services spend opportunity, and their application today of a mixed tool set indicates there is still a major opportunity for both upstarts and established vendors to tackle this mega category in more effective ways.
SIG members can dive into the PRO briefs survey results below.
Morgan Zombolas, Marketing Engagement Manager, Spend Matters
Morgan spent the first six years of her career working in marketing and agency operations at a small firm in Chicago’s northern suburbs. While there, she supported client services for the Gatorade account, working on various youth experiential marketing projects. She also managed several back-end processes related to accounting and human resources. Now at Azul Partners as the Marketing Engagement Manager, Morgan helps support the day-to-day marketing efforts of both the Spend Matters network and MetalMiner. She has a B.A. in Communication Studies from Elmhurst College. In her free time, Morgan enjoys playing with her two older yet rambunctious dogs, traveling to visit family in Europe and watching her favorite hockey team, the Vegas Golden Knights.
State of Services Procurement Technology Survey
Morgan spent the first six years of her career working in marketing and agency operations at a small firm in Chicago’s northern suburbs. While there, she supported client services for the Gatorade account, working on various youth experiential marketing projects. She also managed several back-end processes related to accounting and human resources. Now at Azul Partners as the Marketing Engagement Manager, Morgan helps support the day-to-day marketing efforts of both the Spend Matters network and MetalMiner. She has a B.A. in Communication Studies from Elmhurst College. In her free time, Morgan enjoys playing with her two older yet rambunctious dogs, traveling to visit family in Europe and watching her favorite hockey team, the Vegas Golden Knights.