Understanding the Value of MSPs in Services Procurement

In our recent webinar, “SOW: Client Needs, Strategic Choices, and the User Experience,” we delved deep into the intricacies of services procurement, with a particular focus on understanding the landscape, overcoming management inhibitors, and forging a plan to create greater value.  In the webinar we presented original research into the value Managed Services Providers (MSPs) can deliver in a services procurement solution. 

Statement of Work (SOW) is also known as services procurement, project services or fixed-bid services. Fundamentally, this is all about engaging external workers on a specific project – whether that project lasts one month, one year, or longer.  

Survey Overview 

Survey respondents were asked, “Given what you know today, where would you see the MSP providing the greatest value in a services procurement solution?” The responses were illuminating: 

  • Transaction Administration, Visibility, and Analytics including rate card validation: 60% 
  • Worker Compliance and Resource Tracking: 30% 
  • Source-to-Pay Solution including strategic category management, supplier rationalization, and benchmarking: 10% 
  • Procure-to-Pay Solution including RFx contract management: 0% 

The clear preference for “Transaction Administration, Visibility, and Analytics” at 60% underscores a significant market sentiment. Let’s explore what these results suggest about the current state of the market and where it’s heading, guided by insights from our CEO, Catherine Candland. 

The Market’s Focus on Transaction Administration and Visibility 

In the webinar our host, Tom Kaminsky, Founder and Managing Director of Chateau Consulting, shared this research, and then posed a pertinent question to Catherine Candland regarding the disparity between the high value placed on administration services and the relatively lower emphasis on advanced services like category management and strategic sourcing. Catherine’s response highlighted a critical understanding of market maturity and organizational needs.

Catherine’s Perspective: “It all starts with understanding who you’ve got on the team.” 

Catherine emphasized that the foundation of effective services procurement begins with transparency and visibility. Without a clear view of who is involved in projects, what their roles are, and the costs associated, companies are at risk. The high percentage of responses for “Transaction Administration and Visibility” reflects this need for foundational clarity. 

“The usage of non-employees has moved into statement of work, fixed bid, and independent contractors.” 

Catherine pointed out that when seeking external help staff augmentation has been the traditional focus, but there’s a growing shift towards more structured procurement methods like SOW and fixed bids. This shift necessitates robust transaction administration to effectively manage the complexities of these engagements. Organizations need to evolve their structures and processes to facilitate smoother integration of external talent, ensuring compliance, and cost efficiency. 

Implications for Market Maturity 

The survey results and Catherine’s insights together paint a picture of a market that is in a transitional phase. Companies, especially those in the mid-market segment, appear to be focusing on getting the basics right before moving on to more advanced procurement strategies. This approach is prudent: ensuring robust administrative processes and clear visibility lays the groundwork for more sophisticated services procurement practices.  Companies are confident that their procurement organizations will do a superlative job of sourcing, evaluating, selecting and negotiating with project services personnel. Concerns center around what happens once the contract is signed and the work begins. 

Let nextSource Help You Avoid Hidden Costs and Risks 

The key to maximizing the value of services procurement begins with solid administrative foundations. By focusing on transparency, compliance, and efficient transaction management, organizations gain peace of mind that the contracted services will actually be delivered. At nextSource, we specialize in helping organizations navigate this journey, helping you avoid hidden costs and achieving greater value from your services procurement processes. If you’re interested in partnering with us to streamline your services procurement and elevate your organizational efficiency, contact us today. 

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