Horses for Sources says ‘ditch procurement’

In a very stimulating way to start the New Year, the highly respected outsourcing analyst Deborakh Kops, writing here for the equally revered Horses for Sources website, says that one of the golden rules for making (out)sourcing a driver for real business change and improvement is to "ditch procurement".

She says...

While our friends in the CPO’s office have an important role to play in procurement process and governance, they cannot be the major arbiter of taste when it comes to sourcing true corporate change.

Of course I couldn't stand by and not respond on behalf of my fellow professionals, so I asked what this 'sourcing' activity was if not a form of procurement anyway?  The replies to my point from both Deborah and Phil Fersht, the Head of HfS, are well worth reading (read them below her main article).

What Deborah was getting at is that applying 'standard' procurement processes, based strongly around lowest price / acceptance of contract terms, is unlikely to get the best result when you're looking to select a provider for a major outsourcing project.  And I fully agree.  She says,

..we see the rise of global sourcing teams at leading companies--folks who work with the businesses to determine the right solutions in context of business conditions, investment in enablers such as technology, timing, the organization's ability to adapt, and so forth. They work closely with experts who deal with procurement risk, contracting, policies and procedures, rate cards, etc.

Very interesting - what she suggests is procurement being positioned as a technical support function rather than being central to the more strategic (important) work.  I think if I was a CPO I'd be pretty worried and disappointed if a separate 'sourcing' team existed outside my remit, wouldn't I?  But Phil hits the nail on the head when he says,

And her (Deborah's) point is that procurement folks simply don't understand outsourcing - they need to get beyond rate-cards to get into the real issues about selecting a provider and making a business case..

So are procurement folk too narrowly focused when it comes to outsourcing and other more strategic commercial activities?  How can we make sure we are seen as contributors, not people who get in the way?  What do you think?

I couldn't agree more with Phil's 'needs' - although I would argue that the best procurement people are already acting in this way.  But not enough perhaps... Anyway, a good debate and questions to start 2011!

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