How Can We Validate Service Providers’ Past Credentials?

Spend Matters welcomes this guest post from Suvigya Muchhal, of GEP.

The services industry is the center of gravity in today’s global economy, be it IT, consulting or financial services. The sales function, particularly in the services industry, is a high-skilled job and is led by experienced professionals. One of the key selling tools that sales uses in the services industry are case studies. These case studies showcase value adds done by service providers and the challenges they have addressed for their respective clients. For any potential customer, case studies are instrumental in providing an overview of the provider’s capabilities and in helping the client assess previous experience and scalability in a particular domain. These case studies are mostly published by service providers; some are posted on the provider’s website, while others are shared with the clients during a sales pitch.

The question is, how can these case studies be validated?

One answer could be a client reference call, but if the vendor is manipulating data points, it would certainly not reveal the client name, citing confidentiality, to say the least. In that case, can we rely only on trust? Can trust be sufficient to assess the capabilities of a service provider that could potentially become a strategic supplier?

Another important dimension to look at in case studies is the way a particular result is achieved. Usually, the results of most case studies center on cost savings or value creation. One may validate these numbers by asking questions about the processes and changes brought in to deliver those numbers. Digging deeper into the suggested process changes can reveal the depth of impact, thereby enabling its fair evaluation.

I recently conducted primary research involving senior strategic procurement professionals, and the overall response, about 87% of respondents, suggested that while evaluating a vendor, case studies do play a key role. However, the numbers and claims made in the case study are taken with a “suggestively large” grain of salt.

This happened to me once, when during one of the outsourcing initiatives I was leading, a vendor suggested that it had three-figure strength of employees in a particular niche domain. I took the claim at face value, giving the vendor an edge in evaluation criteria. Later, however, when I looked deeper in my evaluation, it turned out that the organization had only two-figure strength of specialists in that domain. The vendor conveniently came out with an apology, suggesting it to be an error.

This story reflects the responses in my survey, and thereby presses a need for deeper due diligence in evaluating claims that can give competing providers an edge — especially given that account managers or sales reps are pushed to limits to increase the top line by all means necessary.

Another effective methodology for evaluating such case studies would be to meet the team that executed the “claim” and do an interview with not only the lead but also the team members who were on the ground. Talking to these folks, or even evaluating the response of the account manager or sales rep on such request, can give you a view of how much due diligence you need to do to consider the case study as part of your total evaluation.

Given the complex business environment we operate in and the number of service providers engaged in cutthroat competition, one cannot deny the need for a neutral organization that can publish or validate case studies. As simple as it might sound, this could turn out to be the next big vertical for the consulting world — a stepping stone for vendor evaluation.

For more interesting thinking on procurement, visit the GEP Knowledge Portal.

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