Have you ever tried to understand your internal stakeholders and the dynamics behind opaque decision-making processes in complex organizations as a procurement professional? I bet you did. Let’s shine some light on common situations and behaviors.
Even today, the vendor selection for Professional Services engagements often takes place behind the scenes. Procurement professionals are often-times the last link in the chain. Procurement experts, tell me the same story: stressed stakeholders in need to start a really important seven-digits volume project with external support, pushing procurement to send out a request for proposal to a set of preselected service providers and receive answers within a few days only.
Really? They want to decide this within a few days, with almost no time for procurement to search for adequate and competitive service providers and to discuss and shape the scope and solution with them. So, for you as procurement, what about your expertise and influence?
Even though the customer journey of project sponsors is mostly opaque from procurement’s point of view, it is not a mystery from a vantage point. For those familiar with the concept of the customer journey, most steps can be clearly assigned to the relevant players in your organization and their conscious and unconscious decisions. Instead of reciting the theoretical customer journey approach, the following is meant to describe the best levers for you as a procurement professional to add value and gain visibility in this process. (Read more about Best Practice for Procurement and Management of Professional Services Contracts in this publication of ResearchGate LINK).
1 | Pre-Awareness
Status-Quo:Pre-Awareness is a state of unconscious knowledge and opinion, usually not from individual experience but rather from hearsay. Stakeholders like department heads or business unit managers are not aware that they need external support from a professional services provider at this point in the journey. Thus, they don’t consider searching one, but usually have a predefined opinion about the market and players. Even though this is a very crucial state, there is usually no touchpoint between stakeholder and procurement.
Your options:If you want to become part of your internal customer’s journey, communication is all! Active “pre-awareness” means, you as procurement communicate the “what-if” cases and the processes behind them.
What if you need support from an external service provider? Come, talk to us at procurement and we will help you structure your demand, identify service providers, and help you be quicker and more efficient! It’s our job!
2 | Awareness
Status-Quo: Awareness emerges when stakeholders realize they may only solve a specific problem with an external service provider. Usually, they start reaching out to some colleagues internally or externally to get smarter on the topic. They start googling to get some names of these unknown companies and involve first team-mates internally. Again, often procurement is not involved. At the same time, you in procurement maintain your preferred supplier list and make framework agreements wondering why you are only able to cover 10% of the company’s spent on professional services with these suppliers. This results in a maverick buying ratio of 90% for your category!
Your options: Again, awareness is a rather unstructured state. You need to make potential stakeholders aware of your assets and capabilities. Maybe you distribute a catalog of approved vendors or hold information webinars once or twice a year to tell those future project sponsors about processes and how you help them and that you are responsive whenever they need you.
3 | Consideration & Preference
Status quo: Now it’s showtime. At least for the service providers. Procurement is still not part of the team. Stakeholder discuss project approaches and scopes with those service providers they found online or someone has recommended them to work with. Usually, some networking is involved as well. However, who said that someone else’s gardener knows how to fix your TV? If you are not involved at this stage, your piece of the cake will be to negotiate prices and get a signature under the contract.
Your options: Show your stakeholders that they are losing time searching the wrong vendors, or at least hitting a lucky punch might be a risky undertaking when it comes to important projects. After all, according to WGMB 38% (LINK) of all consulting projects fail! The art of becoming a strategic partner to internal decision-makers can be considered the “procurement-champions-league”! Show your internal stakeholders that you have a better overview of the market, that you have numerous experience in structuring a request for proposal, or that you know how specific service providers have performed in the past. Create a track-record and make it available to your stakeholders. Push information.
4 | Purchase
Status-Quo: Finally, your home-turf – you might think. As mentioned earlier, reality shows that in many cases project sponsors still take the lion’s share of the purchasing preparation. The rest are usually not very grateful. Chasing procurement success in lower one-digit saving on daily rates should not be your motivation.
Your options: Create and live a process for requests for proposals and the procurement decisions that are undoubtedly faster and more compliant than any maverick buying your stakeholders might pursue consciously or not. Utilize technology to become smarter and quicker. Your goal should be to get into a collaboration mode with your stakeholders. Get involved and involve them. Show progress and make results transparent and accessible. Even your stakeholders feel better if they don’t need to manually sketch proposal results into an Excel sheet or collect opinions on service proposals from colleagues by email, one-by-one. Use technology and involve your stakeholders as business partners. (another great view on business partnering can be read in this article of Procurement Leaders LINK written by Jonathan Webb)
5 | After-Sales
Status-Quo: While service providers now try to cross-sell new products or renew the running contract, procurement is usually not welcome at the party. Service providers tend to have well cultivated and protected relations to your internal stakeholders. This is important from a delivery point of view, but not so helpful when it comes to creating positive competition among service providers and evaluate performance and quality.
Your options: Procurement can help during the process of accounting and invoice settlement or become a non-biased referee concerning the evaluation of the service provider’s performance on the project. Use tools to make yourself and your stakeholders more efficient during service or project delivery and enable your stakeholders to focus more on delivery than on administration. Transparency on performance and active quality management is usually not the strength of your internal stakeholders. This can become one of your key levers.
6 | Loyalty
Status-Quo: Loyalty is a two-edged sword. On the one hand, loyalty to a successfully performing service provider gives you advantages concerning the initiation of a follow-up project, on the other hand, it creates the dilemma of not having competition and fresh ideas for your next project and thus losing competitiveness of your company.
Your options: Well-performing service providers should always get a second chance for follow-up projects. But make sure, you as procurement help to measure who is well-performing and who should be left out next time. Also, by managing quality and performance-related tasks like mentioned before, you also have the legitimation to influence future decisions. Also, the dotted line in the chart links back to “consideration & preferences” and shows how the next journey may be sped up significantly – with your help.
All of these scenarios have been experienced and important by my clients at APADUA (LINK). The struggle to get involved to create an impact are omnipresent among large corporations and small/medium-sized companies alike. You and your team in procurement need to step up and show your potential by early awareness creation and collaborative approaches. New solutions and technology help you do this job even better than before. Make your experience and capabilities visible to become a trusted partner along the journey within your organization.
Have you experienced these cases yourself?
How did your organization overcome these challenges?
APADUA | ResearchGate | WGMB | Procurement Leaders