Technology continues to transform the sourcing and procurement space, helping CPOs maximize efficiency and automate mundane tasks. Early adoption of the right-sized mix of procurement technology has helped firms reduce overall costs and catalyze internal process optimization. Irrespective of their size, procurement organizations can benefit from this technology revolution, especially in light of efficiencies garnered by Cloud Computing. This white paper will explain to you the top procurement technology trends you must know for 2012.

1. TREND REPORT
Strategic Sourcing
and Procurement Outlook 2012
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Copyright © 2012 GEP. All rights reserved.

2. TREND REPORT
Leveraging strategic sourcing to achieve a balance between savings objectives, managing suppliers and
supply chain risks is a widely discussed topic of interest. Procurement organizations are continuously
looking for initiatives that deliver substantial bottom-line impact, while bringing about process
enhancements. Based on the GEP experience, of working with Global 2000 clients, we have identified five
key trends impacting Sourcing and Procurement plans in the near future. While 2011 was marked by
geopolitical and fiscal challenges, we believe that 2012 will present opportunities for improvements.
Strategic Sourcing and Procurement Outlook: Key trends to watch for in 2012
1. Procurement Automation: Cloud Adoption and Challenges
Leading enterprises using strategic sourcing and procurement as enablers of margin expansion continue
to invest in SaaS based solutions. Going forward, adoption of Cloud Computing based solutions is likely
to increase exponentially. These solutions are free of complex installation processes and maintenance
overheads. Tools such as e-Spend, e-RFX and e-Purchase led the shift from behind the firewall solutions
to the SaaS based models. While SaaS adoption was driven by functional executives, Cloud Computing
adoption is being driven by IT executives.
However the shift from SaaS to Cloud, for modules covering confidential proprietary data such as
Contracts, has traditionally met with resistance. Full services Procurement outsourcing providers will
upgrade their technology solutions to help clients mitigate these Cloud data security concerns. As
organizations come to terms with the flexibility, scalability and ease of integration with Cloud based
solutions, we will see accelerated adoption. Mobile accessibility of procurement technology apps is also
an area to watch for in the near future.
2. Risk Mitigation: Decoding the European Crisis
Notwithstanding the fiscal lifelines, it is now reasonable to ask where the Euro is headed. Currency
fluctuations and an impending threat of medium term inflation will require Procurement to engineer
and upgrade contingency plans. With these plans, the leadership will expect to understand supply chain
exposure and mitigate risk thereon, given one of the several scenarios that may unfold.
Suppliers, based on their fiscal orientation, may request a shift to dollar (or other currencies)
denominated contracts. Where a declining Euro is not favorable they may want to either hold
negotiated contract prices or incentivize favorable payment cycles. The crisis may also present arbitrage
opportunities in several categories. Enterprises will adapt their contingency plans to incorporate factors
that maximize opportunities while minimizing risk.
3. Sustainable Sourcing: More than Just your Carbon Footprint
Best-in-class procurement organizations continue to align their strategies and operations in compliance
with globally standardized sustainability policies. In the context of strategic sourcing, sustainability
compliance implies assuming ownership of a firm's and its suppliers' supply chains. Earlier this year,
Apple announced that it will align its compliance objectives with those of the Fair Labor Association
(FLA), a collaborative effort to improve working conditions in factories. Apple's announcement and
disclosures came on the back of bad press, highlighting less than appropriate conditions at supplier sites.
P&G and Walmart have led the sustainable procurement drive from the front while others continue to
set their own standards and strategies.
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3. TREND REPORT
In light of stringent regulation, enterprises are likely to invest substantial resources in ensuring
compliance. However, going forward, they will review the role of external expertise, while demanding
their procurement outsourcing provider offer sustainability compliance within their existing deliverables.
At the same time, full service procurement outsourcing providers will continue to upgrade their offerings
to focus on integrating a client's sustainability detail in their solutions.
4. Supplier Interaction: Leveraging Social Media to Connect with Suppliers
Building relationships based on shared understanding is always a win-win situation for both buyers and
suppliers. While traditional supplier management modules cover most aspects of tracking performance
and assessing risk, enterprises have often found the need for engaging suppliers beyond just rewards,
recognitions or joint planning groups. Sharing the business experience, interests and latest updates can
offer valuable insight for both buyers and suppliers.
P&G, for instance, unveiled a portal, which allows existing and prospective suppliers to connect beyond
organizational boundaries. The social networking potential of such initiatives is likely to extend
applications and levers critical to supplier management. The new challenges that will emerge with such
platforms include management of the volume of information, while simultaneously protecting
competitive edge and trade secrets.
5. Indirect Categories: Monitoring Effectiveness and Efficiency
Indirect spend continues to offer unrealized potential for both leading enterprises, employing best-in-
class sourcing programs, and those just beginning to address it more strategically. Increased focus on this
segment comes with the objective of bringing more spend under management. Sub-categories within
indirect procurement need a unique relationship and business approach that is different from direct
procurement. These specialized requirements, of addressing indirect spend, are likely to bring about a
paradigm shift in the procurement outsourcing space.
As enterprises crystallize their strategy to address more spend under management, they will face
challenges such as hiring specialized talent, getting stakeholder buy-in and effectively capturing the
savings generated. Going forward, these needs will make way for intelligent outsourcing to third party
providers. Traditionally, procurement outsourcing has been viewed within the confines of generating
labor savings and hiving off the day-to-day transactional operations. While it offers that potential,
specialist procurement outsourcing providers also provide services such as Tail-spend Management and
Sourcing Support that allow for accelerated and sustainable returns on investment, while building value
by improving processes. Long term relationships with the right outsourcing provider will then enable
businesses to spend more resource bandwidth on crucial procurement tasks.
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GEP (Global eProcure) is a leading procurement services firm dedicated to helping enterprises add value
and reduce costs through procurement and supply chain transformation. With a comprehensive portfolio
of services and solutions, GEP helps many of the world's largest organizations uncover savings
opportunities, and deliver these savings to the bottom line. We have managed over $50 billion of spend
on behalf of these clients, across industry sectors and geographies.
Our blended model combines management consulting, strategic sourcing support, implementation and
outsourcing services with a full suite of best-in-class procurement tools and technology solutions. Our
global footprint helps us to deliver these services wherever our clients need them. Headquartered in New
Jersey, USA, we have offices in London (UK), Prague (Czech Republic), Mumbai & Hyderabad (India),
Shanghai (China), São Paulo (Brazil) and Willoughby (Australia).
100 Walnut Avenue, Clark, NJ 07066 | P 732.382.6565 | info@gep.com | www.gep.com
Copyright © 2012 GEP. All rights reserved.