This article is aimed at the parties on both sides of the negotiating table – those who buy consultancy, and those who sell it.
As a category of spend, consultancy rarely follows the perceived ‘norm’ of the buying process. Whereas the internal client would usually write a specification and procurement would manage supplier selection and deal negotiation, with consultancy the client nearly always stays closely involved. In fact they often expect to take the lead.
Against this backdrop procurement functions can have a positive or negative impact on their organisation’s consultancy spend depending on the mind-set of the people involved.
Very simply, procurement functions will have a positive impact on their organisation’s consultancy expenditure if they centre their involvement on supporting the business outcomes required. They will have a negative impact if they focus too heavily on the procurement process itself.
Unfortunately procurement professionals don’t always seem to understand this, especially those that view the agreement of commercial/contractual terms as being the end of the exercise rather than the beginning.
I passed my professional procurement exams (Chartered Institute of Purchasing & Supply) nearly 25 years ago, and after all this time the procurement ‘community’ are still struggling to engage with their organisations in a way that makes them an effective part of the decision making process. Publications such as Supply Management, Procurement Leaders and CPO Agenda carry articles about stakeholder engagement in nearly every issue, but professional buyers are still struggling to make an impact.
Why Consultancy Procurement is Different
The trouble with calling something a ‘profession’ is that it implies the need for ‘training’ or ‘qualification’ before you can do it. Law, accountancy and medicine are clearly professions, but people spend their money on personal goods and services every day. Do they need to be a ‘professional procurement’ person to spend that money wisely? No. Yet in many companies, that is the impression the Procurement Team often gives out when trying to justify its existence.
We say that it’s procurement’s job to negotiate the best price. Only the procurement function has the internal authority to commit their organisation to external expenditure. Only the procurement function has the expertise to conduct a proper market test.
But in my experience, when it comes to consulting services, the role and activities of the procurement function must concentrate on providing facilitative help. We are the guardians of the budget holder’s ‘blind-side’. For example, we can highlight where similar work has been done before, where firms have not performed as expected, and where suppliers have compromised on their ability to deliver by offering unsustainable pricing.
Win-Win for Buyer and Seller
Seen from this perspective, it’s clear that in the consultancy buying arena at least, it’s in everyone’s interest for the procurement professional, internal client and service provider to work together. By that I mean that all three need to focus on how the services offered add genuine value to the business. The buyer achieves that elusive engagement with the organisation’s objectives, and the (worthy) seller is far more likely to deliver a good service based on shared understanding and commitment.
Approach Consultancy Procurement as a Strategist, NOT a Guardian
Here is the number one way that procurement professionals can make a positive impact on how their organisations buy consulting services:
Without doubt the thing that makes the biggest difference is when buyers adopt the mind-set of being business people in procurement roles, rather than positioning themselves internally as guardians of the ‘spend management processes’.
Often procurement professionals will deal with a lack of internal engagement by embarking on a tour of key stakeholders to ask lots of open questions about what requirements may be in the pipeline and to convince them that if they are brought in earlier they can help them to get the best deal.
What this approach does is incorrectly assume that consulting services support is rigorously planned. Often it is not – the need will arise as a result of business circumstances. Requirements are rarely black or white, instead they tend to be in the form of ‘problem statements’ or ‘capability gaps’.
Procurement professionals need to understand this and focus on how they can best stay in tune with the targets and performance of their key stakeholder groups. In this context then the value of procurement is to provide stakeholders with access to the sort of market intelligence that will help them decide if an external solution will address whatever issue has emerged.
In parallel, procurement professionals should make it clear to the supply market that this is a role they are fulfilling, and to openly be a conduit for receiving any market intelligence that would prove beneficial to their internal stakeholders.
Advice for Consultants
As a consultancy service provider, you need to be aware of the approach that procurement is taking and shape your proposition accordingly. Shifting the buyer’s perspective from process to outcome will strengthen your position and increase the likelihood of success.
To achieve this, you need to feed procurement the necessary intelligence and ask the kinds of questions that will open their mind to the real business opportunity, and show that you are the right company to solve the problem or fill the gap. By aligning your proposition to the client’s needs, you effectively realign the procurement criteria and set a benchmark against which others must compete.
Over the next couple of weeks I’ll be looking at other ways in which procurement can improve its contribution to the procurement consultancy process, to the benefit of buyer and seller. This is a massive topic and I could go on, so please feel free to ask any questions and I’ll do my best to fit my approach to your specific need.