External Resource Management – is this THE new name for Procurement?

We featured Guy Strafford (Proxima founder and director) and his blog a while ago when he asked the very provoking question - does procurement need a new name? Is ”procurement” toxic as he put it, too associated with old ways of doing things?

I was very annoyed with him, because I'd been thinking about the same question and was planning how to feature it here, so he beat me to it! I emailed him to say that, and I also said that although I couldn't enter his competition - blogger incest, as it were - I had my own idea as to a new name, if indeed we thought procurement needed that.

I won't say what it was I suggested - but let's just say I was very pleased when he announced his winning entry, which was "External Resource Management". And the individual with that bright idea was my old friend David Atkinson (see picture), very occasional guest blogger for us, ex CPO and now procurement adviser, trainer, lecturer, music fanatic (and I really mean fanatic), and deluded Newcastle football supporter.

Seriously, Atkinson is a deep and perceptive thinker about procurement and its future, and I'm sure he also appreciates the bottle of good champagne Mr Strafford donated to him as the winner. But that term - "External Resource Management" - has a number of interesting aspects and attractions.

It captures the entirety of our potential role; that is, managing all that the organisation obtains from outside the organisation. And now we know, courtesy of Proxima's recent report, that the whole "external" spend bucket is on average 70% of an organisation's revenue, compared to just 13% for staff costs.

And it also has a nice symmetry with "Human Resources Management", which is how the function that used to be "Personnel" has re-branded itself very successfully over the last 20 years. (As an aside, perhaps we should look at how that change happened, and whether we could learn anything from it)?

So there is definitely an attraction in the new term. However, that doesn't mean we should all rush off and re-print those name badges. For a start, there is no lever we, or anyone else, can just pull to make such a change happen. If it were to happen, it would be a gradual process, driven by organisations deciding over time to re-badge their own functions. And that in itself is only likely to happen if the actual nature of the work carried out by that function changes, which then requires or deserves a new name.

That brings us on to the key point. Let's look twenty years into the future and assume we are all part of the External Resource Management profession, with the CERO (Chief External Resource Officer) sitting on most company Boards.  The question is - what would we have done, individually and as a profession, to have earned that title, and what would we now be doing in our jobs? And how different would that be from what is currently known as procurement in most organisations?

They strike me as the really big questions emerging from this debate for us to wrestle with. So you see what you've started, Mr Strafford...

Voices (3)

  1. Derek Lancaster:

    From hero to CERO…?!

  2. Dave Orr:

    Erm….could the name have drawbacks?

    Human Resources is HR.

    External Resource is ER.

    Look at how well the old “Accounting or Finance system” did when it was renamed to ERP!

    Not to mention SAP as another famous acronym.

    Surely, what is in the actual tin, matters as much as what is on the label?

    Windscale to Sellafield – still a big nuclear thingy etc.

  3. PlanBee:

    Hmmm EXTERNAL resource management

    Where does that leave demand management or make v buy decisions?

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