services procurement

The State of Services Procurement Technology: A joint research study by SIG & Spend Matters

State of Services Procurement Technology research study
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

 
Morgan Zombolas, Marketing Engagement Manager, Spend Matters

Complex Services Procurement and Technology: A Spend Matters and SIG Survey

Procurement technology

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.

>>Take the Survey<<

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.

Andrew Karpie, Research Director for Services and Labor Procurement, Spend Matters

A User’s Guide to the Gig Economy for Procurement Practitioners - Part 1

How procurement can make the gig economy work for them.

The gig economy has been talked about so extensively that the term has become nearly meaningless. Yet contingent workforce and services procurement practitioners know there is something going on beyond the buzzwords, something that is beginning to matter to the work they do. It is difficult, however, for many practitioners to distinguish what is essential and of importance in the context of their procurement goals. To aid in that effort, this Spend Matters’ brief explores how practitioners can make the gig economy work for them.

This two-part brief is available to readers as part of SIG and Spend Matters ongoing partnership

Read part two.


Deconstructing the Gig Economy

Based on a cursory look at Google Trends data, it is clear that the interest in the gig economy has risen consistently since the summer of 2015. No such increase occurred for terms like “contingent workforce” or “temporary labor” since 2004. But let’s take a closer look at how the gig economy is being described. 

Definitions of what constitutes gig economy work range from:

Andrew Karpie, Research Director for Services and Labor Procurement, Spend Matters

A User’s Guide to the Gig Economy for Procurement Practitioners - Part 2

How procurement can make the gig economy work for them.

In part one of this brief, we deconstructed the meaning behind the buzz word “gig economy” and explored what these new digital supply chains look like. In part two, we’re addressing the potential value opportunities, risks and challenges associated with digital supply chains for work and services and how practitioners can make the gig economy work for them.

This two-part brief is available to readers as part of SIG and Spend Matters ongoing partnership.

Click here to read part one.


What is the potential for value, risk and challenges of digital supply chains?

The conditions we discussed in part one of this brief present contingent workforce and services procurement with a new set of potential value opportunities, risks and challenges. 

As with pushing ahead with most innovative approaches, achieving value means confronting, evaluating and, where possible, addressing risks and execution challenges.

Value, Risks and Challenges

Andrew Karpie, Research Director for Services and Labor Procurement, Spend Matters