Elance upgrades its services procurement software

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October 10, 2003 (Computerworld) -- Elance Inc. on Monday will launch an upgrade of its services procurement and management software, adding so-called bill of services functionality that can provide users with more detailed information about contract costs and service-level agreements.
The Elance SPM 4 software is designed to automate and streamline the purchasing of services ranging from consulting help to office cleaning and maintenance, said Diana Jovin, vice president of marketing at Sunnyvale, Calif.-based Elance. She estimated that up to 30% of spending in a typical company goes toward such services.
Motorola Inc. installed Elance SPM 4 last month as an early adopter of the software, said Dennis Neumann, director of indirect e-procurement at the Schaumburg, Ill., company. The new product will be used by some of the 20,000 workers who are authorized to buy services for Motorola, although the exact number of potential end users isn't known, he said.
Until now, Motorola's diversified business units have purchased services separately, without a companywide view of contract information, Neumann said. That meant a cleaning contractor could have multiple agreements with different Motorola divisions, charging a different rate for each.
"It's to the benefit of the vendors to divide and conquer," Neumann said. But with Elance SPM 4, Motorola's buyers can quickly find out if corporate or regional contracts have been negotiated, he added.
The software also can provide details about contracts beyond their total cost, according to Neumann. For example, Motorola knew before how much it was spending on a specific consulting contract. But it was much harder to find out what percentage was for labor costs as opposed to other expenses, such as travel.
Neumann said it's too early for Motorola to judge the potential return on its investment in the Elance tools, but he added that the company thinks it can reduce the cost of services contracts by 10% to 20%.
It takes about two hours to train each procurement manager to use the Elance software, but Neumann said the technology represents a "culture change" at Motorola. "It's a big challenge to get used to understanding it and using a lot of the benefits," he added.
Elance SPM 4 runs on Sun Solaris servers and is available as a product or through a managed service, according to Elance officials. The cost for a 3-year contract ranges between $3 million and $5 million, including licensing and services.
Services procurement software typically can save a company 5% to 10% of its spending on services, but the savings can total as much as 30% because such purchases "have been so poorly managed," said Christa Degnan, an analyst at Aberdeen Group Inc. in Boston. She added that upto half of all services contracts aren't controlled by procurement departments and that about 25% of companies have no formal procedures for buying services.
Degnan said Elance competes with vendors like Ariba Inc. and PeopleSoft Inc., which offer services management capabilities within broader sets of e-procurement products. Other rivals include IQNavigator Inc., ICG Commerce Inc., Fieldglass Inc., eWork Exchange Inc., Chimes Inc. and White Amber Inc.

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