PO suppliers migrating to offer end-to-end services: Study

By SiliconIndia   |   Saturday, 30 August 2008, 04:56 Hrs
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Bangalore: The mix of suppliers of Procurement Outsourcing (PO) services is rapidly changing with the emergence of a new value proposition in which suppliers are migrating towards end-to-end offerings, indicates an analysis of the PO supplier marketplace by the Everest Research Institute. Driving supplier migration is an evolving PO value proposition that more closely links procurement and finance processes thereby delivering new efficiencies and offering increased savings opportunities.

The institute's Global PO Supplier Landscape Report's analyzes covers areas like market snapshot and types of offerings, supplier market shares and trends, delivery capability assessment, characteristics of various supplier segments and implications for key stakeholders, including buyers and suppliers. According to the Institute, the PO market continues to grow in bursts, with an overall 26 percent CAGR pace and supplier managed, non-core spend reaching almost $60 billion.

"As suppliers continue to work towards overcoming supply and demand constraints, changing market dynamics are forcing suppliers to change strategies to move towards offering more end-to-end services," said Katrina Menzigian, Vice President, Everest Research Institute. "Because few suppliers today have end-to-end S2P (source-to-pay) service capabilities, they are making concerted efforts to round out their capabilities through acquisitions partnerships and internal enhancements," Katrina added.

According to the study, the changed supplier mix reflects three emerging PO offerings - sourcing-focus, procure-to-pay (P2P) focus and end-to-end or source-to-pay (S2P).

According to the report, the PO market continues to be concentrated, but the supplier mix is changing. The Top four suppliers - Accenture, IBM, ICG Commerce and Xchanging continue to account for almost 75 percent of active annual contract value; however, several new players are emerging that are establishing notable market share.

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