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Taking the Lead: The Evolving Role of Purchasing in Services Procurement


Ivalua Releases Findings from Latest Trending in Procurement survey

T-systems

Ivalua, the leading global spend management solutions provider, announced today the results of its ninth Trending In Procurement survey research on Services Procurement and Purchasing Departments

Most organizations spend a substantial percentage of their revenue on services: Consulting, Business Process Outsourcing, IT maintenance, Service Desk, Training, Patents … Services spend represents a great challenge for many enterprises, as managing it involves dealing with specific financial, legal and organizational issues associated with this category.

Ivalua gave the floor to the Procurement Departments and professionals involved in services procurement as part of its quarterly survey Trending in Procurement, to take stock of the challenges linked to this category and to the use of Procurement technologies.

“Services Procurement is a strategic spend category for many large companies. There is much room for improvement in this field, including during the services scoping, implementation and post implementation evaluation phases. Ivalua has developed solutions and standard features for Services Procurement professionals, to help them manage all the specificities of this category regardless of the services considered: marketing, legal, consulting …” says Gérard Dahan, Manager EMEA, Ivalua.

Purchasing professionals take the leads on Services procurement…
A majority of the surveyed procurement professionals (68%) says that their Department is responsible for managing services procurement. For the remaining, this category is the responsibility of each business unit (17%) or of their company’s Human Resources department (15%). This is a clear indication that Purchasing departments have taken ownership of this category (just like goods procurement), which was previously managed outside of their field of vision, with employees themselves going to the marketplace directly.

Among the reasons why Purchasing professionals may not directly manage Services Procurement in their businesses, the two most often cited are first ” hesitance to forgo Business Unit relationships with existing and trusted suppliers” (72%) and “Procurement only manages standardisable items” (57%).

…and acknowledge the challenges attached to this category.
The main challenges of services procurement, identified by survey respondents are: “standardizing services spend needs and requirements” (72%), “providing requisitioners a catalog of services” (67%), and “creating & managing a services supplier repository” (54%). Other challenges, such as managing legal risk, Supplier service delivery and quality assurance or dispute management are not considered as major difficulties.

Services Procurement and Spend Management technologies
When asked « What type of solution does your company use to manage Services Spend? » a majority of the participants indicates that they use their “Spend Management solution – the same that we use to process goods procurement ». ERP is the second most frequently cited tool, used to process Services Procurement

In details:
What type of solution does your company use to manage Services Spend?

  • 1. A spend management solution – the same that we use to process goods procurement – 43%
  • 2. ERP 21%
  • 3. A “niche” solution specialized in Services Spend management – 18%
  • 4. A specific tool we developed – 12%
  • 5. We do not use a solution to manage Services Spend – 6%

In this context, it may be noted that companies which have implemented a Spend Management solution do not systematically use this solution to manage Services Procurement. Indeed, 47 % of participants who are not using their Spend Management solution to manage Services, indicate that their Spend Management solution does not “offer comprehensive functionalities to model specialized sourcing, ordering and invoicing attributes for services”, and 26 % indicate their solution does not “offer functionalities to manage the organizational and operational aspects of services procurement (HR, Timesheet, Resources)”.

More than 180 Procurement and Finance professionals based in Europe and North America have answered the Trending in Procurement survey #9 released via emailing, social media and Ivalua event from March to April 2016.