Procurement As A Force For Change (Part 2)

In Part 1, we looked at my session at the recent Bloom customer event. I talked about the evolution of procurement from being concerned largely with supply and price, to a focus on wider value, and now being expected to consider wider social and economic goals too – certainly in the public sector, and in some cases, in private firms too. So how does this apply to procurement of professional services (including consulting and statement of works)? Let’s look at the four steps we discussed in terms of procurement goals.

First, supply. Just like my early role buying raw materials for Mars production lines, stakeholders need consultants and other professional services providers to support effective operations. It may not be quite as time-critical as keeping the Mars line running, but procurement must make sure users can access the professional services providers they need in a timely manner (“speed to service”) and do everything possible to ensure the quality is right too. Experience suggests that procurement rarely wins when it tries to impose consultants on users and budget holders.

Then we can look at cost. In terms of consulting, the cost focus is often on day rates, but while this is one factor, and applying leverage and effective negotiation are worthwhile tactics, it is in our experience not the most important element of the true cost picture. Competition will almost always help to optimise costs, but that needs to be combined with good market understanding to identify the right firms to deliver what is really needed, and indeed an understanding of what exactly is required.  Which take us nicely into …

Value – this should be at the heart of consulting procurement approaches and strategies. Two areas of focus are related to demand management. Firstly, not over-specifying assignments, so that the right level and type of resource is identified for a piece of work. This is true for both real consulting work and “statement of works” type activities. Too often, we have seen top-level consulting firms used for run-of-the-mill project management type work for instance. Secondly, good demand management ensures that assignments don’t overrun or indeed just run on interminably.

To address both these issues, and indeed the “cost” element discussed above, an approach that defines the required outcomes or outputs from consulting work enables better cost and value management. Robust performance management will also help to drive value and delivery.

It is also worth remembering that consulting is one of the spend categories that can have a very high leverage or multiplier effect. So, a good consulting assignment might bring benefits worth many, many times its cost. Equally, a disastrous piece of advice might cost the organisation many times the actual fees. So, buyers of consulting must focus very clearly on the outputs and outcomes desired from the work, not simply day rates.

Finally, we have that wider role for procurement as “society influencers” as we called it. Creating a level playing field for procurement decisions, encouraging new market entrants and smaller firms can both drive value and help the wider economy by encouraging innovation and competition. Using public money well and guarding against fraud and corruption are other aspects of this goal. In some parts of the public sector, looking for suppliers (including consulting firms) to provide defined social benefit is becoming more important; perhaps by taking on apprentices or long-term unemployed, or providing free coaching in schools.

Indeed, Bloom itself has been very supportive to smaller consulting firms in its work – “70% of procurement projects through Bloom are delivered with SMEs, many of which did not have access to other frameworks before”, says Rob Levene, MD of the firm.

So procurement can, we believe, be a force for positive change. Simply by doing our job well, encouraging fair competition and strong performance from suppliers, we are helping the economy more widely. By looking actively for innovative business, particularly small or recently formed enterprises, we can help further. And if we can support wider value, whether by using social enterprises or minority-owned firms or by persuading suppliers to support that social value through their own contribution, we can do our own little bit to change the world.

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