By Bill Huber, Director, CPO Services, TPI
SAP and WE Energies provided some excellent, practical insights on how eSourcing auctions have been successfully conducted, and how they were able to diffuse the frequent arguments that reverse auctions destroy value. As we have noted in the past, reverse auctions and other sourcing technologies are simply tools, and it is always the human element that determines whether tools will help to create or destroy value. Gail DeVeau’s work at WE Energies is an example of how the tools can work in capable hands.
The BPO Market:
Phil Fersht from AMR Research provided a broad overview of the direction of BPO. He shared many excellent nuggets with the group. There were several highlights that stood out:
- There is a new breed of executive emerging that is looking at globalization and outsourcing. In the 90’s the CIO had to move forward with enterprise resource planning (ERP) or be left behind. Now, senior finance executives are feeling the need to move forward with globalization or be left behind.
- Healthcare analytics and sourcing from federal funding will be a growth area for sourcing professionals. The stimulus plan confirms this.
- Many things that AMR Research has been telling clients not to do in outsourcing for years is now happening. Now companies are simply saying, “Take 30-40 % off bottom line. We are willing to take a leap of faith. We just want it done.” The reality is that it takes 3-4 years to do effectively.
- In outsourcing, client satisfaction trumps other service level agreements (SLAs). If clients are satisfied and they feel that they are working with the provider, they will tend to be pleased even if there are problems in other SLAs.
- Procurement outsourcing will increase, partially because of the skill set issues facing procurement organizations, and knowledge process outsourcing (KPO) options available that are executable with relatively small headcounts.
- Customers are asking procurement software vendors to provide more process support to drive greater collaboration between procurement software providers and outsourcers. Currently only about 15% of procurement BPO implementations involve technology transformation, far below other areas of BPO.
- KPO resources are often used to bring high value service to clients with the objective of ultimately growing the business into more scalable BPO.
More insights from day 2 to follow…