A guide to indirect spend #4: Professional services

2 April 2012
We’re now half way through my blog series on the six ‘top trades’, or indirect spend categories, that are focal points for sourcing in most organisations. This week we’re turning a corner from the sourcing of products such as office and IT supplies and hardware and looking at the somewhat different challenge of professional services – a major spend category for many organisations that demands dynamic thinking and planning. The breadth of professional services required by many organisations can be a real sourcing challenge unless a carefully considered approach is adopted. Sourcing people and services has some rather less tangible aspects compared to products so a lot of thought must go into what you actually want, as well as what you want to pay. Start with clear definition of the services that are required and then map these against market defined categories and sub-categories as a starting point. But your skills gap analysis must then go further than this. Clarifying precisely the types of people required to deliver the services, in terms of qualifications and experience, ensures tender responses remain focused on your needs be it strategic consultancy or practical project management. Selecting the right type of contract - from frameworks with no rates to full à la carte choice, clearly defined service level requirements and service commissioning processes are all essential to properly evaluating and comparing each potential supplier. Even once you have defined these core sourcing criteria and have a watertight brief you should be prepared to actively embrace variance in suppliers’ approaches to tender responses. No two service organisations are the same and the fact people are the core asset here means they will seek to differentiate themselves as unique in both approach and skill. Innovative pricing and service delivery will be on offer as the basis of good value, so it is critical to have a clear understanding of the core cost drivers and associated overheads as your benchmarks. It’s also important when insourcing or outsourcing to be able to measure value against realistic internal delivery costs. Before you start this process have you evaluated how much it costs your organisation to do the same job in-house? Sourcing professional services is a whole different ball game to products, so be prepared for a greater variety of options and making choices based not only on best value but best fit for your organisation too. ☛ Temeena Hussain is a sourcing consultant at Wax Digital. Next week: Waste management
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