Riding the Management Consulting Sourcing and Procurement Services Safari

With a hat tip to my old friend and colleague Brian Sommer, who writes the blog Software and Services Safari, it’s clear to me that the world of procurement-focused management consulting has become a jungle thick with opportunity and risk – for clients, providers, and new entrants. On the provider side, it’s a world where predators and prey pursue and hide from each other (and even trade roles from time to time). And it’s a world where newer entrants are rolling up their sleeves and doing more than ever before from an operational and leave-behind perspective (even strategy firms such as BCG and Bain have gotten in on the procurement and operations act in a more consistent manner).

For customers, this means a lot more choice and confusion, thus making apples-to-apples comparisons more difficult. It also makes it more important to understand the market, given that a long-standing services provider to an organization might attempt to up-sell new services or solutions that aren’t a good fit. This is important, because unlike traditional consulting services that are often sold with little or no competition -- relationships typically matter most for both parties in the case of consulting engagements, rather than RFPs -- these new services (e.g., managed services for sourcing, supplier management, etc.) can often be purchased from a range of providers with somewhat diverse offerings and different market perspectives and a RFI or RFP might be a better route to take to understand the market.

In short, we’ve entered the thick procurement services jungle for the long term. Here are some guidelines to keep in mind about what’s changing with the scenery and wildlife around you:

  1. There is now significant cross over (and overlap) between traditional management consulting type projects (e.g., procurement transformations) with managed services and business process outsourcing (BPO) components. It’s worth knowing if one is the optimal fit for an organization’s specific needs (and which services are complimentary in a given situation).
  2. How services are delivered in procurement is changing based on the advantages of smart, savvy offshore analytical data factory and production environments. McKinsey was the first strategy firm to truly take advantage of India in this manner (e.g., producing presentations for clients from templates based on the input of on-site project team members), but many other firms are making better and smarter use of the appropriate analytical and quantitative skills. The potential outcome is better and faster clients.
  3. The role of technology in practice organization and services delivery has increased dramatically, even within firms that previously did not consider it a focus. Curiously, in the past 12 months, we have seen technology assessment and strategy work for clients carried out by just about every type of procurement services firm under the billable hour sun. No longer is it just the Big 5 and technology boutiques doing this type of work.
  4. The promise of platform as a service (PaaS) is real – or will soon be real – in the offerings list of many of these providers. Some of the BPOs are ahead of the game here with PaaS offerings, especially on a category basis (e.g., Infosys, Procurian, Proxima, Xchanging, etc.). We expect this to only increase in the future.
  5. Firms are getting better at codifying IP on all levels – in general services/practice delivery, as standard engagement “leave behinds” in new managed services offerings.

There are more elements to be aware of, and we will discuss them in later posts.

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