Bill Young |
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| Buying Consulting Services |
control and manage consultancy; supports the application of
professional sourcing techniques; and requests the board and all
departments to comply. But more often the board is not yet be
involved so I am going to recommend a ‘softly, softly’ approach
which carries less personal risk for the Purchasing Manager.
Consultancy is an undermanaged area of spend with phenomenal
potential for value-improvement. It is certainly the most difficult of
all Purchasing categories. Managing consulting spend is about
managing behaviours. Every one of your stakeholders has a
strong emotional response to consultants. Some are threatened
by their status as externals; some are envious of their reputed
salaries; and those who engage and manage them feel privileged
to be part of their circle. And the consultants themselves, your
‘vendors’, may know their way around your organisation better than
you do – when you think you are making progress, you can find
yourself faced with sudden and inexplicable difficulties.
Your first task, even before determining the level of spend, is to
meet the heads of departments and find out how much they want
your help. You will be surprised at the range of responses: from
difficulty getting a meeting and incredulity at your impertinence, to
relief that someone will actually help them solve a recognised
problem. Discuss these reactions with your boss, the Head of
Procurement, and get clear agreement from her that you will
restrict your initial activities to the departments that want support.
The next task is to assess spend. Everyone will tell you the same
thing: after this or that project, the consulting spend will come to an
end and there will be nothing to manage. Nonsense, of course: but
you are talking to the managers of existing and known projects, not
the ones that are still being developed – these are much more
difficult to find. Every organisation claims to be reducing consulting
spend and yet consulting revenues grow, year on year.
You need a spend map’ – a detailed breakdown of spend which
accounts for all of the company’s revenue after deducting EBIT and
salaries and identifies the names of vendors against all spend.
First analyse the relevant, specific account codes and then go
through all the codes looking for the names of consulting firms. Do
not assume that they have been correctly coded. A presentation of
the scale and scope of overall spend will help your internal clients
to focus on the issue and make them aware of your activities.
Build a detailed ‘stakeholder map’. This should show all of the key
budget holders, influencers, and others who work with consultants
and influence the decision to engage them. Plan regular meetings
(informal is often best) and start by asking them for their opinions
and experience. This is not ‘soft soap’: they have actually bought
and managed consultancy whereas you may not!
Use the spend map to approach your stakeholders and ask for
information on the fees they have been paying to consultants and
on their assessment of performance. Build a history of
engagements and begin to identify the vendors who are being
used repeatedly. Share this information and your insights.
When a door does begin to open, consider some quiet coaching
from the sidelines instead of full-frontal sourcing techniques. Your
internal client may only want to know what day-rate is fair for a
given consulting role. Do not jump in with conventional purchasing
solutions and berate them for not having three competitive bids!
Sell your successes as the achievements of your clients. On
completion of a project, write it up as a joint activity and get
acknowledgement or sign-off from the client. Only when you have
done this can you present any savings to your boss in Purchasing;
and maintain the confidence of your clientst. An advantage of this
approach is that a client may even add in quantifiable benefits that
you, as a Purchasing person, could not have claimed as savings.
In conclusion, here is a safe and reliable way of making a positive
value-impact on consulting spend. To make further progress you
need level support for formal purchasing processes and workshops
but that, as they say, is another story.
professional sourcing techniques; and requests the board and all
departments to comply. But more often the board is not yet be
involved so I am going to recommend a ‘softly, softly’ approach
which carries less personal risk for the Purchasing Manager.
Consultancy is an undermanaged area of spend with phenomenal
potential for value-improvement. It is certainly the most difficult of
all Purchasing categories. Managing consulting spend is about
managing behaviours. Every one of your stakeholders has a
strong emotional response to consultants. Some are threatened
by their status as externals; some are envious of their reputed
salaries; and those who engage and manage them feel privileged
to be part of their circle. And the consultants themselves, your
‘vendors’, may know their way around your organisation better than
you do – when you think you are making progress, you can find
yourself faced with sudden and inexplicable difficulties.
Your first task, even before determining the level of spend, is to
meet the heads of departments and find out how much they want
your help. You will be surprised at the range of responses: from
difficulty getting a meeting and incredulity at your impertinence, to
relief that someone will actually help them solve a recognised
problem. Discuss these reactions with your boss, the Head of
Procurement, and get clear agreement from her that you will
restrict your initial activities to the departments that want support.
The next task is to assess spend. Everyone will tell you the same
thing: after this or that project, the consulting spend will come to an
end and there will be nothing to manage. Nonsense, of course: but
you are talking to the managers of existing and known projects, not
the ones that are still being developed – these are much more
difficult to find. Every organisation claims to be reducing consulting
spend and yet consulting revenues grow, year on year.
You need a spend map’ – a detailed breakdown of spend which
accounts for all of the company’s revenue after deducting EBIT and
salaries and identifies the names of vendors against all spend.
First analyse the relevant, specific account codes and then go
through all the codes looking for the names of consulting firms. Do
not assume that they have been correctly coded. A presentation of
the scale and scope of overall spend will help your internal clients
to focus on the issue and make them aware of your activities.
Build a detailed ‘stakeholder map’. This should show all of the key
budget holders, influencers, and others who work with consultants
and influence the decision to engage them. Plan regular meetings
(informal is often best) and start by asking them for their opinions
and experience. This is not ‘soft soap’: they have actually bought
and managed consultancy whereas you may not!
Use the spend map to approach your stakeholders and ask for
information on the fees they have been paying to consultants and
on their assessment of performance. Build a history of
engagements and begin to identify the vendors who are being
used repeatedly. Share this information and your insights.
When a door does begin to open, consider some quiet coaching
from the sidelines instead of full-frontal sourcing techniques. Your
internal client may only want to know what day-rate is fair for a
given consulting role. Do not jump in with conventional purchasing
solutions and berate them for not having three competitive bids!
Sell your successes as the achievements of your clients. On
completion of a project, write it up as a joint activity and get
acknowledgement or sign-off from the client. Only when you have
done this can you present any savings to your boss in Purchasing;
and maintain the confidence of your clientst. An advantage of this
approach is that a client may even add in quantifiable benefits that
you, as a Purchasing person, could not have claimed as savings.
In conclusion, here is a safe and reliable way of making a positive
value-impact on consulting spend. To make further progress you
need level support for formal purchasing processes and workshops
but that, as they say, is another story.