Procurement

Procurement is traditionally seen as a pain in the posterior by many consultants, and there is good reason for this: procurers not only drive down consultancy rates and add a layer of administration to consultancies but consultants frequently complain that they do not understand consulting projects and damage the quality of delivery.

Procurement from Joe O'Mahoney on Vimeo.

Procurers have always been around, negotiating discounts and bulk buying office material for the client. Increasingly, as consultancy expenditure has grown, procurement has been used to recruit consultants. For the Client CFO, this offers a number of advantages:

- lower costs can be achieved through economies of scale (ie. centralising purchasing to achieve bulk discounts)
- lower costs can be achieve through the use of expert negotiators rather than whoever happens to be the client manager with a consultancy need
- there is less scope for corruption: kick-backs only work if managers and consultants collude
- greater control and traceability of spend can be achieved by centralising purchasing.

However, for the both the consultant AND the client manager a number of disadvantages can occur:

- procurement can destroy the important trust relationship between managers and consultants
- procurement do not always understand the project as well as the consultant or the manager
- consultancy services are not like paper clips: the cheaper is not always the better.

Still, procurement control of consultancy continues to grow every year. In the public sector it is now illegal NOT to go through procurement for large consultancy spends. As time has passed and technology improved, the shape of procurement has shift. It is increasingly common to see consultancy jobs advertised on e-procurement sites, though one should only do this if it is a simply, commodified project where references are available!

It is also more commonplace now to see clients outsource their purchasing of consultancy services to external procurement companies that specialise in this type of work. I have even recently seen two consultancies who specialise in selling advice to clients on how to better recruit consultants!