17 July 2008 | Paul Snell
Buyers and management consultants met at a roundtable last month to discuss the challenges in the relationship between the two parties. Paul Snell reports
The tricky relationship between buyers and management consultants has often been characterised by mutual complaints and misunderstanding. And purchasers have historically been excluded from their appointment.
But has anything changed in the past five years in the way their services are purchased? According to Meryl Bushell, director of Meryl Bushell Ltd, buyers, particularly in large organisations, are much more stringent about these types of deal.
"Now generally there is much more rigour about how they go about it. However, I think the higher you get in an organisation the more likely it is that you can bypass the system."
But Guy Strafford, client services director at buyingTeam, argues that not much has changed, with deals still being done at a high level in the business, and then it is left to procurement to sort out the practicalities afterwards.
Both buyers and consultants argue it should be procurement's role to educate their director community on how to be more disciplined in their purchasing and, says Strafford, buyers have to earn the trust of senior leaders to act as the adviser on making these decisions.
Stephen Hayers, vice-president of services procurement at BT, says it is key to create the right environment for this to happen. This could involve creating supplier lists where due diligence on suppliers has already been completed, allowing CEOs to make quick decisions.
Another problem discussed concerned how buyers are measured on savings. Even if added value is the desired outcome for the business and the consultancy, the buyer has no incentive to address this in the contract.
"It puts them on the opposite side of the fence both to the third party supplier and the internal business department," says Hugo Were, partner at Accenture.
Participants also predicted a shift in the way consultancy firms deliver projects in the future. Large firms will begin to be challenged by the buyers' need for smaller specialist and niche players.
Fiona Czerniawska, co-founder of sourceforconsulting.com, believes buyers will become smarter at dividing the market into "big names", medium-sized companies and niche players, with preferred supplier lists reflecting a range of these firms.
The industry could potentially end up similar to the film industry, where large firms, like studios in the movie business, contract groups of specialist smaller firms to work together to provide services on a project.
Participants also believe some consulting services are becoming commoditised, and buyers should challenge the industry to be clearer about those that are not and need to be bought in a more sophisticated way.
Were also highlighted firms' desire for consultants to "stop fighting like cats in a bag" when working with each other on projects and collaborate to provide the client with the best outcome.
He added that consultants want procurement departments to help determine exactly what is wanted from the client. He says the earlier you do this, the more successful the project will be because expectations will be more realistic.
And participants believe the economic downturn will be an opportunity for procurement to demonstrate how they could add value and reduce costs.
And according to Bushell, the best way for procurement to do this is to assess whether the business needs to hire consultants in the first place.
"Some of the great savings in consulting happen because someone has a conversation of whether you need the consultants anyway," adds Czerniawska. "It is a good conversation to have for both sides because consultants shouldn't be there when they are not adding value."