By Editorial Staff
Procurement solutions have existed for static commodities for some time, but only in the last dozen years has technology enabled the automation of the extraordinarily complex services procurement category, also known as human capital or contingent workforce management. The combination of the complexity of this category and the relative novelty of solutions for services procurement has meant that business intelligence (BI) capabilities to support strategic purchasing of temporary and project labor have lagged behind the well-developed BI capabilities served up as adjuncts to static commodities procurement solutions.
“It’s not that most services procurement providers haven’t claimed to offer business intelligence as part of their solutions,” says Elliot Owens, BI director at ProcureStaff, a global services procurement solution provider. “Rather, most providers tout their internal benchmarking and reporting capacities as a BI solution.”
The problem with this approach, according to Owens, is that while internal benchmarking is a fundamental element of a robust BI offering, it stops well short of providing the broader context that enables an organization to make market-informed purchasing decisions supported by statistical evidence. Linear reporting of historical data is not a surrogate for statistical, predictive and interpretive analysis, Owens says. Beyond the obvious infrastructural requirements of this kind of analysis, true BI requires a comprehensive understanding of the business drivers within the services niche and a foundation of statistical expertise to guide the most effective “slicing and dicing” of the data collected.
Businesses Don’t Operate in a Vacuum
To better understand why it is an ineffective strategy to rely on business intelligence based solely on internal, transactional benchmarking and reporting, imagine that your organization’s human capital procurement program is a competitive swimmer alone in an Olympic pool clocking his time for the 100-meter freestyle. As he continues to practice the 100 meters, the swimmer keeps track of improvements in his time and his confidence is boosted as he can clearly measure the seconds he shaves off his personal best. His improvements may appear dramatic to him and imbue him with a sense of accomplishment. But the swimmer might be bitterly disappointed when seven other swimmers enter the pool and each completes the 100-meter freestyle at times well below our solo swimmer’s best. While our swimmer may have dramatically improved his time, he is still behind his competition. Once provided the ability to measure his rank relative to the others in the pool, he can truly work towards achieving competitive time.
Similarly, most services procurement solutions provide an organization with the ability to view progress in terms of rate savings, supplier performance, fill times and a host of other metrics contrasted against their own past performance. But these improvements occur in a vacuum because they are not contrasted against true, best-in-class market data. As services procurement has grown into a mature industry, procurement organizations are beginning to realize that internal benchmarking and reporting are simply the first step in achieving best-in-class rates, candidates, fill times, compliance, etc. It is becoming clear to procurement organizations that they have not achieved true BI.
Owens explains: “Intelligence is transitioning from a ‘nice to have’ to a ‘must have’ element of the modern human capital solution. Especially in the face of extraordinarily difficult economic times as companies are grappling with unprecedented financial challenges, it is critical to identify opportunities for cost savings and efficiency improvements using the best possible tools. The ability to be strategic in the administration of contingent workforces is one such opportunity, and I think we will see more and more providers attempt to satisfy this critical business requirement.”