Más contenido relacionado La actualidad más candente (20) Similar a GEP Value Trends Procurement Outsourcing (20) GEP Value Trends Procurement Outsourcing2. GEP Value Trends: Procurement
Outsourcing
Third in a Research Series on Procurement from
Information Services Group and GEP
September 2012
ISG research conducted in conjunction with:
Copyright © 2012, Information Services Group, All Rights Reserved
3. Introduction
ISG undertook a research in June 2012 in with support from GEP to provide insights to CPOs and other
Procurement executives in an effort to assist them in understanding some of the key issues facing other
procurement organizations. Additional goals were to provide insights to steps that they might take to address
some of these issues and to move their organizations to the next level in delivering value to their companies.
Respondents to the survey were primarily based in North America with 28 percent of respondents representing
other geographies. Respondents included leaders from the financial services, healthcare and pharmaceuticals,
business services, manufacturing, energy, government and public sector, media and telecom, retail and travel
and transportation sectors. Fifty-nine percent of respondents were from businesses of more than $5B in annual
revenue and respondents were generally CFOs, CPOs or their direct reports.
The research focused on three key aspects affecting the procurement function:
• Procurement Strategy: Key Challenges and Transformation Drivers
• Procurement Technology and Implementation
• Procurement Outsourcing
In this three part series, we bring to you insights from the research covering these three aspects, one at a time.
These insights reflect the voice of numerous procurement leaders across several industries and can be an
effective tool in benchmarking your own procurement organization.
In the first report, we focused on key challenges faced by procurement executives today, areas they perceive as
opportunities for improvement and top priorities for procurement executives at this time. The second report
provided insights into Procurement Technology and Implementation trends including type of procurement
software most actively used today, trends in procurement software adoption, trends in software deployment model
and the importance of brand in software provider selection.
This report, the last in the three-part series provides insights into:
• Adoption trends in procurement BPO
• Procurement outsourcing drivers and preferences
• Satisfaction with procurement BPO offerings
• Cross-functional participation and key decision makers for procurement outsourcing
• Executive relationship role in procurement outsourcing decisions and
• Importance of brand in service provider selection
2
Copyright © 2012, Information Services Group, All Rights Reserved
4. Survey Approach and Respondents
Respondents to the survey were primarily based in North America with 28 percent of respondents representing
other geographies. Respondents included leaders from the financial services, healthcare and pharmaceuticals,
business services, manufacturing, energy, government and public sector, media and telecom, retail and travel
and transportation sectors. Fifty-nine percent of respondents were from businesses of more than $5B in annual
revenue and respondents were generally CFOs, CPOs or their direct reports. It should further be noted that
respondents tended to be from organizations that participate in forward-thinking professional societies and are
therefore likely to have a higher degree of awareness of more advanced trends in procurement. Organizations
that do not actively participate in such societies may therefore be underrepresented in the survey.
3
Copyright © 2012, Information Services Group, All Rights Reserved
5. Procurement BPO
Procurement BPO has matured significantly since the earlier focus on it as primarily an F&A activity. Increasingly,
solutions have become more focused on capability growth and expansion rather than being driven by significant
replacement of internal staff to reduce the expense of procurement operations. By focusing on better managing a
company’s spend, Procurement BPO providers have been able to attract clients interested in expanding their
managed spend capabilities to other geographies and lines of business. The key drivers of this trend are primarily
focused around acquiring scarce skills, improving processes and better support for internal business units. In
other research conducted by ISG we have observed significant growth in the use of Procurement Business
Process Services since 2008. While many companies are not currently considering Procurement BPO, we have
also observed this percentage decreasing over time as Procurement BPO becomes better understood in the
marketplace.
Currently, Contract Management and Transactional Procurement have a higher adoption rate for procurement
BPO with 14 percent of respondents reporting that they have fully implemented these services.
