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August 28, 2008
Report: Procurement Outsourcing Suppliers Offer End-to-End Services
By Anuradha Shukla, TMCnet Contributor
An analysis of the procurement outsourcing supplier marketplace by the Everest Research Institute indicates that the mix of PO service suppliers is rapidly changing. The research has revealed that suppliers are migrating towards end-to-end offerings.
According to the Institute’s Global PO Supplier Landscape Report, driving supplier migration and strategies is an evolving PO value proposition that more closely links procurement and finance processes. This not only delivers new efficiencies but also offers increased savings opportunities.
The Institute’s report analyses market snapshot and types of offerings, supplier market shares and trends, delivery capability assessment, characteristics of various supplier segments and implications for key stakeholders, including buyers and suppliers.
The report said that the PO market continues to grow in bursts, with an overall 26 percent CAGR pace and supplier managed, non-core spend reaching almost $60 billion.
Katrina Menzigian, vice president, Everest Research Institute explained that as suppliers continue to work towards overcoming supply and demand constraints, changing market dynamics are forcing suppliers to change strategies to move towards offering more end-to-end services or hold their leadership positions. Only few suppliers today have end-to-end S2P (source-to-pay) service capabilities, and they are making concerted efforts to round out their capabilities through acquisitions partnerships and internal enhancements.
The changed supplier mix reflects three emerging PO offerings according to the Institute’s report: sourcing-focus, procure-to-pay (P2P) focus and end-to-end or source-to-pay (S2P). The report says that although the PO market continues to be concentrated, the supplier mix is changing. Accenture (News - Alert), IBM, ICG Commerce and Xchanging are the top four suppliers that continue accounting for almost 75 percent of active annual contract value. Suppliers are focusing on specific geographies, industry verticals or buyer segments and therefore creating their own areas of leadership.
The report identifies Accenture as the leading supplier to financial services companies, IBM and ICG Commerce for manufacturing, and Accenture and Capgemini (News - Alert) for energy and utilities. The contract characteristics and delivery models vary by supplier segments.
The report identifies Accenture as the leading supplier to financial services companies, IBM and ICG Commerce for manufacturing, and Accenture and Capgemini (News - Alert) for energy and utilities. The contract characteristics and delivery models vary by supplier segments.
Saurabh Gupta, research director, Everest Research Institute and co-author of the report pointed out that PO suppliers are expanding their delivery footprint across onshore, in-region and offshore delivery locations. He noted that while sourcing-focused suppliers are onshore-centric and P2P-focused suppliers tend to focus on offshore-centric models, end-to-end suppliers have developed a healthy mix of onshore, in-region and offshore FTEs.
“Almost all PO suppliers are beginning to optimize their location strategies as global sourcing starts to play an increasingly important role in the PO market,” he said.
Everest Research Institute serves as a central source of independent and objective strategic intelligence, analysis, and actionable insight for leading corporations, suppliers, technology providers, and investors in the global outsourcing and offshoring marketplace.
Everest Research Institute serves as a central source of independent and objective strategic intelligence, analysis, and actionable insight for leading corporations, suppliers, technology providers, and investors in the global outsourcing and offshoring marketplace.
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Anuradha Shukla is a contributing editor for TMCnet. To read more of Anuradha’s article, please visit her columnist page.
Edited by Mae Kowalke
