I’ve been deluged with many private emails and comments since I posted "The low-cost outsourcing advisors are on the march". Some passionate views out there, but one thing’s for certain, there has never been as great a need for sourcing advice as there is today… and there has never been such a plethora of advisors competing to give their advice. And whether you are a highly-sophisticated enterprise with your sourcing experience, or a complete novice in this domain, you will most likely have to engage a third-party, whether it’s simply to administer and negotiate a complex contract, or to hold your hand through the entire evaluation process, contract signing and beyond. At the end of the day, it’s "horses for courses" with every firm… you should know best what help you need, so make sure you engage an advisor with experience in those areas who will give you value for money. If your enterprise has been through complex outsourcing in the recent past, the chances are you will need a lighter-touch approach, but if this is a first-time experience, my recommendation is to seek expert help throughout the whole process.
On the whole, you get what you pay for. However, I have seen situations where enterprises paid top-dollar for third-rate advice, and others which received great service from one of the smaller, cheaper firms. Buyers are also getting smarter and better educated with sourcing issues, and I am also seeing more firms (mainly FORTUNE 500) trying to do more themselves and rely less on advisors. This is a natural control mechanism when companies take themselves through such sensitive change.
I am getting questions almost daily from buyers asking who/how they should approach selecting a third-party. It’s becoming almost as important as which vendor to select. I’ll be expanding more in a forthcoming research article on sourcing advisors, which will focus on the core competencies enterprises must look for in a sourcing advisor firms.
An advisory firm’s competences, in my experience, must include the following:
1) The ability to share IP internally to leverage for its client engagements;
2) The depth of experience of its advisors within the firm. Harvard MBAs are a nice-to-have, but this is largely deep operational work conducted at a level below the ivory tower;
3) The advisory firm’s mix of experience – this should be include talent which has come from operational backgrounds who have experienced sourcing from the receiving end, not simply staff with outsourcing provider and previous sourcing advisory experience;
4) The firm’s ability to "advise" and not just "consult". I’ll expand more on this in the forthcoming article;
5) True "independence" in achiving the optimum outcome for its clients. They must be focused on YOUR best interests, and not their’s;
6) A deep focus on IP, benchmarking data and research – their own and from reputable research firms. An advisory team of 3 or 4 people will never know everything… they need additional knowledge and support;
7) The operational business focus and experience of its advisors beyond simply negotiating contracts: i.e. post-transaction support, retained org design, vendor governance support
A sensible, proven and flexible process for business case evaluation and vendor selection
9) Having the respect of vendors – vendors will work well with advisors when they know they will get a fair crack of the whip. The last thing you want is an advisor who can’t rally vendors to propose on your business;
10) Multiple client references with whom you can talk to directly and discreetly.
Let’s keep the conversation rolling