In many procurement outsourcing deals, service providers successfully identify savings and negotiate more effective contracts with suppliers. But they do not optimize the process end to end, do not facilitate more strategic sourcing, and fail to deliver innovation. Many buyers report achieving direct savings of 5-20 percent but not achieving the goal of transforming the procurement process and achieving a strategic competitive advantage.
This paper discusses findings in a BusinessWeek Research Services study on how companies can reap long-term rewards of indirect procurement outsourcing. The paper identifies the gaps in missed opportunities in procurement outsourcing and what providers and customers need to be open to changing in order to achieve the anticipated strategic outcomes. It illustrates these points with lessons learned from the Telstra/IBM and Deutsche Bank/Accenture relationships. It also presents a list of best-in-class procurement processes and discusses the benefits of outsourcing more than one procurement function.
The paper concludes with a discussion of how SAP generates long-term value and ensures process optimization as well as cost savings in procurement outsourcing.