Rant on blogger, rant on along
Rant on buddy till the day is through
Rant on brother, sister too
Rant on momma like I asked you to do
And rant on fellow blogger, rant on (Rant On!)

Today’s guest post is from Joe Payne, Vice President of Professional Services at Source One Management Services, LLC.

A few weeks ago I was giving a debrief to the Manager of Indirect Spend for one of our customers. The engagement was winding down, and I asked the manager if there were any other categories they needed help with that we hadn’t already looked at. “No” he said, “I think we’ve covered everything.”

Up to that point, I knew we hadn’t worked with their IT department at all, so I asked about potentially discussing telecom or managed services. “Oh, I stay away from that side of the building”, he exclaimed. “Those guys don’t even speak the same language.”

As more and more CFO’s and CEO’s realize the value in creating sourcing departments to control indirect spend, sourcing teams are finding more and more end user resistance to their involvement in the supplier selection and supplier relationship management process. In nearly every organization I’ve worked with, there are groups or divisions that don’t want help from sourcing and prefer to manage supplier relationships on their own. Getting stakeholders to engage can be difficult, but is it really as hard as corralling a cat? Well, let’s look at the similarities:

Cats don’t want to be corralled. Stakeholders do not want to be engaged.

“Sorry I missed your call, please leave a message…”

When you begin to corral a cat, their first instinct will be to cautiously avoid you – but they probably won’t run away. When you first attempt to engage a stakeholder, they will do the same.

“I’d love to meet to discuss my requirements; unfortunately I have a full plate this summer. How does next year look for you?”

When you show a cat you are not going to give up until they get corralled, they will become finicky and potentially aggressive. When you continue to pursue an end user, they will attack.

“What makes you think you can do a better job than I did? What do you even know about this subject matter?”

Lastly, just because you are successful in corralling the cat does not mean they are going to cooperate. Give them any opportunity, and they will escape. Once a stakeholder agrees to proceed (usually after being told to by their boss), you can expect:

“Sorry I missed your call, please leave a message…”

Which takes us full circle.

So, what is the value that sourcing can bring to stakeholders and end users, and why is it so difficult for them to recognize that value?

First you have to remember that practically no one in IT, Marketing, or HR was hired based on their ability to run an RFP, write a contract, or perform a negotiation. They were hired to ensure infrastructure uptime, get the company’s message out, or keep employees happy, respectively. They aren’t focused on cost and most of the time they don’t care about cost. There is no question that lack of training, lack of time, lack of market intelligence and lack of focus will lead to higher price – sourcing brings these tools to the table.

Second, stakeholders typically don’t properly manage vendors, track spend or validate compliance. Without a watchful eye, suppliers either get demotivated or greedy. This leads to either very upset or very rich suppliers. Sourcing offers a clear process and communication hierarchy, the ability for incumbent suppliers to expand services or solicit feedback, and spend consolidation and rationalization opportunities – it improves supplier relationships while keeping costs in check.

Third, even when a stakeholder is upset with a supplier, they will continue to use them. When speaking to end users, I am often surprised by how much they dislike an incumbent, but still continue to work with them. Sourcing brings an independent (and objective) third party to the table that can act as the “bad cop”, pushing a supplier to improve or else replacing them with someone better suited for the requirement.

So if sourcing can bring all this value to the table, why do stakeholders often fail to recognize it?

The answer to that question can be a little more complex, but for the most part it boils down to one thing – purchasing is a personal subject! Think about it – whether you are at home or at work, you want to get a good deal. When you buy a new car, you aren’t going to tell your friends and family how you got ripped off – you are going to tell them you got a great price, and you are going to hope that is true! The same can be said, and normally is exacerbated, in business. If you are responsible for managing a million dollar plus budget, the last thing you want is for people in the company to think you are paying more for goods and services than you should. Having a sourcing group come in and save 30% is the same as having your brother-in-law swing by the car dealer and get the same car for $5K less – it hurts.

Sourcing organizations now have a unique challenge. The thing they were hired to do – get savings – tends to be the easy part of their job. Competition always exists and technologies are always improving – finding a lower price is not difficult. The hard part is finding a stakeholder in the organization that recognizes sourcing is just as valid to them as any other support service, and has the wherewithal to use your group effectively.

To date, I’ve never seen it happen without a strong top down mandate, and it is costing companies millions every day.

Thanks, Joe!