buying consultancy services how to ensure best value consultancy services how to ensure best value...
TRANSCRIPT
Buying consultancy servicesBuying consultancy services
How to ensure best valueHow to ensure best value
Paul V incent31st August 2016
OBJECTIVESUnderstand the challenges inherent in buying consulting services effectively
Appreciate what makes consulting services different to other types of purchase
Understand the dynamics that are common to the way that organisations deploy, consume and sell consultancy services
Buying consultancy services IS different
Price and value mean different things depending on the role that people play in the buying process/decision
Business outcomes are not always clearly defined at the outset
Relationships and trust are crucial success factors
Beauty is very often in the eye of the [budget] holder
The market place is dynamic and constantly evolving.
Buying consultancy services IS different
Buying consultancy services IS different
Things are not always as they seem!
Confirmation bias is endemic…The human tendency to interpret new information so that it becomes compatible with our existing theories, beliefs and convictions
How do consulting firms typically view‘procurement?’
How do consulting firms typically view‘procurement?’
How do consulting firms typically view‘procurement?’
How do consulting firms typically view‘procurement?’
How do consulting firms typically view‘procurement?’
TYPICAL PERCEPTIONS
Procurement won’t own the budget
Procurement won’t understand the business need
Procurement won’t know what ‘good should look like’
Procurement will focus on price rather than value
Procurement might give the work to someone else!
How do budget holders typically view the world?
MY NEEDS!
How do procurement typically view the world?How do procurement typically view the world?
MY NEEDS!
MY NEEDS!
MY NEEDS!
MY NEEDS! MY NEEDS!
How do procurement typically view the world?
How do procurement typically view the world?
It is 2:15pm on a Thursday
After 6 weeks of intense discussions a consultancy firm has agreed the scope of work with their client, addressed all their issues/concerns and lined up their ‘A’ team to start this coming Monday at 9am
During discussions to date they have already reduced their original fee proposal by 20%
Their client has just realised they need their internal procurement team to finalise the contract and issue it to them
The client has made contact with someone in procurement and sent them across a selection of background documentation — the email starts with “I know this is really short notice but please can you just…”
This is the first time procurement have been made aware of this project and the consultancy firm now has to discuss their proposal with them…
The (very common) scenario…
Don’t you wish it could be different?
Understanding the landscape is critical
INTERNAL
CLIENT
CONSULTING
FIRM
Business Context
Understanding the landscape is critical
INTERNAL
CLIENT
CONSULTING
FIRM
Client Hierarchy
Market Forces
Financial Approver
RelatedProjects
Procurement
VALUEVALUE
Understanding the landscape is critical
WHYWHATWHO
HOWWHERE
WHEN
Internal Client
Business Context
Market Forces
Client Hierarchy
Financial Approver
Procurement
Related Projects
Consulting Firm
Organisational
Culture & Polit icsChallengesOpportunit ies
Individual
KnowledgeExperienceCredibility
ProcurementFormalise Deal/
Contract
Traditional (Preferred) Procurement Flow
Internal NeedDefinition
Supply MarketNegotiation/Contract
ProcurementSourcing Exercise
Typical Consultancy Flow
Understanding the flow of things…
Consulting FirmGreat Idea
Internal ClientNeed/Cost
Internal ClientNeed/Budget
Consulting FirmSolution/Cost
…and the game of snakes and ladders!
The person who claimed to have the budget and authority to engage
them actually didn’t;
There was already something set up to fulfil the requirements but the
person who asked them to pitch didn’t know this;
The requirement was a lot more
involved than they were led to believe – but the person who asked
for their help didn’t know what they
didn’t know;
Their proposed commercial terms
were ‘non-standard’ and could not actually be agreed without ‘special’
internal approval;
They assumed that their main contact was ‘smoothing the
way’ for their engagement (as
they said they would);
They were asked to give a
proposal for a requirement that turned out to be undefined (or
budgeted for);
They took on face value the suggestion that a ‘freebie’ of
some sort would be a
guaranteed stepping stone to some definite work;
They overestimated the strength of their executive
contacts when ‘push came to
shove’.
Consultancy firm snakes and ladders
CHALLENGESHow to deliver maximum value and build a positive platform for future work
How to develop relationships with the ultimate decision makers and key influencers
How to differentiate their propositions and sales messages
How to qualify opportunities effectively to optimise the cost of sale
The 4 stage consultancy buying process
Selecting & EngagingSuppliers
DeliveringOutcomes
EvaluatingPerformance
DefiningNeeds
Defining Needs
• What type of problem are you trying to solve?
• How deep is the expertise you are looking for?
• What type of experience are you short of?
• How important is the ability to bring to bear a different and independent perspective?
• What level of challenge do you want to bring to the organisation?
• What level of management will consulting firms be working with and needing to influence?
• How important is thought leadership – the bringing of new insights or approaches?
• What are their core specialisms?
• Are they specialised in your particular business need?
• Are they considered to be market leading?
• On what criteria are they market leading?
• How long have they been a going concern?
• Who are their key people?
• What geography do they cover?
• How do they resource delivery/projects?
• What case studies/testimonials are they sharing?
• What might be their limitations?
Supplier Selection
Applying the right commercial model
FIXED PRICE/FEE
Know where you stand
TIME & MATERIALS
Provides flexibility
CAPPED TIME &
MATERIALS
Provides certainty
RISK & REWARD
Drive value and share risk
Why? Describe objective/reason for needing the consult ing service(s)
What? Describe the consult ing service(s) required
Who? Describe each party’s role and responsibilit ies
How? Describe the approach and expected standards of performance
When? Describe the period of performance
Where?Describe where the consult ing service(s) will be provided
Contracting effectively
Delivering outcomes
Evaluatingperformance
Have we established clear expectations for delivery of the service?
Have we incorporated a clear and flexible methodology to manage the contract and any necessary change(s)?
Do we know how we are going to track and record all benefits?
Was the work delivered to time?
Did the outcome(s) represent value for money?
Were the outcome(s) delivered to quality?
Were the anticipated benefits delivered?
Was the necessary level of knowledge transferred?
Would we use this Vendor again?
What happens when you understand the
landscape and key variables?
Consulting FirmGreat Idea
Internal ClientNeed/Budget
Consulting FirmGreat Idea
Internal ClientNeed/Budget
ProcurementFacilitate
Discussion/Deal & Contract
When procurement professionals adopt a facilitative role it’s a game changer
INCLUSION
They become an integral part of the end to end buying process
They ensure procurement are involved at the right time
They relate most positively with the supply market
APPROACH
They adequately protect corporate terms and conditions
They ensure the business achieves ‘best value for money’
They implement effective processes not unnecessary bureaucracy
CONTRIBUTION
They deliver real business
value to internal stakeholders
A short story…
$1000
Further information resources
www.cbfblueprint.co.uk
Experiential learning opportunity
The Buying Consultancy
Services Workshop
October/November 2016
Insightful content, practical exercises and group discussion, including:
– Defining Consulting Needs
– Supplier Selection & Contracting
– Delivering Outcomes
– Evaluating Performance
– Navigating Roles and Responsibilit ies
To find out more about and book your place visit http://solutions.kellyocg.com/2016Au
straliaWorkshops
QUESTIONS?
Thank you for your time!