Higher Ed Procurement — The "Bain" of University Cost Savings?

A couple of years back, I spoke at a vendor dinner attended by a handful of higher education procurement executives and directors. At the event, I was relatively surprised at how unsophisticated most universities were -- especially in comparison to the private sector -- when it came to getting Spend Management religion. After all, I would suspect those in a position to give to their alma mater -- not to mention governments issuing grant money -- would be more inclined to write checks if they knew that their funds were stretched as far as academically possible. After the dinner, I wrote about these observations on Spend Matters, which did not endear me to the vendor (SciQuest) sponsoring the event, to the point where I’ve not spoken to them from a briefing standpoint since. This is too bad, of course, given the need for cost savings in higher education, especially in the current economy, and not to mention stories like this one from the NYT, which suggests Bain, a relatively unknown strategy firm in the procurement and supply chain sector, is winning deal after deal advising University CFOs and Presidents on where to cut costs, including procurement.

Now, don’t get me wrong. I think it’s great that universities would be inclined to seek any outside advice on how to save money. But I’m personally surprised that, given the importance of procurement to cost cutting and Bain’s relative inexperience in this area in comparison to firms like AT Kearney and even McKinsey, that they’d be the consultant of choice for higher education Spend Management in universities ranging from UNC to Cornell to Berkeley. Granted, it’s not rocket science to create a report like the one that suggested that at one university, “100 centers and institutes that [had] sprung up around the university, many with their own finance, information technology and human resources departments,” and that these silos needed a degree of centralized management or at least control. But when it comes to making both technology and sourcing recommendations, conducting make/buy analyses and looking at outsourcing to maximize implementable savings potential, there’s no way Bain would be tops on my list for this sort of thing. For example, do you think Bain has the expertise to maximize specific savings opportunities in such areas as print and facilities maintenance? I doubt it, in comparison to AT Kearney and other rivals.

Which begs the question: Why Bain? I suspect that, as with most consulting sales, existing and political relationships led the way, and in the case of university cost reduction -- an almost oxymoronic phrase throughout the history of higher education -- an uneducated customer is the best target for relationship-driven professional services sales, especially the abstract kind such as strategy consulting. But at the end of any 100-slide presentation featuring slick frameworks and recommendations, the time will come to implement as many of the suggested actions as possible (assuming they’re right in the first place). That's what I suspect will ultimately be the bane of any university that originally engaged Bain believing that a generalist strategy firm was the right ticket on a procurement train to the most possible implemented savings. This is precisely the argument William Busch opined on Spend Matters when the original NYT article came out.

Jason Busch

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