Services, collectively speaking, represents one of the largest and most undermanaged nonpayroll spend categories (ranging from plant/equipment maintenance services, large turnaround and capital intensive projects to IT operations outsourcing, with a large number of categories in between depending on the organization).

In the aggregate, organizations in the US spend over $1T per year, but procurement groups are generally not equipped (with adequate resources, expertise, approaches and technologies) to fully manage non-contingent workforce services spend categories.

So, it is necessary to choose one’s battles. Gaining visibility into services spend is a fundamental step. But even organizations that have made progress in gaining visibility into swathes of services spend are faced with the question of how to optimize business spend and outcomes and de-risk engagements/transactions with suppliers. 

Where to focus to get the most bang for the buck? What approach to take? What technology tools and what expertise are needed? One fresh approach is the use of unit-rate (versus time and materials) service contracts in conjunction with service catalog technologies.

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