Professional Services in Procurement
Professional Services (PS) are at the heart of a business, services from Finance, Accounting & Tax consulting & compliance, Internal Audit & Strategy & Operations consulting, to Insurance and Legal services ensure regulatory compliance and effective management of corporate and commercial risk on a daily basis, whilst enabling an organisation to identify and implement the corporate and functional strategies required to deliver future operational efficiencies and revenue growth.
However, the procurement of such Services isn’t for the feint-hearted, the stakeholders responsible for Professional Services budgets are usually very senior in status (Hof/Director/CFO level) and have often worked for a management consultancy or law firm in their earlier career and they have very strong views on which supplier’s they want to engage with and who they don’t, based upon their previous experiences.
Furthermore, such stakeholders have generally not offered a warm welcome to Procurement, considering Procurement to have a limited understanding of the relevant supply market and an agenda that is solely focused on reducing cost which in their view will have a direct and negative impact upon the performance of their supplier’s through the provision of resource that is too junior in experience to deliver the business need.
At the same time, supplier’s have been very astute in utilising their direct relationship with stakeholders to effectively by-pass Procurement and negate Procurement’s influence on the sourcing process.
So, influencing Professional Services spend can be a difficult, frustrating and challenging experience, with a pace of progress that can be both a slow burn and a roller coaster of a ride, but, Procurement can, with the right approach, play a leading role in managing such spend.
In my experience, Procurement’s ability to engage with senior Stakeholder’s and create close relationships by demonstrating a clear understanding of the stakeholder’s business and how Professional Services contributes to the stakeholders KPI’s is critical to a successful approach.
A key objective of Procurement’s stakeholder engagement is to understand the future pipeline of requirements from their stakeholders and then demonstrate a detailed knowledge of the respective supply markets to influence discussions on the supply options available from the market that meet the business need.
As stakeholder relationships develop & establish, Procurement can begin influencing the management of Professional Services demand at source, creating Steering groups with senior stakeholders/sponsors that can be a key enabler to implementing a corporate governance policy that challenges not only the business need for engaging external suppliers but also, importantly, the type of resource that is appropriate to the required service e.g. using Tier 2 suppliers or freelance Contractors instead of high-end firms.
In addition, agreeing Preferred Supplier lists (PSL’s) with the business provides stakeholders with pre-approved suppliers that will also support the management of the tail end spend which exists in most spend categories.
Implementing these approaches have enabled me to quickly obtain the personal and professional gravitas and respect of senior stakeholders and enabled Procurement to illustrate the value they can deliver across Professional Services as a trusted partner.
This blog was written by:
C Young Procurement Consultancy Limited