Procurement BPO Adoption Trends
Current Planned
14% 24%
Contract Management Transactional Procurement
9% 53%
14% 21%
Transactional Procurement Contract Management
9% 56%
12% 20%
Spend Analysis Spend Analysis
11% 57%
7% 18%
Sourcing Sourcing
16% 59%
7% 18%
Vendor Management Vendor Management
5% 70%
Fully implemented Currently implementing Considering implementing Not considering implementing
Source: ISG Procurement Technology and Outsourcing Trends Survey March 2012 n = 57
# To what level has your organization implemented the following procurement BPO activities?
4
Copyright © 2012, Information Services Group, All Rights Reserved
6. We observed considerable similarity in adoption of various procurement BPO solutions by industry, notably a
significantly lower use of vendor management in financial services, healthcare and pharmaceuticals and
manufacturing.
Procurement BPO Adoption Trends by Industry
Financial Services (n = 18) Healthcare & Pharmaceuticals (n = 10)
Spend Analysis 11% 11%
0% 78% Spend Analysis 20% 10% 10% 60%
Contract Management 22% 0% 17% 61% Contract Management 20% 0%
10% 70%
Vendor Management 11% 6% 11% 72% Vendor Management 0%
10% 90%
Sourcing 6% 6% 23% 65% Sourcing 0% 20% 20% 60%
Transactional Procurement 5%
0% 28% 67%
Transactional Procurement 30% 10% 10% 50%
Business Services (n = 10) Manufacturing (n = 6)
Spend Analysis 10% 20% 20% 50% Spend Analysis 0% 33% 67%
Contract Management 10% 30% 10% 50% Contract Management 0% 16% 17% 67%
Vendor Management 10% 10% 20% 60% Vendor Management 0% 17% 83%
Sourcing 10% 10% 20% 60% Sourcing 16% 17% 0% 67%
Transactional Procurement 30% 0% 20% 50% Transactional Procurement 0% 33% 0% 67%
Fully implemented Currently implementing Considering implementing Not Considering implementing
Source: ISG Procurement Technology and Outsourcing Trends Survey March 2012
# To what level has your organization implemented the following procurement BPO activities?
Third party procurement management services (Procurement BPO) are increasingly being adopted for a variety of
reasons. Chief among them is improved focus on sourcing and other subject matter expertise, followed by best
practice processes to better support the business. Adding capacity was also relatively highly ranked, but
achieving savings through labor arbitrage was a relatively weaker driver. This is consistent with trends that we
have seen in the industry, where procurement BPO is primarily being implemented as a method to improve or
expand capabilities. While organizations are certainly focused on managing their costs of delivery of these
services, the net trend is one of investment in procurement, with an increasing tendency to buy vs. build additional
capabilities.
5
Copyright © 2012, Information Services Group, All Rights Reserved
7. We also looked at preferences in the types of service providers being used to deliver Procurement BPO. In
general, the greatest percentage of buyers preferred multifunction service providers who provide procurement
and other services. We saw clear patterns emerge depending upon whom in the organization we asked and what
their primary priorities were. Those who leaned toward multifunction providers tended to have a higher focus on
reducing the cost of procurement and a lower focus on achieving sourcing savings. Procurement specialist
providers were the clear preference among respondents who ranked the achievement of sourcing savings high.
The chief driver among CPOs was adding staff/capacity, while the chief driver at the manager level was process
best practices.
The following series of graphics highlights the procurement outsourcing drivers and preferences of respondents
according to their organizational size, role and industry segment.
Procurement Outsourcing Drivers and Preferences
Drivers
Improved focus and skills needed on sourcing and other subject
23%
matter expertise
Need for process best practices to better support business 23%
Adding capacity to existing team vs. hiring 21%
Savings in resource costs/labor arbitrage 19%
Accelerate sourcing savings 14%
n = 57
Preferences
Multi-function service providers who support procurement and
37%
other business functions as well
Provider of procurement software and services 23%
Provider of procurement software and services as well as multi-
20%
function service providers
Provider of just procurement services 20%
n = 56
Source: ISG Procurement Technology and Outsourcing Trends Survey March 2012
# Which of the following would best describe how your procurement organization considers value in procurement outsourcing?
