Scenarios for ISM/Member Organizations in 2020: 5 Paths and 5 Value Propositions

In the first installment of this series, Scenarios for ISM/Member Organizations in 2020: Introduction and Context, we introduced five scenarios for member organizations such as ISM in 2020:

  • Scenario A: Trusted Point of Reference and Industry Standards
  • Scenario B: Embedded Organizational Extensions
  • Scenario C: Custodians of Data and Knowledge
  • Scenario D: Activism and Influence
  • Scenario E:  Social Connectivity, Coaching and Networking

Today we’ll work with the first two of these scenarios in more detail.

Scenario A: Trusted Point of Reference and Industry Standards

Overview: Member organizations set the “gold standard” not only for certifications and credentialing but also serve as trusted references outside of talent credentialing and continuing education; for example, completely trusted “Angie’s List” like services and ratings for members-only access.

Member Engagement: Membership is not just about buying access to events and general networking – it is an obligation (among those who take it seriously) to contribute to the overall organizational goal of defining and managing set reference points. As a foundational element, this might mean contributing to new training and certification requirements such as the CFA in financial services (i.e., very challenging to obtain but regarded as – if not more – highly than top tier MBAs), but is also likely to include contributing to supplier and provider ratings and rankings. Top contributors (based on the aggregate number of contributions and scored value by peers) are given special privileges that can impact credentialing and standing.

Attracting an Audience: Companies are drawn to join member groups because they feel the organization essentially serves as a certifying authority for decisions, ranging from hiring top talent (based on credentials) to supplier award decisions. The organization also acts like a “Better Business Bureau” by enabling suppliers to respond to concerns/complaints neutrally, but buyer-member privacy is closely safeguarded and the choice to share details with suppliers about complaints or needed remediation steps rests with buy-side members only. Users can also “endorse” suppliers or individuals to provide greater credibility. Unstructured information and commentary on suppliers, categories, talent, etc. also keeps users coming back.

Spotlight on Credentialing: Credentials are not taken lightly and there are far more candidates (e.g., members and suppliers) seeking to obtain credentials at higher levels than are granted (or “passed”). This meritocratic scarcity creates a self-reinforcing feedback loop that catapults the stature of not only certifications, but also the member group at large. For practitioners, in contrast to the current ISM CPSM certification and various CIPs certifications, everyone in the industry knows precisely what different levels signify, and achieving higher levels is not only obtaining specific skills that can qualify one for a position, but an entry into a global club that enables career progression and mobility.  For suppliers participating in ratings networks and related credentialing tools, achieving certain levels can help add and sustain margin points based on the status of a “trusted and vetted” supplier. 

Key Scenario Takeaways:

  • Member organizations can set a gold standard for credentials that can shape how hiring managers look at candidates – at all levels, not just manager or below.
  • A Chartered Financial Analyst (CFA) type certification in which few pass various levels of the exam (and take years to study) begins to reach critical mass among top performing and compensated procurement practitioners
  • Organizations can rely largely on their members to contribute ratings and rankings of suppliers, individuals, etc.
  • A self-contained, members-only “Angie’s List for suppliers” built around a largely non-commercial model is one that organizations such as ISM could fulfill for specific categories (MRO, other indirect, services, etc.); qualitative input and insight about ratings/rankings of suppliers is as valuable as specific ratings for many members

Scenario B: Embedded Organizational Extensions

Overview: Member organizations are truly embedded in the organizations they serve, providing services such as an extension of internal shared services teams and centers of excellence. The services they provide might even appear to come from an internal group (for consumers of a particular data or service) and are often highly customized by industry and company, encouraging greater corporate membership and involvement activity among company leaders.

Member Engagement: The line is blurring between member organizations and other third-party services providers, especially those that deliver a shared service to companies (or multiple parties participating in a consortia) such as internal training or managing supplier information, audits and the like. Participating organizations are often assigned specific resources and managers who define programs to serve as an extension of their own organization. For example, when a particular skill requirement or training need surfaces, a request goes through a talent portal that is routed, based on a variety of criteria, to the appropriate group within the member organization. The result of such an inquiry might take the form of a series of online training seminars followed by quick examinations or an onsite skills training/development seminar. Member organizations must invest significantly in infrastructure and technology (in addition to specific curriculum and related development for other service areas) to deliver such capability transparently.

Attracting an Audience: Member organizations both compete and partner with third-party solution providers to deliver shared services. ISM’s acquisition of ADR North America to primarily deliver “customized professional development, consulting and skills assessments” in 2012 was a prescient move to develop an early-stage internal competence in this area. But significant further build-out and investment has been required to attract members to rely on these services beyond an ad-hoc or consultative basis to create a truly embedded culture of the member organization inside its constituent groups and customers. Companies that rely heavily on the member services delivered by these organizations spend 5, 10 or even 20 times what they did less than a decade ago – but consider the cost a bargain compared with alternatively delivery options for what they are receiving in exchange for dues and solution-based fees.

Spotlight on Services Delivery: Member groups invest heavily in a combination of customer/service portal technology and capabilities as well as e-learning tools. In certain cases, member groups also deliver technology in such areas as supplier management to enable shared auditing, quality, and performance management of suppliers through a shared services and even potentially industry (or membership wide) consortia model in non-competitive areas.

Key Scenario Takeaways: 

  • The line blurs between the types of services that member organizations perform for their constituents and the types of services delivered through procurement and other third-parties in the purchasing and operations areas
  • Membership organizations become a type of business process outsourcing provider that is an extension of the organization itself (and even responds and answers calls from individual members as if they were the company itself)
  • Technology is a key enabler for service delivery, be it e-learning, training or supplier management/auditing activities
  • Companies individually spend hundreds of thousands of dollars (sometimes more) annually in dues and member fees to receive these value-added (shared) services
  • Member organizations specialize in service delivery provision and efficiency, acting as a true shared-service for their members that can deliver a superior “product” to private sector solutions. This approach is similar to what USAA pioneered in delivering financial services solutions efficiently and cost effectively to its constituent base in the consumer world

In the next installment of this series, we’ll continue to present each of the remaining member organization scenarios:

  • Scenario C: Custodians of Data and Knowledge
  • Scenario D: Activism and Influence
  • Scenario E:  Social Connectivity, Coaching and Networking

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