A successful procurement transformation, including digital-upgrade projects and source-to-pay technology implementations, is no small feat, nor is it achieved in isolation.
Most procurement organizations on a digital transformation path engage an ecosystem of service partners along the way to help set strategy, target operating models, create project portfolios, do capability building and plan implementation — and then the partners execute them and maybe even enable new processes through various forms of outsourcing and managed services.
That’s a tall order, especially how these vary for different spend areas and stakeholders and organizations’ ability to fund and manage the change. A large-scale improvement of procurement value and agile “operating models” seems to be front of mind for so many CPOs, but achieving it is elusive.
New digital capabilities are certainly part of that conversation.
At Spend Matters, out of the hundreds of vendors that we cover in the S2P space, we do a deep assessment of more than 70 of them in our SolutionMap benchmark, where our analysts score more than 500 RFI requirements across S2P.
And while this gives us unmatched insights in terms of technology, we don’t have similarly deep insights into the hundreds of service providers in the ecosystem. Nor does anyone. We looked.
There are a few good outsourcing advisory firms that look at the mega BPO firms and one that looks at large operations consultancies. But there’s no single source that scans across the ecosystem of management consultants, S2P technology implementation firms, BPOs and the “long tail” of managed service providers (MSPs).
So, recognizing the importance of key procurement services partners, Spend Matters is initiating formal PRO analyst coverage of the procurement services market and has begun publishing the 2021 “Procurement Services Market Landscape” report series and associated vendor directory.
It’s an initiative led by Spend Matters analysts Pierre Mitchell and Xavier Olivera to help procurement understand the distinct capabilities of leading procurement transformation services providers and the larger ecosystem in which they operate, including trends within and across the market segments. (Spoiler alert: New digital capabilities are changing the game, and some providers that haven’t invested are getting left behind.)
“Leading consultancy and services firms are blending procurement outcomes with digital-enabled delivery models,” said Jason Busch, Founder of Spend Matters. “Professional services firms — from strategy and operations consultancies to the Big 5 to BPOs to SIs to MSPs to boutiques — are carving out whitespace in the market. I am very excited for Spend Matters to formally initiate coverage of this market to help the Global 2000 make more holistic solution decisions that are increasingly incorporating a diverse set of strategy, operations, technology and BPO partners.”
The series and ongoing coverage will not focus on trying to rank service providers by generating a one-size-fits-all quadrant, especially since the buyer personas and use cases are so diverse. And as most of our readership knows, we’re not big fans of such an average-of-averages blunt instrument approach, even if we have the data like in our procurement technology SolutionMaps. Instead, our approach will focus on outlining the various service segments and the characteristics of those segments to help identify best-fit strategies and potential partners. We are thrilled to have the trust and support of so many well-known brands, and firms that should be known better, in the market.
The report profiles more than 30 providers of all shapes and sizes. And we’ve organized them into six types of procurement services (and their value propositions):
- Source-to-pay technology specialists — These purpose-built consultancies will help rapidly and effectively implement and optimize the leading S2P applications and suites — and some other tools as well.
- Global consultancies — These firms, including the Big 5 firms, have worldwide reach and support across a spectrum of services, even beyond S2P.
- Strategy consultancies — The C-suite at buyer organizations are undoubtedly using one of these firms, and most of these consultancies are developing formidable capabilities.
- Regional firms — Use these consultants for local presence, cultural fit and specialization (and maybe even lower rates).
- Global BPOs — Clients of these firms get one-stop shopping for large-scale digital transformation and global operations.
- MSPs — These firms occupy the “long tail” of the market and offer niche enablement by category, process, resource, benefit, commercial model, etc.
In several subscription PRO posts over the next several weeks, our analysts will give insights into each of these categories, segment the vendors and detail the capabilities of each firm in the procurement services directory. Each of the procurement-services partner profiles includes:
- Company demographics and service mix by geographic region
- Service and capability overview and assessment of differentiators
- Category specialties
- Commercial models by project type
- Listing of frequent competitors actually seen in the field
- Provider summary analysis with differentiation highlights
The profiles come as PDFs of each firm and also feature providers’ self-assessed ratings on over 25 capabilities where they feel that they compete (or not), differentiate, or are truly best-in-class. If they claim best-in-class, we ask for details and case studies/references, and we downgrade those that are not best-in-class (relative to the providers who can substantiate their self-assessment). We also use the alumni and clients of these providers to help us provide additional validation.
The capabilities generally break down into transformational (procurement strategy, digital strategy, diagnostics, benchmarking, talent/organization, project/program management, training, etc.), core S2P (spend/supply analytics, category management, sourcing execution, tail spend, direct spend, CLM, SRM, P2P, etc.), “extended” areas (supply chain, working capital, shared services, risk/compliance, IT sourcing), and a drill-down into some “digital” competencies.
Although this is just our initial analysis of this big-picture view of the integrated procurement services market, we hope to provide updates to enhance market understanding and add more players to our coverage in the coming year. We hope that the new series will fill in some blank spots for procurement leaders, services buyers, services providers and tech providers looking to strategically partner or influence the market. We also will gather feedback from the ecosystem participants to help guide us on future directions for this ongoing coverage.
The study’s authors recognized the need for this information and understood the value that a snapshot of the market could have for executives who are planning digital updates for their companies but don’t know all of the players and options.
“The idea of procurement-as-a-service is intuitive to CPOs to power procurement’s evolution, and the procurement services market is becoming a critical accelerant to this journey,” lead author Pierre Mitchell said. “Unfortunately, the market is fragmented and still burdened by legacy models, but there is hope as we see digital disruption starting to happen for the buyers’ benefits, if they know how to sift through the complexity. We hope this new Spend Matters coverage area will help provide this order out of chaos.”
Analyst Xavier Olivera sees the study as a puzzle piece that’s vital for companies to have.
“This new procurement services report and directory naturally complement Spend Matters’ SolutionMap vendor rankings and TechMatch’s ability to pair a company’s needs with a vendor’s capabilities,” Olivera said. “The research and directory give our readers and customers a more comprehensive view of strategy and transformation when it comes to S2P solutions and their adjacent processes, covering the missing link of value creation for an S2P solution.”
The series so far
Part 1 summarized the study findings and listed the 34 providers that we’re initially profiling (see our services provider directory to learn more about the providers and their PDF profiles). Part 2 detailed how procurement professionals can use this information, and it gives more information on the six market segments shown above and the providers in those segments. Part 3 and Part 4 dove into the first two segments (S2P consultancies and regional consultancies), and in Part 5, our coverage turned to the “Wild West” segment covering various forms of a Managed Service Provider (MSP) model. Part 6 examines four strategy consultancies that offer procurement services to add value. Part 7 focuses on six global consultancies as well as that group’s promise and pitfalls.