# If you were to consider a procurement BPO provider, who would you prefer?
6
Copyright © 2012, Information Services Group, All Rights Reserved
8. What were the drivers behind these preferences?
Provider of procurement software and services as well
Provider of just procurement services
as multi-function service providers
Savings in resource costs/labor arbitrage 37% Adding capacity to existing team vs. hiring 28%
Accelerate sourcing savings 36% Improved focus and skills needed on
sourcing and other subject matter expertise
27%
Need for process best practices to better
Adding capacity to existing team vs. hiring 18% support business
18%
Improved focus and skills needed on Accelerate sourcing savings 18%
sourcing and other subject matter expertise
9%
Need for process best practices to better Savings in resource costs/labor arbitrage 9%
support business
0%
Multi-function service providers who support
Provider of procurement software and services procurement and other business functions as well
Need for process best practices to better Improved focus and skills needed on
38% sourcing and other subject matter expertise
33%
support business
Need for process best practices to better
Adding capacity to existing team vs. hiring 31% support business
24%
Improved focus and skills needed on
sourcing and other subject matter expertise
15% Savings in resource costs/labor arbitrage 24%
Savings in resource costs/labor arbitrage 8% Adding capacity to existing team vs. hiring 14%
Accelerate sourcing savings 8% Accelerate sourcing savings 5%
n = 56
Source: ISG Procurement Technology and Outsourcing Trends Survey March 2012
# Which of the following would best describe how your procurement organization considers value in procurement outsourcing?
# If you were to consider a procurement BPO provider, who would you prefer?
7
Copyright © 2012, Information Services Group, All Rights Reserved
9. Outsourcing Drivers and Preferences by Organizational Role
Drivers by Organizational Role Preferences by Organizational Role
0% 17%
Savings in resource cost/labor Multi-function service providers who
24%
arbitrage support procurement and other 36%
21%
business functions as well
42%
14%
Need for process best practices to
12%
support business Providers of procurement software
50%
37%
and services as well as multi-function 12%
service providers
21%
Improved focus and skills needed on 14%
sourcing and other subject matter 28%
expertise 17%
0%
n = 56 Provider of procurement software
24%
and services
43%
Adding capacity to existing team vs 29%
16%
hiring
21%
33%
29% Provider of just procurement
28%
Accelerate sourcing savings 20%
services
8%
4%
CPO VP/Director Manager/Staff CPO VP/Director Manager/Staff n = 56
Source: ISG Procurement Technology and Outsourcing Trends Survey March 2012
# Which of the following would best describe how your procurement organization considers value in procurement outsourcing?
# If you were to consider a procurement BPO provider, who would you prefer?
8
Copyright © 2012, Information Services Group, All Rights Reserved
10. Outsourcing Drivers and Preferences by Organizational Size
Drivers by Organizational Size Preferences by Organizational Size
14%
Accelerate sourcing savings 18%
Provider of just procurement
14%
services
24%
Improved focus and skills needed 14%
on sourcing and other subject
matter expertise 34% 25%
Provider of procurement software
and services
19%
Need for process best practices to 21%
better support business 19%
Multi-function service providers 36%
who support procurement and other
27% business functions as well 33%
Adding capacity to existing team vs.
hiring 19%
Provider of procurement software 21%
Savings in resource costs/labor 24% and services as well as multi-
arbitrage function service providers 24%
14%
$1 B - $10 B > $10 B n = 50 $1 B - $10 B > $10 B n = 50
Source: ISG Procurement Technology and Outsourcing Trends Survey March 2012
# Which of the following would best describe how your procurement organization considers value in procurement outsourcing?
# If you were to consider a procurement BPO provider, who would you prefer?
9
Copyright © 2012, Information Services Group, All Rights Reserved
11. Outsourcing Drivers by Industry
Savings in resource costs/labor arbitrage 22% 30% 20% 33%
Need for process best practices to better support
17% 10% 60% 17%
business
Adding capacity to existing team vs. hiring 28% 20% 10% 33%
Improved focus and skills needed on sourcing and
17% 30% 10%0%
other subject matter expertise
Accelerate sourcing savings 16% 10% 17%
0%
Financial Services (n = 17) Healthcare & Pharmaceuticals (n = 10) Business Services (n = 10) Manufacturing (n = 6)
Source: ISG Procurement Technology and Outsourcing Trends Survey March 2012
# Which of the following would best describe how your procurement organization considers value in procurement outsourcing?
