On Thursday last week, I spent the afternoon with the Consultancy Procurement Council. The what? Yes, that’s right, the Consultancy Procurement Council. What a great idea!
Formed of Heads of Procurement for Consultancy and Professional Services Categories, the Consultancy Procurement Council is an exclusive peer learning group for expert procurement professionals to meet and share best practices regarding how to buy consultancy services better.
Representatives from a number of major corporates across the private sector were in attendance on Thursday at the meeting hosted by Bank of America Merrill Lynch in London (Note: I understand that they pass the baton round for the honour of hosting the quarterly sessions).
I was invited to be this meeting’s guest speaker on the topic of “How Consulting Firms Price Projects”, not to give away the family silver but, rather, to explain the key levers that consulting firms need to pull in order to achieve their financial objectives and then move into open discussion about how Procurement:Consultancy discussions can achieve both demonstrable value for the client organisation and a good financial outcome for the consultancy.
We looked at different pricing models (T&M, Fixed Price, Risk & Reward, Consultancy as a Service, Retainer etc) from the standpoints of both the client organisation and the consultancy and established different scenarios where the various models fit best for both sides.
The role of Procurement in educating client business/IT sponsors about the adverse impact on consultancies of starting projects later than advertised, having gaps between phases of work, setting tight deadlines etc. was discussed and the assembled gathering picked up good tips to help them partner internally within their corporations.
There are lessons too for the wider Professional Services and IT Services industry and I was saddened to hear stories about poor practice that I thought had been largely left behind some years back. Examples include jacking up expense claims to increase revenue (Note: lots of varied and recent examples provided here), Partners charging the client for “Partnering” without providing any actual input to assignments, and pulling critical resources from live assignments to put them on more lucrative projects elsewhere. There’s probably a mixture of both truth and a need for better understanding here but the grains of truth serve to give our industry a bad name. Isn’t a high ethical standpoint part of being a “trusted advisor”?
Building a positive working relationship with Procurement can reap rewards for both client and consultancy and I urge leaders of consulting firms to prioritise this higher in their account planning. Procurement isn’t “the enemy” but a function with a purpose – part of that purpose is to promote better value solutions to the business so Procurement can even help sell you in if you spend the time explaining your USPs and providing Procurement with appropriate materials that they can use in internal discussions.
As a closing thought, ask each of the Procurement Professional Services Category leaders that you know if they’re a member of the Consultancy Procurement Council. If not, I’d be happy to create the link – all part of the “added value” service that you can provide to your clients!
Would have liked to have been a fly on the wall at that one. It’s interesting how often there is a focus on day rate rather than outcome. But then it’s also up to the ‘business’ to articulate that.
Thanks Mark. Agreed – the apparent day rate obsession can take the focus away from getting good business and financial outcomes for both client and consultancy. Hopefully my session has helped in some way to widen discussion and deepen relationships.