Taking Back Control of Professional Services and IT Spend

Over the weekend, my wife shared with me that one of her high-school friends was interviewing for a category/vendor-management position focused on professional services and IT spend. The job would report up to the CPO of the organization (rather than to IT, as such roles often have in the past, at least indirectly). I did a quick check of our market-segmentation database. It turns out that the company, a supplier in the automobile and truck manufacturing industry, is in the top 10% of organizations we track in this market from a procurement, supply chain, and IT-sophistication standpoint (in Geoffrey Moore terms, they're a classic "early adopter"). The fact that such an organization plans to invest in a senior category manager in this area should not be surprising, but far too few organizations assign senior supplier/vendor-management resources to these categories today.

I'd argue that there are a few tips that procurement organizations less sophisticated than this one can take with regard to this area. In addition to hiring the right type of folks to manage these efforts, creating a reporting structure that puts procurement at the top and treats the business as a customer or consumer of a procurement service, there are two that I'll share in this post. One, if you've not licensed -- or rented via a SaaS model -- a services procurement tool that addresses professional services (e.g., management consulting, legal, accounting, etc.) and IT services/outsourcing spending, you should. And don't assume that either your eProcurement or VMS platform can handle these categories; they won't always be up to the challenge.

Second, build greater transparency into not only the lifecycle management of vendors in this area, but also the sourcing process itself. Just because a company has always sourced from a well-known, global, first-tier provider does not mean that others, perhaps smaller or regional players, should not be added to the supplier-evaluation equation. In professional services such as systems implementation, for example, a smaller integrator may in fact be as much as 20-40% less on a day-rate basis than a national one, and you may in fact be getting the same resources in situations where it is not uncommon for larger SIs to sub SOW work -- or provide contingent expert contractors -- in the end anyway.

- Jason Busch