In Part 2 of this five-part series, we evaluate the various ways an outsourcing provider can deliver cost reductions and how a buyer can enable the provider to deliver those cost reductions.

Reducing cost continues to be a primary priority for organizations that outsource their business processes. The difficulty comes, however, when buyers expect their providers to run the business exactly as they have, but at a lower cost. Providers have to do something differently in the way they manage service delivery in order to bring cost down, whether through labor arbitrage or leveraging economies of scale, for example. How you can help your provider help you will vary based on how the provider plans to generate those savings. Fail to contribute in the appropriate way, and you risk breaking the service provider's basic delivery model and the assumptions underlying your projected cost savings.

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Continuing on in our analysis of Capgemini's forthcoming February release of the IBX Cloud Procurement platform, we'll first explore the native search/shopping ability. Reviewing our earlier posts, however, it's important to remind readers that all of the shopping activity within the IBX platform occurs outside of the UI wrapper of the SAP SRM toolset (although all actions are tightly linked back into it). This has two key benefits. First, it completely changes the user experience to making shopping and search quicker and more intuitive, with better results across different search models -- self-managed catalogs, supplier managed catalogs, punch-out, etc. Second, and arguably as important, it makes it possible for a user that rarely interacts with the system to walk up and use it on a periodic basis (e.g., quarterly) without need to call a help desk or go through an online training program.

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In this post, we'll dig into Capgemini's current and planned technology offerings and strategy. To begin, IBX places its "cloud procurement" offerings into three distinct higher-level buckets. These include its "Strategic Procurement" offerings including Spend Profiler, Sourcing, Contract Management and Supplier Management. The next category, "Enablers Linking Strategic and Operational Procurement," include Contract Implementation capabilities as well as Procurement Intelligence services. The third major grouping of solutions focuses on "Operational Procurement" and encompasses Capgemini's Content Platform for P2P, search capabilities, SRM capabilities (on-premise or on demand) and invoice management capabilities. All three of these areas sit on top of IBX's "Business Exchange" solutions including supplier self-service, business document routing, procurement content administration, etc. Additionally, IBX includes its supplier network (80,000+ suppliers) and the managed BPO services it can deliver on top of both the network and the broader Capgemini procurement BPO and IBX "Cloud Procurement" solutions.

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Nearly all procurement BPOs claim material differentiation through the category expertise they bring to the spend table. Infosys is no exception but they've taken a slightly different route in this regard. We have often seen other procurement BPO providers taking a route of alliances/partnerships to bring category expertise. Infosys has been making investments steadily to build category expertise in-house, which has gained rapid momentum in the eighteen months, and is also evident with their recent acquisition (keep looking for our detailed analysis on this in the next couple weeks).

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Earlier this year, Spend Matters conducted an extensive interview with a Capgemini procurement BPO customer -- one using both the Capgemini/IBX procurement technology platform next to supporting category management and sourcing services. Our findings from these discussions suggest a number of overall strengths of Capgemini in the platform's marketing around supporting SAP SRM initiatives. Without question, the two closest competitors when it comes to the capability to enable SAP SRM deployments with additional search, catalog management and electronic invoicing capability are Capgemini and Hubwoo. Spend Matters analysis suggests that other SAP BPO partners using SAP SRM technology have not developed their similar own, organic capabilities to complement SAP's own native ECC and EBP capabilities for direct and indirect spend automation.

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