Overcoming Professional Services Sourcing Challenges
July 21, 2015
There are few categories in Corporate America that are harder for a procurement organization to influence and source than Professional Services.
There are several reasons for this, not the least of which is that many of the negotiator/decision makers for these business arrangements are the Chief Procurement Officer’s peers in the C-Suite. These executives generally consider themselves to be good negotiators and experts in the professional services domains they manage. And yet, historically, this category holds some of the least “competitively sourced” business arrangements in the corporate umbrella.
So how does a thoughtful CPO approach Professional Services with the intent of improving ROI, without alienating his or her peers?
Here are 3 keys to consider:
1. Build relationships. There is no substitute for having relationships with your C-Suite peers. Consider having a bi-monthly meeting with each of them where you provide useful insights and information. This might include recent category successes in their domain of influence, “savings to date,” and suggestions for other areas where your team can add value to their operations. It is essential, however, that you invest the time needed to learn about your peers’ specific business processes and challenges – independent of procurement issues. If you are not already doing this, it will allow you to be seen as someone other than the “lowest cost” guy or gal. You will also gain the context necessary for success for sourcing Professional Services. You may even get invited in to help!
2. Analyze your current data. It is astounding how much information we have available to us in the raw data of procurement. Reviewing invoices, categorizing information, and sifting through records can provide valuable insight into your “buyer’s” behavior. At Shelby, we recently completed a 6- week, 500+ hour engagement to do just this. Even though our client had implemented a “spend analysis” platform, the extensive review of their raw data was necessary for the “next level down” of information. Our client was amazed at the level of detail they now had for reviewing their Professional Services relationships. “Facts are our friends” is a great truism.
3. Get a “hunting license.” Many Professional Services arrangements are built on years-long personal relationships. Without some mandate for change from above, it is unlikely that many peers will be willing to make any changes. At some point, the CEO or COO needs to see an opportunity for improvement. This is what we mean by a hunting license – the “owner” of the C-Suite needs to see value and support your approach.
Granted, there are some organizations where the pain involved in broaching this category of Professional Services may not be worth the effort. It is not likely we will run out of work if we do not get to source this category.
However, the respect that can be gained by successfully sourcing Professional Services is hard to match. If your peers experience “first hand” the value of a professionally sourced (new) relationship, or if your work brings their costs down a meaningful amount with their existing supplier/partner, you will have won a stronger ally for your other initiatives.
If you would like to know more about how Shelby has helped organizations achieve maximized business value with their strategic procurement transformation objectives, please contact email@example.com.
President and CEO