Outsourcing Preferences by Industry
Multi-function service providers who support
22% 20% 50% 50%
procurement and other business functions as well
Provider of procurement software and services 28% 20% 20% 33%
Provider of just procurement services 22% 50% 10% 17%
Provider of procurement software and services as
28% 10% 20% 0%
well as multi-function service providers
Financial Services (n = 18) Healthcare & Pharmaceuticals (n = 10) Business Services (n = 10) Manufacturing (n = 6)
Source: ISG Procurement Technology and Outsourcing Trends Survey March 2012
# If you were to consider a procurement BPO provider, who would you prefer?
10
Copyright © 2012, Information Services Group, All Rights Reserved
12. The majority of respondents with experience with Procurement BPO were satisfied with the services that they
received, with less than 10 percent expressing dissatisfaction with any service except contract management,
where dissatisfaction levels were 18 percent.
Satisfaction with Procurement BPO offerings
Are buyers Satisfied?
82%
Spend Analysis (n = 11) 9%
9%
75%
Transactional Procurement (n = 12) 8%
17%
71%
Vendor Management (n = 7) 0%
29%
55%
Contract Management (n = 11) 18%
27%
55%
Sourcing (n = 11) 9%
36%
Satisfied Dissatisfied Can't say
Source: ISG Procurement Technology and Outsourcing Trends Survey March 2012
# If you answered ‘fully implemented’ or ‘currently implementing’, how satisfied are you with the service offerings currently provided by the procurement BPO
providers?
11
Copyright © 2012, Information Services Group, All Rights Reserved
13. Companies considering procurement BPO consistently indicated a high degree of cross-functional collaboration in
selecting a solution. This is consistent with the more general need for procurement to be collaborative with
multiple stakeholders so it can be successful in driving adoption and savings across the corporation. Therefore it
is not surprising to see procurement involving other stakeholders in the decision to select a BPO solution.
Cross-functional participation is evident across large and middle-sized organizations, with a business unit playing
the primary decision-maker role among larger organizations, while procurement function assuming this role
among the middle-sized ones.
12
Copyright © 2012, Information Services Group, All Rights Reserved
14. The CFO or CPO is the primary decision maker for procurement outsourcing at 57 percent of respondent
organizations, with 14 percent reporting their CEO is the decision maker. In all three of these cases a common
driver is presumably driving financial impact to the bottom line. However, beyond this common interest, it is
important to note that CFOs are highly focused on financial controls, financial transparency and risk, whereas
CEOs are often focused on acquiring strategic capability, enhancing organizational agility and improving the
enterprise’s ability to support entry into new markets or geographies. CPOs tend to be motivated by the need to
solve their capability challenge, in other words, pursuing strategies to accomplish the strategic and operational
mandate assigned to procurement with finite resources.
13
Copyright © 2012, Information Services Group, All Rights Reserved
15. It is also worth noting that CPOs in larger enterprises (with greater than $10B in revenue) have a much larger
degree of influence on decisions to employ procurement BPO. This suggests to us that within larger organizations
CPOs have a higher degree of awareness and sophistication regarding procurement BPO than their counterparts
at smaller organizations. We have also observed that in some cases, smaller organizations do not yet have a
formal CPO role.
14
Copyright © 2012, Information Services Group, All Rights Reserved
16. Procurement Outsourcing Decision-making by Organizational Size
17%
President/CEO 14%
42%
CFO 29%
14%
CPO 38%
10%
COO/CAO 9%
0%
CIO 10%
7%
Corporate Strategy 0%
10%
Director/Senior Manager 0%
$1 B - $10 B > $10 B
n = 50
Source: ISG Procurement Technology and Outsourcing Trends Survey March 2012
# At what level of the organization would a decision to consider procurement outsourcing likely to be initiated?
It is also interesting to note that in some industries, including business services and healthcare, CPOs have a
much more limited degree of interest than in others, such as financial services, and especially manufacturing,
where it is more common for the CPO to be a true “C-Level” executive reporting to the CEO.
