When Fiona Czerniawska and I wrote our book a couple of years ago*, we were probably the first to cover procurement of professional services in such a detailed manner. That is partly because professional services (as a category to be addressed by procurement) are a relatively new phenomenon. It is only in the last ten years or so that procurement has begun to get involved – and in something around 50% of companies, according to the surveys, procurement is only involved tangentially if at all.
Serious procurement involvement in marketing goes back a little further, but is still fairly recent in the greater scheme of things. So a key role for the senior procurement team, in large organisations particularly, is keeping up with changing spend patterns in the organisation in order to be equipped and ready to offer valuable services in those new spend areas.
They’re not the only examples of course – marketing is changing with new media and technology, and “the cloud” is disrupting the technology world. New spend categories are developing, just as professional services developed through the 80’s and 90’s.
A successful procurement function or individual therefore needs to keep up with these changes just as their internal stakeholders in marketing, customer service or IT would do, and be ready to respond to new challenges, ideas and markets. While our underpinning procurement skills may be constant, we can’t ignore the changes in external environment if we want to succeed.
Spend Matters PRO will therefore devote some resource and space to covering these “new” areas. There are plenty of other intelligent sources and many millions of existing words about buying construction services and projects for instance. There is a lot less available about the procurement of corporate investigation services, or social media orientated advertising.
As our first example, here’s a good case of how procurement needs to keep up with developments and be flexible in what we offer to colleagues.
It’s not many years ago that I got involved, for the first time in my career, with procurement for call centre services. Luckily, I had people working for me who knew more about it than me! But elements such as drawing up appropriate specifications, getting the balance right between service levels and costs, and defining SLAs and KPIs for the suppliers all required both procurement skills and a good understanding of the service itself.
But things are changing. For some years now, early adopters, geeks and techies have preferred to deal with retailers or other service providers online rather than by calling. It may be partly an age thing too – my daughter would far rather handle things online than ring a call centre.
This trend has developed, and we may be reaching a “tipping point”. That occurs in this context when enough people think like my daughter, and then the service providers realise that they have to change their approach significantly. And that seems to be happening, as we’re seeing call centres being downsized, and new requirements for “digital customer service”. Responding via email, Facebook or even Twitter to customers is no longer a novelty.
So, just as I had to learn about procurement of call centre services a while back, procurement now needs to think about procurement of digital customer services. Here are a few immediate thoughts on some key issues to consider:
- In young markets like this, you won’t find suppliers with years of experience. A start-up may even offer the best option. So be flexible with the usual pre-qualification questions, which can easily eliminate younger/smaller suppliers.
- When a market is not well established, be prepared to put more effort into understanding the “best” suppliers. Identifying the short list of potential suppliers may be more challenging than in more established markets.
- Working out the appropriate service levels will be key. No one expects an instant response to email or Twitter communication; but your customer will expect a response that is appropriate to the medium. That might be within 24 hours for an email – but might be an hour for Twitter.
- It may also be sensible to differentiate urgent communication and non-urgent. While a call centre operator may be able to establish this easily, a Tweet or email my be less clear – so getting the customer to flag this up in some way may be helpful.
- A more direct parallel with call centres is the question of offshoring. Be clear in terms of what you are prepared to accept, and understand any service/cost trade-offs.
- As always, understanding the user’s needs is vital (and that is both the end customer and your internal user/stakeholder) if procurement is to gain credibility in any “new” category.
My Spend Matters PRO colleagues would chastise me if I did not at least tie the concept of market intelligence in with pragmatic advice about where to turn to in the market for category management and intelligence. On the most foundational level, companies should consider a knowledge management platform as part of their core sourcing, spend analysis or services procurement solution that can weave in external market information like open news feeds, subscription feeds, pricing indexes (e.g., for temporary labour), etc. More advanced capabilities can show relative performance, costs, risk and news in the context of actual spending data, sourcing decisions, risk analyses and the like.
If your toolset does not have at least the foundational level of market intelligence woven in, you’re missing out. I’ll save recommendations around more advanced use cases for another time.
In building category specific intelligence from third party content providers for these “new” categories, there are both broad and targeted providers. Broad providers include Beroe, Smart Cube, Procurement Intelligence Unit (Procurement Leaders), Denali Intelligence and countless others, many which may have off-the-peg reports and services available based on the categories you’re after. Targeted providers on a category-specific level include comScore (marketing) and Kennedy Information (consulting).
*Buying Professional services”, Czieniawska and Smith, published by the Economist Books.