On the surface, the concept of a managed services provider (MSP) that administers many of the operational aspects of services procurement is a bit ironic. After all, why would we need to incorporate yet another services provider into a vendor master that most likely has too many services providers already? The answer is in fact quite simple, but it requires understanding the context of the current services procurement environment we find ourselves in.
• Both manufacturing and non-manufacturing companies are becoming increasingly dependent on outside services providers. Regardless of industry, there is an upward trend in relying on external vendors and business partners for everything from IT support management and functional outsourcing to blue-collar contingent labor.
• Manufacturers are looking to become more nimble, and are therefore considering new outsourcing options (from their shop-floor IT infrastructure to manufacturing/contract manufacturing partnerships).
• Services providers are changing their business models to adapt to a new services paradigm (e.g., firms like Accenture are increasingly hiring contingent workers or doing work offshore versus staffing consulting projects with their own in-country resources) with less quality control than before.
• Services spend is becoming less holy everyday. Even CFOs and other business executives are willing to consider alternative options for negotiating and managing their holiest of holy spend: strategy consulting.
• Many technology platforms and services providers that specialize in helping companies better manage services spend have focused largely on contingent labor to date. Yet contingent labor, while a very significant portion of services procurement, is actually not growing as rapidly in focus as broader MSA- and SOW-drive types of services engagements, nor is it getting the same executive attention.
Given this increased reliance on services spend throughout our business—and the business model evolution of many services providers themselves—it is absolutely critical to take control of services relationships by proactively managing vendors rather than letting them manage you.