Spend Matters welcomes some holiday thoughts and New Year's wishes from Danny Ertel, a founding partner of Vantage Partners and a consultant in legal process outsourcing, relationship management strategies, and negotiation techniques.

'Tis the holiday season, at least in the West, with Christmas (and Boxing Day) ever so recently behind us, and Hannukah and Kwanzaa still very much in evidence. What better time to make a wish, for both the practice and business of law. I'll tee up some aspirations here, and follow next week with my views for what we can realistically expect from 2012. Given that these are both short weeks for many, and that my crystal ball is looking rather murky, I'll keep these posts short and sweet.

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In the first post in this series, we offered up the initial three items on a list contained in a Spend Matters UK/Europe research paper, Managing Indirect Services -- Procurement's Greatest Opportunity?, describing the reasons complex services procurement is often so difficult (and of course we provided our own commentary as well). Today, we'll feature four additional points from Peter Smith's paper, plus some additional thoughts. To begin, Peter's fourth observation is, "Services are often 'personal' to the budget holder, even in a corporate environment. Personal relationships can add a markedly different dynamic to procurement decisions compared to those made on purely objective business grounds."

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As we discussed earlier this week, my British partner in crime Peter Smith recently published a research paper titled Managing Indirect Services -- Procurement's Greatest Opportunity?. In it, Peter leverages some of the concepts from a book he recently co-authored, Buying Professional Services: How to Get Value for Money from Consultants and Other Professional Service Providers (Economist Books). One of the more succinct and refreshing aspects of his coverage of services procurement is his seven-step rationale for why organizations find it so hard to tackle services procurement and complex services categories for the first time compared to other direct and indirect spend areas. The first three items on Peter's list are:

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We're excited to announce our latest Spend Matters research brief (coming from the UK): Managing Indirect Services -- Procurement's Greatest Opportunity? Likely relevant for most Spend Matters readers in different industries -- from manufacturing to the public sector -- the genius of Peter Smith's latest paper is that it takes a non-technologists view at the knowledge, platforms and skills required to get more from services spend. As we suggest in the introduction, "Improving procurement across indirect services categories offers significant opportunities for savings. However, executives need to recognise the challenges, understand the value drivers for each category and identify the right strategies. Data, tools and capability must be carefully chosen to be appropriate, and in particular, specifically designed to meet the needs of these spend categories."

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Today, we announce our most recent research focused on the services procurement area: A Statement of Work (SOW) Backdrop -- The Foundation of a Business Case. The paper can be downloaded for free via the previous link. Like other observers of the services procurement market, we have witnessed a significant ramping up of many contingent workforce and services procurement programs within Global 2000 organizations over the past few years. For companies serious about general procurement programs and enablement through technology, the additional investment in a VMS (vendor management system) to tackle contingent spending is a logical extension to core capabilities in the indirect purchase-to-pay arena. It also enables additional spend analysis, e-sourcing, contract management and supplier management capabilities.

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We often do a very poor job at Spend Matters explaining things in as few words as possible. Such is the curse of liking to opine and the danger of being fast at typing. When it comes to services procurement and contingent workforce management, we certainly have a lot to say on the subject (we'll link to some of our research available for download at the end of this post). But we've generally done a poor job of defining, in basic terms, elementary things as the elements that should comprise a vendor management system. At the recent Consol event, Forrester's Stephanie Moore did a good job at capture eight of the basic elements of a VMS:

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Spend Matters would like to welcome a guest post from Pete Kolp, CEO of AIS (Advanced Integrated Solutions). See Part 1 and Part 2 of this post as well.

Throughout the strategic sourcing process you need to look for opportunities to generate savings, including how the program is administered, what policy provisions are provided, and how the supply chain is managed on your behalf. The following proven techniques have reduced relocation spend by 10-30% -- or more:

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Spend Matters would like to welcome a guest post from Pete Kolp, CEO of AIS (Advanced Integrated Solutions). See Part 1 of this post as well.

To enhance productivity and reduce attrition, you must provide top-notch services. But you've awarded your program to the lowest bidder, likely at the expense of service quality. What's more, you're paying hidden fees and can't get comprehensive enterprise-wide reports that indicate what you're truly spending. Compounding the situation, you may have some internal divisions doing their own thing, negotiating inconsistent packages, creating potential discrimination issues and diluting your volume leverage. Here are some things to consider:

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Ariba has known for some time that in order to fulfill its vision -- call it the "commerce cloud," "spend management" or what have you -- that services procurement must be on the table. For a while now, Ariba has had a decent if not overwhelming ability to address SOW spend through a custom driver that users can configure (we know companies have used it for print, legal and other spend areas). Last we reviewed it in 2009, it was not industry leading, but it worked. At that point in time, contingent spend going through Ariba's services procurement solutions accounted for roughly 50% of volume, while SOW spend accounted for the other half. Yet as the market went then (as it does now), Ariba was rarely considered a player compared to independent VMS platforms in the majority of larger platform deals for contingent or non-contingent spend (Fieldglass, IQNavigator, Beeline, PeopleClick Authoria and Provade, in certain cases, are much more common VMS choices). It's clearly Ariba's hope to change this now.

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