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Taming The Dragon: Consultancy Spend.

Category managementCategory Strategies

Consulting services represent the most challenging area of spend for procurement professionals to influence and there are a number of understandable reasons for this. Business outcomes are not always clearly defined at the outset. Relationships and trust between the internal client and service provider are critical success factors. Price and value will mean different things to different people depending on the role that they personally play in the buying decision. Finally, and often most significantly, careers can be impacted if consultancy engagements go wrong…or right!

 

Consequently when it comes to adding value in this spend area procurement professionals will typically face the following underlying perceptions:

  • They don’t have any influence over the budget so there is no need for them to be involved
  • They won’t understand business requirements or have any idea what good looks like
  • They will only focus on price rather than the value of potential outcomes
  • Their involvement will only add time and delays into the decision making process

Now, at this point, you may be rolling your eyes to the sky, but I would urge readers to reflect for a moment. How much do you or your teams really know about the different types of consultancy services offered in the marketplace? How experienced are you or your team at matching commercial and contractual models to suit the outcomes required? How close do you stay to projects once the contractual process has been completed? How often do you participate in the project evaluation process? How much do you understand about the way different consulting firms are structured and how they allocate their costs?

 

If you can’t easily answer these questions then maybe the perception that procurement adds little value during the buying process for consultancy services is not that unfair after all.

 

So how can we change this?

 

I know from personal experience that procurement is often brought into the loop very late on and has little, if any, influence over the way business needs are defined. This is why the fee structure is where attention is most focussed. But we must always keep in mind that our organisations are buying business ’outcomes’ and not ’services’. It rarely, if ever, follows that the lowest level of investment in a project will generate the most value. In fact often the reverse is true.

 

Procurement professionals who work in and around this spend category will know that traditional tactics rarely work. They know that success lies in increasing the amount of business value delivered rather than minimising the price paid.

 

Paul Vincent is director of consulting for 100% Effective Limited www.100pceffectiveconsultancy.com and Chair of the MCA Consultancy Buyers Forum. To find out more about the work of the CBF and how to become a registered member then click here www.cbfblueprint.co.uk/about-the-cbf

Jonathan Webb
Posted by Jonathan Webb

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