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Can procurement add value?

—16 March 2018
—The Consultancy Buyers Forum discuss adding value with procurement.

Effective evaluation of the performance of consultancies is vital. Everyone agrees that constructive feedback is important and leads to improvements in outcomes. But clients often struggle to provide it.  We asked the Consultancy Buyers Forum to look at some of the good practice that is helping them to do so.

Feedback is important to consultants. As one puts it: “I don’t think I’m only doing things right—I always need to improve.”

So why is it so hard for them to get useful feedback from clients:  is there a cultural resistance to giving honest feedback, to being “blunt”?  Consultants might get the hint that the neutral assessment of a merely “satisfactory” rating can mean that a client is feeling a certain amount of disappointment. But true feedback should be both honest and constructive —you don’t want just to hear about things that went wrong but also to explore what could have been done differently.

The apparent reluctance amongst clients to give feedback may not stem from politeness as much as a desire to move on and not to dwell on the past.

This can be confusing for suppliers when they find they are not winning follow up business despite everything apparently being OK—and robs them of the opportunity to change their  approach and provide a better service.

Just another survey?

Can feedback be an automated, online process?  Or does it require a semi-therapeutic dialogue to draw out the real issues and the deeper lessons?

Procurement departments are an obvious route and resource to encourage and organise this dialogue.  But this would mean them stepping beyond merely sourcing—“you asked me to do that, so I bought it” - to adopting more of a business mindset . And it would also require them to spend more time with their internal stakeholders to create that dialogue.  Is that a worthwhile use of their time?

An alternative approach being pioneered in one organisation is to start by gathering essential management information.  Team members within the client organisation are provided with an easy-to-use app that allows them to score a consulting project on three simple metrics - quality, delivery and cost - to give an average project score.  They can do this throughout the life of the project. If the score drops below a pre-determined level then the client team is required to provide more detailed feedback.

The expectation is that this will provide both the opportunity to take remedial action—perhaps asking the consultancy to swap out team members—but also improve the visibility of smaller projects which are rarely reported in the annual review with each supplier.

This is a first step “stake in the ground” initiative, and the client organisation is determined not to let the perfect be the enemy of the good.  Detailed questionnaires simply don’t get filled out—buyers talk of having to “stand over” stakeholders to get feedback.  With at least some quantitative information then a larger picture can emerge —between cost and quality, project size and outcomes and so on.

Another approach is to review consultancy performance as part of a continuous process. This can be managed by the procurement professionals in a way that removes either personal or group bias from the equation. The issue here is finding an individual who can bring together feedback from all the different departments of a client organisation - potentially a role for the FD, who has a direct interest in understanding and evaluating the impact of consultancy spend.

360 Feedback?

Should feedback be 360 degrees?  In other words, should both buyers and consultants be providing feedback to the commissioners of consulting services on how good they are as a client?

It’s a delicate area. Obviously, suppliers don’t want to offend. But it also opens the potential for productive conversations:  consultants can be asked how the client could have engaged the consultancy more effectively, and this might prompt suggestions on how to manage projects internally.  Procurement could use this as an opportunity to explain to the client how to buy more effectively, and show consultancies how they could make themselves more effective and persuasive.

An important point though is that feedback needs to be complete. This is not simply about individuals or even teams but about a whole process:  is the organisation buying and using consultancy effectively and, if not, why not?

Articulating real needs in a gig economy

A thorough approach of this sort will help empower the client organisation – across all its functions. There will be a clearer focus on what the organisation is really buying when it buys consultancy. What outcomes is the client seeking? To achieve them, what does it need? Is this need being met appropriately?

In turn, this can also help organisations explore alternative ways of meeting its needs. Is recruitment or the use of internal resources more effective? Is some combination of resourcing desirable? Is the client chasing lower prices at the cost of losing value? A clear understanding of when to go for consulting and when to opt for contingent labour or increased headcount can only lead to improved outcomes for everyone.

So procurement must both shout louder about what it can do for the business and reposition itself as more of a business partner, perhaps even rebranding itself as “commercial advisory”. In return it needs to remove some of the delays that lead people to circumvent procurement, making it easy for internal stakeholders to access the right outside resources in a timely and value-driving manner.

To sum up:

  • Stakeholder engagement is an exercise in communication:  buyers must communicate effectively with their stakeholders to agree their real needs before they help them buy the right resources to achieve business outcomes.
  • Feedback after the event is not enough: information gathered during the life of a project will be far more influential. Gaining the attention of stakeholders and making it easy for them to provide this information is vital.
  • Feedback also helps consultancies learn and improve. Buyers should also consider feeding back to their internal stakeholders on their performance.
  • Lasting change and deeper engagement will only come if procurement is more outspoken about what it can do for the business.  Procurement must aim not only to  communicate but also to educate the business to be more commercially aware. In this way, procurement can enlarge its role as a business partner and valued part of its host organisation.

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