This afternoon, Spend Matters would like to welcome back our UK and European Correspondent, Peter Smith.

I had the pleasure of meeting Jason for the first time on his recent trip to the UK, and I was trying to explain to him our rather strange UK political process, which means we know there will be an election before the middle of June -- but we don't know when as of yet.

"Why don't you just have a set date for it?" he asked, and I admit I struggled for an answer. Everybody always gets into a state of over-excitement until the announcement finally comes, and then a sense of anti-climax dawns.

We have had a rash of policy announcements from the opposition Conservative party over the last couple of weeks in readiness for the event. And strangely, virtually every one had a significant procurement / supply chain connection or implication.

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Continuing our new “Travel Tuesday” column, this week we'll cover some of the travel Spend Management basics. Today, I’ll refer Spend Matters’ readers to a recent Purchasing Magazine study that provides a useful state of the market when it comes to the role of procurement in managing travel spend today. According to the study, while negotiating/contracting and supplier management activities factor heavily into the role of the typical procurement travel manager, Purchasing’s research suggests that the largest challenge is “getting employees to comply with travel policies and preferred suppliers.” A specific concern in overcoming this hurdle is "keeping prices with preferred suppliers competitive with prices travelers find via Internet sites.” Spend Matters' own research, however, suggests that compliance does not have to be as great a challenge as it has been.

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When we usually think of buying in local currencies, most procurement and finance minds think about denominating contracts in local currencies (e.g., RMB) rather than in the dollar or Euro. But the concept of local currency takes on an entirely different meaning when the financial instrument is one that's not exactly traded on the open, global market. I recently read on my iPhone an article on FoxBusiness that I found so fascinating, I book-marked it to write about when I got back to the office. The article examines the growth of "local, hours-based 'currencies' that are growing in popularity nationwide." The article suggests that "today, there are close to 100 types of local currencies operating in the United States … While some currencies are true to their name and are backed by federal dollars, others are simply a record of hours worked by contributing 'time bank' members."

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Economic issues in Europe have dominated the news over the last few days. Greece is in real danger of going bust; years of corruption, government overspending, and tax avoidance are coming home to roost.

Will the EU -- Germany and France in particular -- bail Greece out? If not, the contagion has the potential to spread around the Eurozone to Spain, Italy, Ireland. At least the UK can depreciate its currency to help get out of trouble; Greece is locked into the Euro and has not made the structural changes necessary to adapt since it joined.

If the EU does support Greece, will there be enough incentive for the Greek government and people to make the necessary painful adjustments, which will mean real cuts in living standards? Or will they keep on spending, like the rich kid on heroin who knows that when things get really tough, Daddy will bail them out? (“Daddy” in this case being Germany, with some help from France and the Benelux countries.)

Last week, however, we saw poor indicators from Germany in particular and the Eurozone in general, in terms of the economic recovery, so voters in the stronger countries are less likely to be comfortable with bailing out their profligate neighbors. As the BBC reports:

“Economic growth in the eurozone has slowed to a crawl -- and that's bad news for the UK as much as it is for member states. The 0.1% growth figure for the fourth quarter of 2009 was worse than expected and puts into perspective the UK's similarly anaemic performance over the same period.”

I have always feared that the UK was in for a “double dip” recession; I am probably a bit of an economic pessimist by nature. These figures suggest, however, that this may be an issue for Europe more widely. And once public-sector cuts start to hit home in countries including the UK, that must act as another kick to an already weak economy.

So ... no answers or predictions, other than this: If you are a service/solution provider/supplier to the Eurozone or the UK, don't bank on a robust recovery and booming sales any time too soon.

- Peter Smith

We are now no more than 4 months away from a general election in the UK; it must be held by June 3rd, although under our system the government can choose the specific date within this timeframe. The strong favorite is May 6th, which would mean combining the national elections with the already scheduled local elections, saving the political parties money, which for Labour is a major issue as its finances are shaky.

