To take advantage of significant hard-dollar savings

European enterprises are anxious to control business services costs, which represent 30% to 50% of all spending at firms today. But a new AberdeenGroup report demonstrates that a key hurdle to savings is convincing management of the benefits of services category spend management initiatives.

ìLike their international counterparts, European firms rank cost control as the chief procurement pain point, yet they have a significant uphill battle to overcome,î said Christa Degnan, Aberdeen research director and author of the report. ìCompanies must find away around the embedded manual processes and the people who resist purchasing optimization.î

ìThe Category Spend Management: Services Procurement Trends and Strategies in Europeî report identified executive support as the top challenge to getting front-line employees to comply with policies and contracts. Consequently, to convince executives of the benefits of cost management efforts, European procurement organizations must build solid business cases around volume of spend, potential savings, and return on investments in services category spend management improvement.

The Aberdeen report found European firms that have implemented cost management initiatives have achieved between 5% and 49% hard dollar savings in a wide range of business service areas, including contract labor and telecommunications.

European companies should evaluate their current positions in terms of services category spend management policies and processes and consider the following actions for optimization success:

Secure executive support for services purchase improvement initiatives as a key enabler of improved bottom line performance

Begin by centralizing procurement and targeting categories where procurement had some involvement for optimization first

Collect detailed information on overall spend and purchase requirements enterprise-wide, as well as market intelligence and category cost models

Establish clear policies and procedures for services purchases and communicate the process, and resulting cost and performance benefits, companywide

The ìCategory Spend Management: Services Procurement Trends and Strategies in Europeî report benchmarks existing procedures for managing services purchasing; quantifies the business benefits inherent in improved services category spend management strategies and procedures; and recommends specific actions for maximizing services category spend management performance in the regi.