| | By Mick James
It’s no secret that
the rise of procurement
hasn’t always been a
comfortable experience
for consultants.
However, in recent years
a lot of work has been
put in by organisations
such as the MCA, the
CIPS and IBC into
getting procurers and
consultants on the same
page.
But now some people
believe it’s time to go
further and redefine the
role of procurement in
consultancy projects, so
they focus not just on
better deals but better
outcomes, too.
One of these thinkers
is Paul Vincent,
Managing Director of a
new company called
Insight Sourcing
Solutions, who believes
he can help both clients
and consultants to buy
and sell more
intelligently.
Vincent used to be
responsible for
consultancy procurement
at BT, where he
describes his impact as
bringing an “injection
of business thinking”
into the way that BT’s
procurement function had
traditionally viewed
their level of
involvement in
consultancy projects.
He took over as BT’s
Global Category Lead for
Consultancy, Recruitment
& Professional Services
in 2007, following a
wide range of commercial
roles within the
company.
“My previous
experience gave me an
instant head start in
identifying
opportunities for
improvement,” says
Vincent. “The team I
inherited were generally
kept at arms length
until the contract
paperwork needing
sorting out or invoices
needed chasing.
Receiving phone calls at
the eleventh hour was
the norm – I felt like I
was running a cross
between a rubber
stamping factory and an
international rescue
centre.”
As in many large
organisations, Vincent
found that the decision
making for purchasing
consultancy was highly
fragmented, and not
centrally monitored.
“The team were almost
totally reactive, so
obvious questions such
as ‘Who were we buying
from?’ and ‘What were we
buying?’ were not being
properly asked. The
first thing we did was
to start making better
use of the management
information available,
and the story we
uncovered formed the
basis of an 18-month
transformation
programme.”
The findings were
remarkable—in a 12 month
period the organisation
had employed over 200
different consultancy
firms, but 75% of the
total spend went to just
6 firms. In 70% of cases
firms had been employed
for just a single
project.
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A “standard”
procurement response
would have been to slash
the number of firms to a
few preferred suppliers
and negotiate heavily on
rates, but Vincent was
trying to answer a
different question: how
can procurement add
value to the consultancy
buying process beyond
just getting a good
price?
Two points became
clear immediately—whilst
consultancy is not a
regular purchase, there
is ample opportunity for
procurement to get
greater visibility of
future requirements.
“Organisations have
budgets, they have
targets and they will
know where they may need
external expertise to
help them achieve those
targets,” says Vincent.
“As a procurer, this
insight means you can
get on the front foot
and better leverage
demand. This forward
view will also help
avoid a situation where
80 different firms are
used to run business
process re-engineering
projects across the
company, which is an
example of what I was
faced with in the
beginning.”
A second major area
where procurement can
add value is through
giving internal clients
greater visibility of
what is going on outside
their ‘functional
stovepipes.”
“Let’s be honest,”
says Vincent, “internal
clients are first and
foremost interested in
their own problems.
However, sharing
intelligence with them
such as which suppliers
have been successful or
not, what prices have
been previously paid for
comparable projects and
probably most important
of all – has anyone in
the company done this
type of project before –
are all valuable inputs
into their buying
decision. Procurement
functions generally have
all this information at
their fingertips – they
just need to recognise
its value and use it
more proactively.”
This might have the
ultimate effect of
changing not which
projects are purchased
and for how much, but
how the projects are
structured.
“In my experience
when procurement is kept
at arms length it is
because the rest of the
organisation expects
them to be a barrier and
not a help,” says
Vincent. “Alternatively,
you get the situation
where new people are
recruited into an
organisation
specifically to solve a
problem and they just
don’t know what they
don’t know about their
organisations’
purchasing process.
Building awareness and
credibility can take
time but often if an
internal client has one
good experience, it can
be enough to change
their own perception and
they will then help to
spread the word amongst | |
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Vincent did overhaul
the preferred supplier
list in BT but he did so
with the full
involvement of the
business. “We identified
the regular buyers of
consultancy and asked
them ‘How much choice do
you need and what
variety of firms do you
need to choose from?’,”
he says. “We then
delivered a preferred
supplier list on that
basis. It is only worth
mandating the use of a
preferred supplier list
if the list meets the
needs of the business.
You must also recognise,
and this is very
important, that there
will be times when the
preferred suppliers
cannot meet particular
needs and procurement
needs to pragmatically
support the business in
engaging someone who
can.”
Vincent is now
working with large
organisations on their
purchasing of
professional services
and with consultancy
firms that want help in
dealing with the new
breed of procurement
professionals.
“As procurement
professionals what we
should want to do is
help consultants to
market themselves
appropriately within our
organisations. If they
are part of a preferred
list then how do they
stand the best possible
opportunity to be
considered when needs
arise,” he says. “If
they are non preferred
firms then let’s help
them to understand what
they may need to do
differently to be
considered for business
in the future. Back door
deals help no-one in the
long run.”
Vincent believes that
many procurement
functions will need to
redefine their role to
usher in this new way of
working, but the
benefits will be worth
it.
“In this category of
spend price is not the
most important thing.
Value is. Organisations
need to be clear about
why they need
consultancy help in the
first place, what
outcomes they require
and how the projects
will be managed to
ensure these results are
delivered,” he says.
“Procurement has a
fundamental role to play
in answering these
questions. At the moment
I hear a lot about the
commercials, a lot about
how to make sure you get
the best rate, but not
nearly enough yet about
how procurement
professionals want to
more directly influence
the successful outcome
of consultancy projects
within their
organisations.”
Encouraging this
philosophy is why
Vincent has set up
Insight Sourcing
Solutions and, as a
seasoned cynic of
procurement, I think he
is a most welcome breath
of fresh air. | |
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