Introduction

As the Procurement Outsourcing (PO) market gains momentum, a new value proposition is emerging that represents a convergence of traditional PO and the traditional Finance and Accounting (FAO) value levers. Consequently, the supplier mix in today’s PO market is changing rapidly in terms of type of offerings, delivery capabilities, and market success.

The objective of this research study is to assist key stakeholders understand the evolving PO supplier landscape and help them identify value creation opportunities as well as identify potential risks involved.

The research is based on two key information sources:

• Proprietary Everest database of 100+ multi-process PO contracts signed as of August 2007
• Capability fact-pack of 16 PO suppliers including Accenture, buyingTeam, Capgemini, Corbus, DSSI, Genpact, Global eProcure, HCL, HP, Hubwoo, IBM, ICG Commerce, Infosys, Surestock, WNS, and Xchanging

A companion piece to this study, PO Supplier Profile Compendium, 2008 ERI-2008-1-R-0273, provides in-depth profiles of 16 key players in the PO market landscape. Each profile offers details on organizational structure, target market by vertical industry, buyer segment, and geography, overview of key strategic investments and recent engagements.

Contents

The focus of this research study is to analyze the fast-changing global PO supplier landscape and analyze its impact on the PO market across the following perspectives:

• PO market snapshot and the types of offerings
• PO supplier market shares and trends
• PO supplier delivery capability assessment
• Characteristics of various supplier segments
• Implications for key stakeholders, including PO buyers and suppliers

Each dimension is discussed in detail to provide the reader an in-depth and accurate overview of the supplier trends in the PO market. It provides an insight into the strategies of the PO suppliers, for example, the section on characteristics of supplier segments offers the following insights, among others:

• Most sourcing-focused players are small-sized “pure-play” procurement providers. They have pursued focused go-to-market strategies and tend to specialize across industry, geography, category, or technology. Since the value proposition of their PO offerings centers around spend unit reduction and external compliance, they often face challenges in sustaining and/or improving the savings over a longer time
• As a result of the increase in the number of PO contracts with focus on procure-to-pay (P2P), i.e. transactional processes, several players from different origins, (e.g. multi-tower players, IT outsourcers, and FAO players are entering the P2P PO space. There is increasing incidence that these suppliers are realizing the process overlaps between F&A and procurement processes
• Only a few players namely Accenture and IBM have the capabilities to offer full end-to-end source-to-pay (S2P) PO services. These players were the pioneers of the PO market and enjoy a clear leadership position with a cumulative market share of 55% in terms of ACV. However, the PO supplier landscape is evolving with both P2P-focused and sourcing-focused players expanding their capabilities to emerge as a third front in the S2P space. These dynamics challenge current market leaders to adapt to changing market conditions in order to ensure future leadership positions