The State of Services Procurement

Brian Sommer summarizes what he learned in a recent meeting focused around services procurement. I think he is far too generous about the sophistication in procurement practices around services.

This comment is particularly telling "No consistent definition exists for professional services or consulting. Sourcing executives find it tough to apply a single set of practices that apply to the full breadth of services that companies procure."

Just around IT services (as against legal or architectural services) there are distinct markets around contracting/staff supplementation, systems integration, application management outsourcing (and offshoring), infrastructure outsourcing, and BPO. The players are different (look at the different ways different offshore markets are evolving), the things to look for are vastly different (ITIL and utility models in infrastructure outsourcing versus time tracking around contractors), the price points are widely different. And markets are morphing as everything gets delivered "as a service" - so software, hardware, telecom companies all offer variants of IT services.

No single sourcing process or sourcing technology can handle it all. Or should be expected to handle a services market which totals spend of over $ 500 billion a year.

I know I am being critical of my own clients in saying so, but like I wrote here, I wish more procurement folks would treat IT spend, not just IT services, as very different from MRO or other direct spend, not just try to find homogeneous "solutions" .  Lots of empty calories in the spend.

The good news is there are plenty of disruptive vendors and business practices and tools waiting to be leveraged. But they are often at sub-categories and niches of markets. Tough to discover them if you seek a "single set of practices".