Professional Services Procurement, the final frontier?

 

There is an excellent article on Procurement Leaders looking at the topic of Professional Services procurement, specifically reviewing the new book by Fiona Czerniawska and Peter Smith titled "Buying Professional Services".

For all those involved in Marketing Procurement (and other high-complexity services categories) I suspect the following summary found in the article will ring true.

- The services are usually provided to senior, smart, well-paid individuals by other senior, smart, well-paid individuals.
- Only some professional services are regulated in what has to be provided; most are tailored to meet the needs of individual organisations
- Lack of information about such things as a firm's track record in a particular field or the fees it typically charges for similar work makes it hard to compare and evaluate professional services firms.
- The outcome of using external advisers depends as much on the end-user as the adviser and, to a large extent, on the relationship between the two.

Certainly there is a growing awareness amongst procurement professionals of these high-value, high-complexity services categories. However, they are extremely difficult to manage and an enhanced set of skills are needed.

At a recent ANA conference, Kim Kraus who leads the P&G Global Marketing procurement group, made specific mention of the inter-personal skills that she looks for in recruiting people to her team. The ability to work in the "grey area", as she put it!

So although the basic aspects of supply management are still required, it would seem that the ability to understand these categories intimately, especially the value of the service being delivered (rather than the straight cost), will be a differentiator for leading organizations.

Author: Richard Benyon (Decideware)

http://www.procurementleaders.com/news/latestnews/2719-potential-services-proc/

Comments

[Mano Manoharan]

I face the challenges outlined in the article, in every assignment that I undertake. Agree with dot points 1,2 and 4 of the "Summary". I have almost given up on verifying or assessing track records because of (i) the over the top claims made by service providers including "excellent service provision" and unsubstantiated claims on savings and other benefits to past clients. The clients too, have become extremely cautious in providing references especially in a Public Service environment with the advent of FOI laws.

I see the Statement of Works (SOW) playing a crucial role in the engagement of professional advice. The over-arching options are (i) being detailed and prescriptive and specify a methodology or (ii) specify a performance.

If the engaging agency has some level internal professional capacity and past experience in the professional service being procured, it best that option (i)) be adopted in the SOW. The engaging agency however, carries the risk of the prescribed methodology delivering the desired outcome.

In option (ii), the engaging agency should be upfront in its SOW and state "this is where we are at present, and this is what we intending to achieve and we have $X in our budget for this purpose; could you please provide a proposal on what best you can do to assist us in achieving our objective within existing budgetary constraints?". When a performance SOW is developed on this basis, the price element is eliminated from assessment of competing proposals received. A weighted MCA (Multi Criteria Assessment) coupled with a Value for Money assessment (using a Value for Money Index analysis) will assist in prioritising competing proposals. In a public sector environment however, it is not possible to be as expilcit as stated, in the SOW due to complex rules relating to disclosure of information, particularly in stating available budgetary provisions.