Buying Professional Services – why relationships matter

Here's our first excerpt to celebrate the second anniversary of the publication of "Buying Professional Services" published by the Economic books, and co-authored by Fiona Czerniawska and I.  In this extract, we look at why relationships between providers and users  do matter, but why procurement people are also right to worry about them!

“We’re a relationship business” say professional services firms.  Look at any of their websites and you will see the same set of qualities highlighted: the technical excellence of their people; their openness, integrity and professionalism; the extent to which they can think laterally, creatively and globally.  They can also, as if all this was not enough, work side by side with your own staff so seamlessly and effectively that you will be hard-pushed to say where one team starts and the other finishes.

But from a purchasing perspective, relationships push up prices because buyers are reluctant to negotiate with people they like; they obscure business cases because it is harder to get rid of people who are already working with you; they reduce competition because you end up buying from the same suppliers again and again.

Relationships complicate the purchasing process because it makes it harder to be objective.  While you can use a semi-scientific process for evaluating proposals and presentations, these do not take gut feel into account.  Indeed, in many cases, they become a means by which gut instinct can be justified rather than a way to challenge it. How many times have you sat in on a set of supplier presentations, all ready to mark the presentations objectively, only to hear someone say, “I really liked that team.”

The problem is that the delivery of effective, high-quality professional services also depends on relationships, to some extent at least.  A lawyer who does not get on with a client may be ever so slightly less willing to take the latter’s late-night phone call.  A tax adviser who enjoys working with a particular finance director will be more likely to put in the extra effort that success often requires.  A consulting firm that knows its way around a client’s organisation is better positioned than a rival that has never worked there before to know how to negotiate the internal politics.

Purchasing managers therefore find themselves caught between a rock and a hard place.  On the one hand, they need to maintain a professional distance during the purchasing process but, on the other, ensuring there is an effective working relationship between client and adviser is critical to the success of the actual project.

First Voice

  1. Life:

    I’m the proud owner of a copy of this book and recommend to anyone interested in procurement of consultancy. As both a consultant and a procurement advisor I found it challenging and it had me tearing my hair out and highlighting passages in equal measure!

    On the above extract I’d agree but would say it also depends on the type of “consultancy” being offered. For just one example, along with all the usual well observed challenges of cosultancy, one difficulty is the practical and moral dimension of how far you should push a hesitant or unconfident client toward a correct and complete conclusion. Early on in my career I had it explained to me by an old hand whom I respect enormously that the dilemma, where it is clear for a typical mix of both personal and proessional reasons the client(s) is unwilling or unable to fully follow through, is whether the optimum result is to push for full resolution and risk not achieving any progress, or take the client as far as you judge you can and achieve at least an interim (hopefully) gain. This is a common issue, for example, in org change, risk management or sorting out personality type board issues. Not so relevant for purely technical jobs.

    A key difference with procrement services, although I acknowledge that it’s a matter of emphasis, is that “getting on” and trust are often not far off the sole determinants of success, given competence and integrity are also requirements for both procurement and general consulting. Trust in particular is often cited, and trust is a two way street. iI rarely is as easy as just explaining the available options and letting the sponsor decide! Interpersonal aspects are sometimes even more difficult to evaluate than whole life cost.

    So maybe the “I really liked that team” guygal is spot on? I’ve had “I really loved his tie” before, in just the circumstances described on a large technical procurement, but even then I found myself wondering if, given that competence and value were there, and that the individual was so enamoured of this aspect (!), was it actually a relevant observation?! Luckily, when I checked the evaluation grid, it turned out it wasn’t……

    IMHO, for some types of consultancy relationships are far, far more important and integral than just taking the late night call, and when we are procuring such services we need to be very careful we don’t insert procurement metrics into the evaluation criteria, rather than rightly applying them to evaluate.

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