When it comes to slaying sacred services spend cows – audit spend very much included – we've long held the opinion that one of the most important tasks a procurement organization can engage in is educating the organization about what they're currently consuming. Imagine, for instance, that you're dining at a restaurant you've been eating the same lunch at for a decade. In fact, you've largely ordered the same things each time. But because you are famished when you come in – and you're also a creature of habit – you don't take the time to examine the menu as you would if you were dining there for the first time.
From a pricing standpoint, the benchmark for that Caesar salad with salmon (wild, not farmed, please) is not something you can readily call up, whether you're being charged a similar rate to other eateries. That milkshake you treat yourself to every Friday – you have no idea how many calories are in it, let alone the saturated fat. And that's just the beginning. You dine out of habit and not because the establishment is necessarily exceeding all the objective (and even subjective) measurements to which you might subject a place you're evaluating for the first time.
In tackling audit spend and other categories where stakeholder visibility and risk is high, we've historically recommended the following general tactics:
- Doing homework and knowing the benchmark
- Using empathy as a tool to win detractors
- Understanding and segmenting all of the different elements of the "sub" categories within each area
- Getting creative with both sourcing and supplier management strategies
- Selling the "afterlife" of category engagement – no need to have the sacred cow eat garbage!
This last point is absolutely critical. Just as sacred cows wander the streets of India eating from rubbish piles, so too might senior stakeholders in finance – not to mention boards – without necessarily even knowing it. To this end, as Procurian observes on the topic, "external audit is one of very few areas of spend that is owned by a company's board of directors, and many of these stakeholders may be understandably reluctant to question long-standing relationships that have proven to be successful as determined by the SEC and PCAOB."
Yet there is hope. Just repeat: "show the cows the good stuff and they'll never stop thanking you for all they missed before."