Optimize the Ups and Minimize the Downs of Your Procurement Capability Journey
The journey toward maturity of Consulting Procurement Capability is infused with challenges. It’s all part of the process. However, there is always a better way to face the challenges ahead.
“Strategy without process is little more than a wish list.” – Robert Filek
In this post, we will focus on helping you get a clear perspective on the stages of maturity of your Consulting Procurement Capability – from the starting point to the best-in-class maturity level.
Defining where you want to go next –
- For Large companies – the best-in-class maturity level should be the end-game in the transformation journey. They are already familiar with Strategic Sourcing, Demand Management, and Category Management. They spend hundreds of millions of dollars every year on Consulting Projects and can get significant savings and quality improvement by implementing best-in-class Consulting Procurement practices.
- For Mid-Market Companies, spending roughly $5M to $30M in Consulting every year, the aim should be somewhere between the Best-in-Class and the Leading Maturity Level or rely on third-party services to go the extra mile.
- For Smaller Companies, spending less than $5M a year, the Leading Maturity level is a good start. If the company has not implemented Category Management yet, the Consulting Category can be integrated as part of a more ambitious project on the full Procurement Scope.
Consulting Procurement Organizations should aim to reach a high level of maturity.
The benefits that come with it are:
- Use of best-in-class practices
- Utilize significant efficiency gains for the Procurement group and company
Now, let’s take a look at the Maturity Grid, which is a great way to measure your current Procurement Capability –
Your starting point –
The Consulting Procurement Maturity grid aims to help organizations understand where they are today, where they should go in the future, the value of doing so, and how to get there.
The Maturity Grid – 4 Levels of Consulting Procurement Capability –
Each level has its strengths and weaknesses that need to be understood.
- Basic or Operational Level –
At that level, the Consulting Category is not managed. The organization is leaving value on the table.
The organization has not implemented specific processes for Consulting Services and the decision-making for Consulting is often decentralized. The Procurement Group is involved at the last stage of the process if at all. The Supplier selection is based on interpersonal connections.
The potential for savings and improvement are significant, but not utilized.
- Standard Level –
The Organization is starting to manage the category. They have developed specific processes to manage the Consulting Category and implemented Demand management for projects over a certain threshold. Suppliers are chosen through competitive bidding 50% of the time.
The consulting Spend is under control. The organization sees the value of managing the Consulting Category. The strategic value gap begins closing as the capabilities for Consulting Procurement start to increase. Teams have developed a basic understanding of the specificity of the Consulting Market – with critical value utilized by knowing things can be improved.
- Leading Level –
The Leading Organization has put in place a solid Category Management for Consulting Services. The teams have developed a good market knowledge supporting sourcing and negotiations. Procurement is involved in most purchases and most suppliers are chosen through a competition.
The organization is one step shy of having a fully mature Consulting Procurement Capability. The strategic framework to make this happen is complete, and the organization is ready to begin implementing the next level.
- Best-in-Class –
The Best-in-Class Organization has developed a fully mature Consulting Procurement Capability. This is truly evolved and highly efficient organization in its Procurement Capability maturity.
The Consulting Spend and the Consulting Sourcing Strategy are aligned with the strategic priorities of the organization. Procurement is recognized as a full business partner for the Consulting Category and leads a collaborative approach to Consulting Sourcing.
The teams have now an advanced understanding of the market including alternatives, fees benchmark and new entrants. They manage the Performance of their suppliers through systematic performance reviews and continuous improvement plans with long-term partners.
The ROI of projects and the internal team satisfaction have greatly increased.
Key Areas in Your Consulting Procurement to pay attention to, as per the Maturity Grid:
Strategy, Governance & Organization
- Sourcing Process
- Enablers (Manuals, Guidelines, and Systems)
- Category Management
The following questions can get you started:
- Is your Consulting Spend aligned with your strategy?
- Do you have a procurement team or person focusing on Consulting?
- Do you have a collaborative approach to Consulting sourcing led by your procurement teams?
- To what extent do you organize competitions between providers for your projects?
- Do you implement differentiated sourcing processes by nature of the project for the consulting category?
- Do you track the performance of your Consulting Providers?
- Do you leverage category-specific digital solutions for the Consulting category?
- How knowledgeable are your Procurement teams in the Consulting market?
- Do you consider creative fee structures for your projects?
- Do you have a make-or-buy strategy for the Consulting Category?
We hope being equipped with these tools will allow you to easily understand the Procurement Capability level of your organization and set your strategic goals accordingly.
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.