Elance includes a bill of services (like a bill of goods) function for managing complex contracts, such as business process outsourcing, service-level agreements and formula-based services. Combinations of service types can be bundled into a single contractor order. For example, a global IT consulting supplier might have an SLA with specific deliverables and a payment schedule, as well as items that fall outside the scope of the original agreement.
The software suite also allows procurement departments to configure business processes, such as sourcing rules, workflow, and access permissions, to accommodate multiple divisions, departments and locations. SPM 4 also provides flexibility for suppliers with self-service maintenance and change order management for master contracts. Buyers and suppliers have a common set of information to work with and can automate the reconciliation process, improve compliance and reduce invoice errors.
"Fundamentally, services are managed different that product," said Diana Jovin, Elance vice president of marketing and business development, enterprise solutions. "We can leverage a common infrastructure and harness financial workflow rules, but we are not replicating what's in [product] e-procurement. Services purchasing and management is an end-to-end process, and has a lot of frequent changes, unlike products. For example, during the course of an engagement with a consulting or facilities management supplier, you could have a lot of change orders. A solution has to have a mechanism to deal with changes and provide a history." In addition to Ariba, SPM4 integrates with Oracle and PeopleSoft e-procurement applications.
Elance is offered in a hosted or locally installed model, with a three-year minimum licence. SPM 4 is priced based on the amount of services driven through the application. Jovin said the entry level would be about $500,000 per year (with a spend of $50m to $100m on external services), including licensing fees, support and maintenance. Elance's typical three-year contract is in the $3m to $5m range, Jovin said. So far the privately held company, with about $70m in venture capital garnered since 1998, has signed up GE and a few other Fortune 500 companies in addition to Motorola for the latest version of Elance SPM.
Elance isn't the only game in town. Other firms, such as Fieldglass, IQNavigator, ICG Commerce and Convendis Technologies, provide procurement automation, but are not as flexible as Elance's solution. "The other pure plays like Elance are mostly focused on contract labour, with time and expense and now additional project-based capabilities," Degnan said. "Elance has more breadth and is focused on the bill-of-services concept." ERP players including PeopleSoft and Oracle, as well as Ariba are building out their services procurement capabilities. SPM4 is unique in that it supports a wide variety of service categories, said Degnan. "Elance seemed to lag the market a year ago, but in the last year the company is picking up forward thinking organisations that understand they need functionality to address services, and that contract labour is only part of the solution," Degnan said.
With outsourcing growing at a rapid rate, and the intense focus on ROI, services procurement and management is likely to make the short list of initiatives that get budget approval in the coming year.