Given the state of the economy, reducing public expenditure will be a major issue in the campaign, so public-sector (government) procurement is likely to be a stronger theme than usual. This can be seen in the campaign of David Cameron, leader of the opposition Conservatives, who appears to be making “openness” a major element of his proposition. In a speech this week, he said:

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During the recession, we all started minding our spend -- companies, nonprofits, families and individuals included (governments, of course, got a pass). Of course, if you're a family or individual lucky enough to be gainfully employed, and you cut back your consumption, the result almost certainly leads to increased savings (or at least debt repayment). I found the chart that consultant Edward Harrison recently shared on Seeking Alpha to be a great reminder of the power of recession to put us into savings mode. Looking at historical U.S. savings levels from 1947 onward, what's most interesting is that until 1995 the quarterly savings rate (based on a rolling 4-quarter average) was awlays above 6%. In the '70s and early '80s, saving peaked at nearly 12% during the inflationary cycle, only to begin to fall off a cliff in 1982.

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Whether you're an American or Chinese citizen -- or a resident of just about any other country for that matter -- chances are more than likely that your government represents far and away the largest spender within your borders. Of course, as private sector professionals, when we think of procurement and sourcing we often think of dropping savings to the bottom line (and meeting the aggressive targets our bosses set for us). But in government, the entire concept of savings is a bit more nebulous. After all, if you achieve cost reduction on purchased goods, the amount you've saved quite often disappears from your budget allocation the following year, and in government, the less you have to spend, the less power you have. Fortunately for those who represent us in Washington, Beijing, New Delhi, and just about every other capital, there's still an awful lot of spending going on, even if certain budgets aren't surviving at current levels from one year to the next, thanks to the few savings-focused government employees who think like us.

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In the private sector, it's difficult to justify procurement fraud in any way to shareholders (sometimes its enough to land the executives who knew about it in jail). At the UN, however, procurement fraud is an almost venerated tradition. After all, when your shareholders are captive and take the form of hundreds of nations (very few of which manage their own buying effectively), it's pretty easy to get away with the equivalent of Spend Management murder. But it's going to be even easier in the future. And that's because according to a major cable news network the UN is now cutting back on its own investigation of internal fraud. Yes, you read that correctly. According to Fox News and the AP, "The United Nations has cut back sharply on investigations into corruption and fraud within its ranks, shelving cases involving the possible theft or misuse of millions of dollars, an Associated Press review has found."

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After a short April Fools hiatus, I'm back. Bloggers are too vein to not see their posts on a daily basis, I supppose. Could not resist the RSS call of the wild. Well, let's get to today's regularly scheduled programming ... In the past few months, I've probably had close to a dozen interactions with different services procurement vendors or practitioners taking a closer look at their services spend (often for the first time, in certain categories). Given the findings from a CAPs report that European Leaders sites in a recent blog post, it's no surprise that the general interest in services procurement is rising as companies discover the potential of the opportunity as well as some of the unique challenges it brings. It's important, however, not to downplay these hurdles. According to the post, the study found that "two-thirds of supply chain professionals viewed the procurement of services as being more problematical than just plain old materials and component procurement."

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Earlier in the week, I posted a news announcement of Ariba's latest foray into the on-demand world with its recent 9s5 release. As one astute reader pointed out in a comment, the name "9s5" does not exactly have any market/marketing connation -- in fact, in my view, it flies in the face of the non-software focus of on-demand -- so perhaps Tim Minahan, as the commenter suggests, will get around to changing the release names. I'd second this suggestion. But enough on superficial branding. In today's post, I'd like to expand on my earlier analysis, digging into some of scoop behind the enhancements of 9s5 and what it means for the market. In a final post on the subject early next week, I'll get into even more product analysis detail.

To begin, let me preface my analysis with the fact that I have not demoed the release yet (I intend to spend a number of caffeinated hours at the Ariba product showcase area at LIVE playing around). Still, I have a good sense that if Ariba is claiming functional parity with the installed release in most areas -- and if this statement is true -- exactly how the application stacks up to others in the market. But what is not clear to me at this point is the phase out of the Procuri product line (which I also intend to find out much more about in the next couple of months). I suspect it will be a fast phase out of the Procuri product name and I will also guess based on some early feedback from Procuri customers that they will be encouraged -- encouraged is such a polite word, isn't it? -- to move onto the Ariba product suite as well.

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