I have a background in services, both professional and otherwise, and this is always an interesting topic. In my opinion, the most important take-away from the event is that more companies are breaking down the wall and not only addressing services spend but having success. Although there are complexities with services like legal and marketing that don’t exist with straightforward services like facilities maintenance or contingent (temporary) labor, procurement groups are more than capable of handling those complexities just like they have done with complex materials spend.

Last week’s event on sourcing complicated services is now available on demand by clicking here.

Sharpen Your PencilPart of what makes these categories complex is dealing with the groups that own them. Unlike pest control (for instance) legal spend is owned by a group within the company dedicated to that function – and they probably have quite a bit of pull with executive leadership. Procurement may be viewed as a threat to their ownership of the spend and their relationships with suppliers.  One of the early goals should be to break down walls between the spend owners and procurement by getting face time and co-locating. Ideally you want to eliminate the feeling of us v. them.

So if your procurement organization has not made a focused effort to address services spend in the past, how do you decide where to start?

According to the speakers, the question is less about which service categories are “easy” and more about the profile of your organization and which categories will work well with that.

Black Book of OutsourcingYou will also want to do thorough spend analysis on the categories and suppliers you are looking at before discussing the idea outside of procurement. Once you have identified the categories that are possibilities, perform an opportunity assessment to determine how they rank relatively by opportunity size, complexity level, political risk, difficulty to learn and effort required. In the end, you want to make sure that your chosen categories are selected objectively and are defendable.

When you are really starting out with any complex category (services or otherwise), while you want a return to be proud of, low difficulty may be more important to minimize the damage to the group (in terms of both confidence and reputation) and their relationship with the organization.

Remember to consider the amount of change management that will be required to manage the category differently and the willingness of the business owners to participate. One great suggestion from the call was to look at the org chart and target any areas where there has been recent leadership turnover: particularly when the new leader has come from outside the organization. They may be looking for assistance to bring about the change they want to see.

A last few thoughts that came out in the event Q&A:

 

About Emptoris

Emptoris is a world leader in delivering strategic supply and contract management solutions that enable companies to maximize financial performance and optimize commercial risk. The company’s award-winning sourcing, contract management, spend analysis, supplier lifecycle management, services procurement and telecom expense management solutions are leveraged by more than 350 Fortune 1000 and Global 2000 companies.

About Forrester

Forrester Research, Inc. (Nasdaq: FORR) is an independent research company that provides pragmatic and forward-thinking advice to global leaders in business and technology. Forrester works with professionals in 19 key roles at major companies providing proprietary research, customer insight, consulting, events, and peer-to-peer executive programs. For more than 28 years, Forrester has been making IT, marketing, and technology industry leaders successful every day.

About ISM

Founded in 1915, the Institute for Supply Management™ (ISM) is the largest supply management association in the world as well as one of the most respected. ISM’s mission is to lead the supply management profession through its standards of excellence, research, promotional activities, and education. ISM’s membership base includes more than 34,000 supply management professionals with a network of domestic and international affiliated associations. ISM is a not-for-profit association that provides opportunities for the promotion of the profession and the expansion of professional skills and knowledge.