Services compose a large and growing slice of corporate expenditure—on average a third of total spend, according to research from the Center for Advanced Purchasing Studies. Tim Reed, vice president of product strategy for service procurement software provider Elance, adds, “In some industries, such as entertainment, insurance and finance, it can be a lot higher.”
And the management of service procurement is often poor. For example, look at contract labor. “On any given day, ask a Fortune 1000 company how many temporary workers they have, how much they are paying them, what their total spend including fees will be and what accrued expenditure is owed to suppliers, and they won’t know,” says Elaine Taylor, president of consultancy Taylor-Harris.
Accordingly, says Toby Redshaw, Motorola’s corporate vice president of IT strategy, architecture and e-business, the electronics manufacturer intends to e-procure just about every service the company buys—with one exception: benefits.
“As with most companies, benefits have been a big deal at Motorola for over 10 years now, and the area is pretty tightly managed,” he says. “We’d be polishing the shine on the silver, rather than adding any value.”