impacore – a different approach to professional services procurement

Regular readers know of my interest in professional services procurement –  hence the book I co-authored titled “Buying Professional Services: How to Get Value for Money from Consultants and Other Professional Service Providers “  (available from all good bookshops etc etc...)

Anyway, that wasn’t the point. Professional services procurement is to my mind one of the most challenging category areas, so it’s always interesting to hear of new ideas and approaches.  Hence I was immediately fascinated when I was introduced to a relatively young German firm, impacore, who are promoting just such a novel approach.

They’re still heavily focused on German clients, working with large companies, but are beginning to make moves more broadly in the US, Asia and Australia – and their German clients are often international businesses in reality. They’ve got the intellectual firepower of ex McKinsey and A.T Kearney people behind the firm, including Dr. Martin Dürr, one of the impacore founders and Directors, who I met recently.

impacore help client firms, usually those with a large spend on professional services, to get better value and performance from their service providers in management consultancy and also legal services, IT project work and similar. And these are huge spend areas now for many firms of course; with the largest organisations spending hundreds of millions of $, £ or every year on these services.

There is also another complexity in the breadth as well as scale of the spend. “We work with clients who have hundreds of different projects running at any point in time”, says Dürr.  It is almost inevitable that no one person in the client organisation will have an overview of what is being spent in this category and with whom – let alone a real sense of how well the supplier is performing.

So when a client engages impacore, they don’t take over the whole category – as an outsourcer might do. Rather, they sit between their client (the buyer) and the professional services firms (the providers), helping to manage and improve performance and looking to save the client firm money where the consultant isn’t performing.

They do that through a combination of their deep market knowledge and a process of questioning staff from the buy-side about supplier performance. This is a highly structured process – as impacore describes it:

“At the core of our service we monitor the ongoing performance of your providers using Performance Ratings. We interpret those Performance Ratings for you based on our best practice performance benchmarks. You will know immediately when performance issues surface and most importantly, you will know exactly what to do about it”.

Where it is clear that a professional service provider is not performing, impacore’s Performance Ratings can be used as a basis to get the project back on track. In the case of serious performance issues there is the evidence required to reduce the consultants’ fees (through rebates or future cost reductions).

When that happens, there is also the opportunity for impacore to be rewarded on a contingent fee basis, taking a share of those benefits. However, most clients choose to pay them on more standard fee basis for their services.

It’s a novel and interesting model, and we’ll be back in part 2, when we’ll look at other aspects of the approach, and feature more from my discussion with Martin Dürr.

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