Five key best practices to leverage demand management right
Many Procurement Executives put a lot of time and effort into price negotiation and daily rates for Consulting Services. They leave the negotiation table with a 5% discount, with the feeling of having accomplished their duty. But is it so really?
Five key best practices to leverage demand management right
“Doing more with less, is a crucial principle to learn; especially if you’re going to be in business in this rapidly changing world.” – Robert Kiyosaki
Consulting Firms know the game well. They build a 5% discount on their pricing. If you ask for a more significant discount, they can simply descope or staff down their project.
Descoping will hurt the real value you are getting from the project, and staffing down will likely cause delays in execution.
Consulting is a strategic lever to accelerate the execution of your strategy. However, the pressure on operational budgets won’t go away. And Consulting, apart from restructuring projects, is still allocated to OPEX.
How best to organize your Consulting projects? If you keep asking yourself this question, we have some great tips
Demand management allows the teams to differentiate between the “must-have” and the “nice-to-have.” You can keep your money for what is really important.
But still, 47% of companies don’t use demand management or a make-or-buy strategy for Consulting Services.
And that’s a big mistake we like you to avoid.
1. You need to have a clear transformation roadmap –
If you want to spend your money on the right projects, you will need to have a clear strategy shared within your Company. To implement this strategy, you will build a Transformation Roadmap that clarifies how you will attain your goals.
Your next step is to breakdown the work to be done and identify the main workstreams and the skills and objectives associated. These workstreams can be led as stand-alone projects with or without external support.
2. Don’t forget to prioritize your projects –
When you have a list of projects to be launched to execute your strategy, you know that you cannot do them all simultaneously.
Define an analysis grid to sort your projects to determine which ones are more important. Impact vs. budget is often a good start, but nothing prevents you from being more creative in your criteria. Try to identify projects that are enablers for other projects with higher priority.
3. Take advantage of your internal resources when it is relevant –
This is where the understanding of the skills associated with each project kicks in. You may not have all the resources in-house and may not be able to mobilize all of them for your projects.
For each project, identify what can/should be done in-house and what can/should be outsourced.
Don’t forget to include a rough evaluation of the budget.
4. Keep an eye on the budget –
The reality of the situation is that you will not handle all the projects this year. To keep control of your expenses (or the tap), you have to define what you will spend on consulting for the period, based on where you stand in your transformation (usually from 0.5% to 3% of the revenues).
As a general rule, try to start with those that will generate immediate savings to fuel the additional projects. Another simple principle is to identify projects that will maximize the impact on a given time horizon and accelerate its benefits.
Besides, it would help if you defined what part of the budget will be allocated to strategic projects and what part will be left at managers’ discretion.
5. Start with the Highest Priorities –
The basic principles in Demand Management require deciding what projects will be outsourced in the next years. Start with the high-priority/high-impact projects.
Once you have reached 2/3 of your targeted budget, have a closer look at the projects still in your portfolio. Do you have projects with lesser priority or impact but an immediate return on investment? Or projects enabling other projects with higher-priority? They might be your next priority.
After you allocate your budget, you might end up with projects that are still highly-strategic.
You have several options: you can adjust your budget for this year to integrate them into your portfolio. You can reconsider other strategic projects and reassess the strategic value. You can also reduce the “Use directly” budget to include one or two strategic projects.
Just applying these five basic best practices will help you to generate significant value for your Company. And what executive would refuse to do more with less?
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Hélène Laffitte is the CEO of Consulting Quest, a Global Performance-Driven Consulting Platform and author of “Smart Consulting Sourcing”, a step by step guide to getting the best ROI from your consulting. With a blend of experience in Procurement and Consulting, Hélène is passionate about helping Companies create more value through Consulting.