15
Copyright © 2012, Information Services Group, All Rights Reserved
17. Procurement Outsourcing Decision by Industry
Financial Services (n = 18) Healthcare & Pharmaceuticals (n = 10)
CFO 33% CFO 60%
CPO 22% CPO 10%
President/CEO 11% President/CEO 0%
COO/CAO 17%
COO/CAO 20%
Director/Senior Manager 0%
Director/Senior Manager 10%
Corporate Strategy 6%
Corporate Strategy 0%
CIO 11%
CIO 0%
Business Services (n = 10) Manufacturing (n = 6)
CFO 40% CFO 33%
CPO 10% CPO 50%
President/CEO 10% President/CEO 17%
COO/CAO 0% COO/CAO 0%
Director/Senior Manager 20% Director/Senior Manager 0%
Corporate Strategy 20% Corporate Strategy 0%
CIO 0% CIO 0%
Source: ISG Procurement Technology and Outsourcing Trends Survey March 2012
# At what level of the organization would a decision to consider procurement outsourcing likely to be initiated?
16
Copyright © 2012, Information Services Group, All Rights Reserved
18. Given the degree of change management and cross-enterprise coverage typically associated with procurement
BPO, executive relationships and brand reputation were potentially critical differentiators for clients when
selecting a provider. In fact, this is the case with a minority of clients; 28 percent of respondents believe that
executive relationships are very important in considering or executing a BPO deal. However, approximately the
same percentage indicated that executive relationships were not important, and 44 percent saw executive
relationships as a factor, but not an overriding factor, in procurement BPO decisions. It is also worth noting that
the higher the level of the respondent in the survey, the less likely they were to indicate that executive
relationships were the primary decision factor, and that there was no significant variation in this trend between
larger and smaller companies. Interestingly, we did see significant variation in responses by industry, with
financial services showing a relatively low level of importance on this factor, and manufacturing and
healthcare/pharmaceuticals showing a much higher degree of importance. This suggests that despite the lack of
existing executive relationships, smaller providers will have a reasonable opportunity to compete for business in
the majority of opportunities in the broader marketplace, but that providers may be inclined to test the waters in
qualifying pursuits in some industries. From a buyer perspective, this underscores the importance of an effectively
managed sourcing process to ensure a level playing field for competition.
17
Copyright © 2012, Information Services Group, All Rights Reserved
20. Importance of Executive Relationships by Organizational Size
28%
Not important, the capabilities of the provider are most
important
31%
43%
Important but other factors such as supplier's brand,
reputation and capability also matter
41%
29%
Very important in considering/executing a deal
28%
$1 B - $10 B > $10 B n = 50
Source: ISG Procurement Technology and Outsourcing Trends Survey March 2012
# Executive relationships between a software/service provider and my company’s leadership is:
19
Copyright © 2012, Information Services Group, All Rights Reserved
21. Importance of Executive Relationships by Industry
0%
Manufacturing (n = 6) 50%
50%
20%
Business Services (n = 10) 50%
30%
20%
Healthcare & Pharmaceuticals (n = 10) 40%
40%
45%
Financial Services (n = 18) 33%
22%
Not important - the capabilities of the provider are most important
Important but other factors such as supplier's brand, reputation and capability also matter
Very important in considering/executing a deal
Source: ISG Procurement Technology and Outsourcing Trends Survey March 2012
# Executive relationships between a software/service provider and my company’s leadership is:
20
Copyright © 2012, Information Services Group, All Rights Reserved
22. Brand appears to be a more of a contributing factor to software/service provider selection than a major one, with
40 percent of respondents indicating that brand was of minimal importance and only 7 percent listing it as the
most important criteria, with the results being similar across large (revenues > $10B) and middle-sized (revenues
of $1-$10B) enterprises. The higher the organizational level of the respondent, the less that the respondent
considered brand to be a major factor For example, 57 percent of CPOs said brand is of minimal importance for
service provider selection and none said it was the most important criterion, while at the manager level 15 percent
of respondents perceived brand to be the most important criterion and only 29 percent said it is of minimal
importance. Among verticals, brand importance was ranked lowest by the manufacturing sector and was
somewhat higher in financial services and healthcare/pharmaceuticals.
