New Compass Research: Dating and Relationship Lessons Applied to Procurement BPO

We're excited to announce the availability of our most fun -- and we believe most insightful -- research analysis of procurement BPO to date: Tips for Making the Promised BPO Benefits Real -- Alignment, Focus and Integration. The paper, co-authored by HfS' Phil Fersht and Spend Matters' Jason Busch, personalizes what it takes to get the most from procurement BPO relationships. The secondary title just about says it all: "Jason Busch and Phil Fersht Apply Lessons From Dating and Marriage to Procurement BPO." Despite the whimsical lead-in, this Compass research brief is not all fun and games (though we hope the more informal tone will leave you amused). In fact, the analysis offers some highly prescriptive areas for company introspection before heading down the BPO path (e.g., process maturity examinations, dangers of "lift and shift" thinking and skills, and knowledge awareness) as well specific advice on what potential partners should bring to the table.

The paper begins by offering up the one piece of advice that we should never forget about procurement BPO partner relationships -- engagements aren't about dating. They're about getting married, something the authors think many people don't realize. Remember this one point, and your chances of success with procurement BPO will increase on a log scale. In other words, never mistake a BPO relationship for advisory or software. You can scrap a consultant's deck and trash a software package overnight, but BPO is different. Just as in a marriage, you can't fundamentally fix things if they're already broken going in. Sure, you can invite a consultant or software vendor to paper over a broken process. But it's not the same when it comes to transferring ownership of the outcome and, in practice, sharing your proverbial corporate bedroom with another party.

Phil and Jason pick their words carefully in their "final tips" for engaging on the right footing from the start with potential BPO partners when they proffer up the importance of "saying what you mean" and the importance "expecting human behavior" from partners (e.g., "you will need to decide who works which hours and make allowances for the higher turnover and resources quality that night-work attracts -- the very best resources don't need to work against their circadian rhythms"). In terms of training, Phil and Jason suggest the importance of remembering, "training [your BPO partner] is not about 'how to do procurement.' If you have to do that, well, you've got bigger problems. Training is about your environment, your industry, your observations and lessons learned, and the outcomes that will make everyone successful. But picking a team you can work with, even if it is not the most experienced or sexy team, is, in our experience, the single biggest predictor of outsourcing success. The more people from the provider team that you can expose to your company culture and values, the better. Please, please don't ever consider 'train the trainer' type models."

While technology in procurement BPO settings is not a core focus of the paper, it does come up in context. For example, "Often buyers and providers alike will use technology as a crutch for process. 'We can only use technology X because that's what our process is built on.' Or 'Because we use technology Y, you get a ready-made process.' Neither of these statements is accurate or relevant. A technology that cannot adapt to a best-practice process is useless, and you should banish it to the proverbial rubbish bin. Likewise, a procurement process that can only run on one technology is a poorly designed process. Integration, not process, is the first question when it comes to selecting a technology."

In the end, to keep your sanity and make your assessment of potential spouses --er, providers -- an insightful exercise, the authors suggest that you minimize the time you spend on table stakes. As an example, they suggest doing your reference checks to make sure the success stories are real, but then focusing on the elements of your business that are unique. For example, the right provider can, and should, be able to address all of your needs from a category perspective -- picking someone who can only do MRO is like hitting the singles bar fifteen minutes before close. In other words, it's low effort and something is likely to happen, but something you may eventually regret. Granted, pursuing a complete offering could lead to much, much more valuable results. But where the provider is able and the client is willing, great things can be accomplished through an integrated platform that includes complex indirect and direct categories -- and potentially even technology tie-ins as well.

If you're curious to learn more about key tips for selecting the right BPO partner and making the promised benefits of procurement BPO real -- not to mention discovering the type of humor that the spouses of co-authors Jason Busch and Phil Fersht have to live with everyday -- then don't wait for a more starched-shirt approach to the subject. Download this latest Compass volume today: Tips for Making the Promised BPO Benefits Real -- Alignment, Focus and Integration.

- Sheena Moore and Jason Busch

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