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Top Procurement Outsourcing Vendors, Black Book Survey 2007 Results
Orbys Black Book, Dec 2007, Pages: 31
Black Book surveyed 3522 senior procurement, supply chain management, and chief financial and operating executives to benchmark enterprise procurement outsourcing and plans, and rank the top twenty Procurement BPOs of 2007.
Procurement outsourcing has risen to the center of attention in the 2007 corporate world because of its ability to deliver a two way impact in the form of cost reduction as well as value creation. Procurement Outsourcing (PO) involves the outsourcing of parts or all of a company's procurement functions (people, processes, systems, and expenditures) to an external service provider. Today, the procurement BPO focus is on indirect (non-core) procurement. Procurement outsourcing typically includes many of the traditional IT outsourcing elements - systems integration, transition, change management, service level agreements (SLAs), and governance.
The Black Book of Outsourcing research predicts that the worldwide BPO market will hit $700 billion in 2008 as more companies increasingly embrace business process outsourcing. Procurement Outsourcing is among the fastest growing BPO areas. We expect the worldwide market for Procurement BPO to increase to $6.0 billion in 2008, projecting a 37% CAGR (compounded annual growth rate). Many enterprises are taking considerable interest in procurement BPO because of its ability to impart two key benefits—cost reduction and value creation—two factors which are highly desirable in today’s business environment. Procurement outsourcing facilitates the reduction of operational costs and also has the ability to impact third-party expenditures, in addition to operational expenses. By virtue of the quick pay-back period associated with procurement outsourcing, the value proposition for these initiatives is fairly compelling to prospective buyers.
In Q1 2008, we observe an increasing number of companies who are entrusting indirect procurement—tasks and transactions associated with acquiring goods and services that are needed on a day-to-day basis—to outsourcing service providers. One of the important payoffs realized by PO adopters is the opportunity of utilization of top-notch procurement systems and processes without making huge capital investments. Procurement outsourcing as a strategy works well for companies who constantly battle with the nonconformist buying issues despite having made considerably large investments in strategic sourcing and e-procurement in the form of time and money. If properly implemented, procurement BPO can help fill the gaps in an enterprise’s procurement model and deliver benefits that the firm would not be able to realize on its own. Comprehensive (or End-to-End) Outsourcing is targeted at four primary domains within the procurement process which are evaluated within this survey process to collect a comprehensive procurement outsourcing initiative for the purposes of this competitor comparison:
- Total Spend Management
- Sourcing & Supply Chain/Logistics (Procure-to-Pay)
- Category Management
- Transaction Processing: Transactional requisition to pay processes
Outsourcing non-core indirect procurement offers significant cost-reduction potential. As enterprises find it increasingly difficult to train and staff their internal purchasing organizations, many are looking at procurement outsourcing as a viable alternative. The ongoing economic downturn only reinforces the need for enterprises to control costs and maximize performance. As global markets begin to recover, increased competition and price depreciation will demand that enterprises keep a firm grip on costs.
Enterprises spend nearly half of every dollar earned on external goods and services. Yet, many organizations lack the skills, expertise, and infrastructure to effectively manage procurement across all spending categories. Developing these competencies in-house can often be too costly or too time-consuming — or both. As a result, under-performing operations and under-leveraged spending are causing enterprises to leave billions of dollars on the table which technology infrastructure that many firms lack. Procurement outsourcing firms are seizing the opportunities presented by meeting both comprehensive services and project-specific requirements of prospective clients.
SURVEY-QUALIFIED PROCUREMENT OUTSOURCING VENDORS, 2007
[in Alphabetical Order]: Accenture, Ariba, Capgemini, Connell Sourcing, Corbus, Direct Sourcing Solutions, EDS, ePlus, Genpact, Global eProcure, IBM, ICG Commerce, Ketera, Orbian, Perfect Commerce, PFSWeb, Procuri, Prosero, PurchasingNet Inc., and XChanging
The Black Book of Outsourcing research service titled TOP PROCUREMENT OUTSOURCING VENDORS 2007 provides an in-depth competitive analysis of the highest 20 ranked purchasing and procurement services outsourcing globally. The study examines the customer responses and satisfaction scores on eighteen specific criteria within the Procurement BPO market space and details each positioned vendor in four major functional areas. An analysis of key competitors provides the reader with in-depth market information.
Key Benefits:
Determine how your current vendor is performing in other vendor engagements, and inspect the performance of vendors pre-RFP or pre-contract renegotiation.
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