Greater Value From an SP is Easy as 1, 2, 3… and Here’s Why
Let’s talk service providers (SPs), and break down why they are set to be procurement’s next best friend, with the help of VP of Services Procurement at Guidant Global, Michael Feild.
Remember when we taught you procurement speak? The differences between SOWs, VMSs, and MSPs? Don’t worry, everything you need to know is right here.
But now, onto the next lesson…
In this new commercial and economic environment, the external workforce is set to become more strategically important than ever before. Businesses across almost every sector, in every country, are adapting their operating models to meet today’s ever shifting landscape. This includes you, procurement!
As part of this search for the optimal workforce mix, services procurement looks set for a golden age. Getting maximum value from these external services providers will be key to achieving strategic goals.
The question is: how can procurement teams achieve that? This ultimate three-step guide will show you how.
Step 1: Make friends with your next SP
Not a day goes by in 2021 without some high-profile example of talent scarcity making the headlines. Did you see the one about the UK care home offering a £10k ‘golden hello’ for hard-to-find registered night nurses?
This kind of extreme tactic is clearly not a viable solution to a long-term problem. Talent shortages will persist and, while they do, external service providers will be crucial to any large organisation’s ability to scale their workforces up and down as demand dictates.
So, what’s your first step to greater value from an SP?
Articulating its importance to achieving greater ROI from services procurement spend to your wider organisation.
This is a crucial first step, because when hiring managers understand why you’re changing the way they engage with agencies, they’ll be much more likely to get on board. And when your C-suite sees how critical service providers are to optimal delivery, they’ll support your efforts to achieve greater visibility, control, and value.
Let’s take a look at what those efforts should entail.
Step 2: Target strong ROI with strict management and control
It’s time to tighten the reins. After all, we can’t let our employee visibility cloud over in these turbulent times. Service providers offer the solution to such visibility and therefore can be harnessed as a tool to mitigate the effects of future global workforce disruptions.
Let’s not forget, procurement and supply chain’s reliance on service providers is not a post-pandemic trend. Rapid digitalisation coupled with chronic talent scarcity has been forcing organisations to lean on external providers for years prior to 2020. And cracks in their approach were starting to show, even back then.
A 2019 SAP Fieldglass survey of over 1,000 senior execs revealed some worrying trends:
● 25% of projects by service providers ran over on time or budget
● Only 36% of service providers met their stated goals and objectives
● 41% reported experiencing maverick service provider spend
● 43% admitted to not managing the compliance of their service providers.
The Covid-19 pandemic has almost certainly made these problems more severe. With the sudden shift to remote working, many organisations realised they had a poor level of visibility over exactly who was working for them – and what the status of key projects was.
To wrestle back control and visibility, procurement teams must centralise and standardise. ROI can be improved by establishing clear and consistent processes for supplier selection, rates of pay, terms of engagement, project scopes, milestone setting, payment approvals – and by managing all of this within one central online system.
But, as we’ll see, tech-based centralisation is only part of the solution.
Step 3: Balance performance monitoring by blending tech and market insight
One obvious symptom of the global scarcity of talent is that teams everywhere are being pushed to their limits. With reduced capacity but rising demand, burnout is on the increase – and procurement teams are by no means immune to this threat.
So, when it comes to optimising services procurement, a centralised approach with a vendor management system (VMS) at its heart can significantly reduce the administrative burden on already overstretched teams. Today’s sophisticated vendor management systems automate the sourcing and management the entire contingent workforce, leading to:
● more tightly controlled costs
● mitigated security and compliance risks
● increased operational efficiency
● improved vendor and worker performance quality, and
● complete visibility of all non-employee labour.
But technology alone can only achieve so much. It can improve your visibility and understanding of the external workforce and their performance, but it can’t tell you what to do with that information. For tech investments to generate greater services procurement ROI, organisations must complement them with investments in human specialists.
When people and tech work effectively together, the results are superior! Here’s why:
People, not tech, will always drive services procurement
Remember, it’s important not to be totally blinded by shiny new tech! Services procurement is almost entirely dependent on people, something that’s often overlooked in the rush for advanced technology and automated processes. Technology is an increasingly important enabler in the procurement of services, but cooperation between people will always be paramount.
So when different business units sing their own tune, it’s the lack of communication and alignment that leads to poor visibility and control. Success for HR is often different to success for IT or marketing. No amount of technology can fix a lack of cohesion.
Take data, for example. Sure, it’s one of the most valuable assets for any business, but it’s practically worthless without the people who can analyse it and suggest the right direction of travel as a result. Businesses must invest in these specialist people, many of whom can be outsourced via an experienced managed service provider – an external partner with the right combination of expertise, innovative technology, and data intelligence to deliver game-changing ROI.
There’s no doubt that throughout the services procurement process, human collaboration is the crucial factor in success or failure. To ensure service providers deliver on time, at acceptable rates and to a high degree of quality, people inside and outside your organisation must work together.
Michael Feild is VP Services Procurement at Guidant Global. Want to know more about optimising your services procurement and statement of work activity? Have a read of this!