21
Copyright © 2012, Information Services Group, All Rights Reserved
23. Importance of Brand by Organizational Role
57%
Brand is of minimal importance in the selection of
44%
a software/service provider
29%
43%
Brand is important,but other factors also matter 52%
58%
0%
Brand is the most important factor in the selection
4%
of a software/service provider
13%
CPO VP/Director Manager/Staff
Source: ISG Procurement Technology and Outsourcing Trends Survey March 2012 n = 57
# Please describe the importance of Brand in the selection of a procurement software/service provider
22
Copyright © 2012, Information Services Group, All Rights Reserved
24. Importance of Brand by Organizational Size
41%
Brand is of minimal importance in the
selection of a software/service provider
33%
55%
Brand is important, but other factors also
matter
57%
4% $1 B - $10 B
Brand is the most important factor in the
selection of a software/service provider > $10 B
10%
n = 50
Source: ISG Procurement Technology and Outsourcing Trends Survey March 2012
# Please describe the importance of Brand in the selection of a procurement software/service provider
23
Copyright © 2012, Information Services Group, All Rights Reserved
25. Importance of Brand by Industry
50%
Manufacturing (n = 6) 50%
0%
50%
Business Services (n = 10) 30%
20%
20%
Healthcare & Pharmaceuticals (n = 10) 70%
10%
22%
Financial Services (n = 18) 78%
0%
Brand is of minimal importance in the selection of a software/service provider
Brand is important,but other factors also matter
Brand is the most important factor in the selection of a software/service provider
Source: ISG Procurement Technology and Outsourcing Trends Survey March 2012
# Please describe the importance of Brand in the selection of a procurement software/service provider
24
Copyright © 2012, Information Services Group, All Rights Reserved
26. Conclusion
We will continue to provide research into the increasingly dynamic procurement space.
• The relatively high degree to which Procurement organizations’ operations are in line with the industry
standard practices suggest a significant opportunity to take advantage of standardized solutions in the
marketplace.
• While Procurement BPO adoption remains relatively low, significantly increased adoption over the past
few years suggests that we may be at an inflection point in the industry, and that we may see significant
growth in this sector moving forward.
• The CFO’s office is the powerhouse for procurement outsourcing decisions; however cross-functional
participation is very high.
• Evaluating providers in the market followed by RFP execution is the most sought after vendor evaluation
approach.
• Procurement organizations are increasingly looking for additional capacity, along with specialized skills,
subject matter expertise and process best practices from procurement service providers, and have
modest expectations for reductions in procurement operational costs. Procurement BPO is clearly
becoming primarily a capability strategy, and it is likely that this is the cause of increased interest in this
sector.
• The market for procurement service providers has become increasingly complex, and most buyers have a
limited familiarity with the range of solutions available. Buyers should seek additional insights and subject
matter expertise to ensure that they have a full understanding of their options in both delivery models and
service providers prior to finalizing their solution strategy.
25
Copyright © 2012, Information Services Group, All Rights Reserved
27. For More Information
If you would like more information about GEP products and solutions, please visit www.gep.com or contact us at
info@gep.com
Clark, NJ, USA London, UK Mexico City, Mexico São Paulo, Brazil
+1 732-382-6565 +44 (0)20 3008 7471 (52) 55 4777-2251 55 11 2787 6393
Prague, Czech Republic Mumbai, India Hyderabad, India Shanghai, China
(420) 233 025 400 91 (22) 6137 2100 91 (40) 4004 4212 86 (21) 6122 1238
About GEP
GEP is a diverse, creative team of people passionate about procurement. We invest ourselves entirely in our
client’s success, creating strong collaborative relationships that deliver extraordinary value year after year. We
deliver practical, effective procurement services and technology that enable procurement leaders to maximize
their impact on business operations, strategy and financial performance. Named a category leader in procurement
outsourcing by the Black Book of Outsourcing, a Star Performer in Everest Group’s Peak Matrix of service
providers, and to the Supply & Demand Chain Executive 100 for seven years, GEP is also ranked as one of the
Fastest Growing Technology Companies in Deloitte's Technology Fast 500. Clark, NJ-based GEP has eight
offices and operations in North and South America, Europe and Asia. To learn more, please visit www.gep.com.
Unauthorized copying, distribution or re-printing in part or whole, without the written permission of GEP is strictly prohibited.
26
Copyright © 2012, Information Services Group, All Rights Reserved