Services Procurement Grows Despite Obstacles

The services procurement market is an anomaly. In theory, it should be huge, because purchases of services represent 30% to 60% of all company spending, with a high potential for significant savings with more effective management. However, the market today barely has $200 million in total revenues. Why? Spending on services is fragmented, with different C-level executives controlling different services spending categories. The resulting lack of enterprisewide strategies for services spend management drives demand for products to manage specific categories of spending (most often, temporary workers) or that can start with one or two services categories and expand to others. As a result, the leading vendors are services procurement specialists like Fieldglass, IQNavigator, and Rearden Commerce with software-as-a-service (SaaS) offerings that support departmental adoption. Contingent workforce management (CWM) vendors like Beeline, eWork, and Peopleclick are also factors in the market, while eProcurement vendors like Ariba, Oracle, Oracle PeopleSoft Enterprise, and SAP are small but growing presences.