Capacity and Capability: Comparing buying behaviour in Procurement and HR

Buying and contracting services is messy – why and what behaviours are at play?

Episode highlights

Buying services with outcome-based thinking
Flow down and connecting contracts with strategy
Procurement's identity crisis
Applying capability and capacity to category strategy
Is the buying and contracting of services messy?

Posted by: ZivioReading time: 97 minutes

With Paras Sood, Partner, FP Consulting

00:00:00 - From procurement to procurement consultancy
00:11:45 - The evolution and maturity of procurement
00:21:50 - Is the buying and contracting of services messy?
00:28:30 - Buying services with outcome-based thinking
00:37:55 - Flow down and connecting contracts with strategy
00:44:00 - Buying behaviours
00:51:30 - Procurement's identity crisis
00:59:45 - Applying capability and capacity to category strategy
01:06:15 - Shaping operating models for strategic objectives


Jonny Dunning:   0:00       So anyway, Paras Sood, thank you very much for joining me. Just to get into kind of quick, formal introductions, so you, in fact, I will let you introduce what you are doing now. And also, could you just give a quick background because you have got some quite interesting changes that have happened recently.

Paras Sood:          0:17       Yeah. So I am now with Future Purchasing Consulting, FP Consulting. We are procurement consultancy, specializing in strategic acumen office to strategic acumen. But I have been in and around kind of industry and consulting most of my life. I am similar to a lot of people in procurement kind of stumbled into it through various means. But I have had a really kind of diverse sort of trajectory to where I have got to now which is given me some real reflective ability around the whole space of procurement supply chain, but at the same time, I have learned loads through just being on different sides of the fence, and also working in different industries as well, so really excited to be with FP right now. And I kind of mission is to try and create the best procurement teams that we can possibly create, full stop. And, whatever that means, whether it’s kind of capability, transformation, whatever that might mean, hopefully plays to our experiences as well.

Jonny Dunning:   1:23       And so firstly, I think that’s really exciting. And, it’s obviously a big change from or... It’s a real, kind of, you are making a real play on something here, because you have got something you want to take to the market. But do you look back at any of the teams that you have worked in? Do you take much from that in terms of looking at previous teams and going, “Wow, that was fantastic! Within that team, we had a great capability, or we had really good leadership, or we had a beautiful process in place,” is that something you can kind of take from some of the previous teams that you have worked in?

Paras Sood:          1:55       Yeah, 100%. And it’s the reason that I have kind of decided to take this step for myself as well. I have learned from so many different experiences, sometimes where companies are doing things pretty well. And then you are just trying to enhance what they are doing, could be a public sector or private sector organization. But other times where this is the more common side where companies are really struggling with trying to get everything in order for them to transform or grow or develop or push the business in a procurement fashion, I find that space, relatively exciting, working collaboratively with people in that space. And I don’t think that I have ever seen a company or an organization with utopia when it comes to procurement. I would love for somebody to tell me what that company is. But I have never seen that. So I think there’s always something to do in the space. And it’s more a case of what’s the right levers to be using on that sort of either transformation journey or capability building journey itself. 

Jonny Dunning:   2:57       Yeah, so obviously, DB last roll must have been a fairly large team globally, within the function. That’s, from in terms of the change for your approach to the market, what you are doing on a day to day basis. That’s quite a big change, really, isn’t it? 

Paras Sood:          3:15       Yeah, I mean, I am doing something very different to some degree with one half of my brain, which is, where we are growing a consulting business, and we are working with clients of any type, it could be private sector, banking, FMCG, whatever it might be. So having that diversity of kind of working with different industries is now the new fold that I am in, but absolutely DB, complex organization, an age old institution that people know, and having to try and navigate what the complexities were of DB’s needs, from a supply chain perspective, but just kind of from an organizational behavior perspective, as well. It is put in the hard yards, and you really need to get sort of under the hood, to understand how you are going to potentially drive change in a place like DB. But it was massively rewarding for me professionally, I felt like there was a lot of impacts that you could generate. And there’s a great team that still kind of knocking about. So for us, and even when you fold empowerment is our kind of way of thinking and ultimately we are not trying to take over what procurement teams are doing. But DB have got an established, competent, capable Chem team that can take things into the future. And that’s a really satisfying experience for me to have gone through. And to enable that to some degree.

Jonny Dunning:   4:43       Absolutely! And so from a consulting perspective, what’s been your experience of that in the past on kind of both sides of the fence in terms of that consulting attitude and that experience?

Paras Sood:          4:56       Yeah, I think it can consultant, on the consulting side of the fence and you can be a consultant on the industry side. My take on things really, the model I would consider is, do you have the ability to bring in the best way of thinking into your organization to take them forward. And if you are in the organization, you are going to have to work with probably consultants or partners, or open your mind up to thinking of the latest thinking or the most challenging thinking for you to move forward. But if you are on the consulting side of the fence, you are ultimately shaping that. And you are determining what new looks like for companies and for industries and for thought leadership in the market. So I think you can do on both sides of the fence. But your change management challenge seems to be more important internally. Whereas on the consulting side of the fence, it’s more about challenging the thinking from an outside perspective, and helping, be that kind of independent voice to what the internal needs might be of a DB or anywhere else.

Jonny Dunning:   6:03       And when you look at kind of like the most well-known big kind of general consulting firms, how much do you feel that the people that are working within those organizations have got the industry experience as well, kind of in house experience? So, obviously, you have got great in house experience, is that something that you feel, is sometimes lacking in the larger consulting firms or were there just maybe pure consulting through and through?

Paras Sood:          6:28       I have worked with those big consulting firms, again, as an internal stakeholder to them, or in partnership on the consulting side as well, I was with Jim Pat. So that was, large kind of outsourcing consulting firm as well. And I think there’s some really good people! Really good people in all of these consulting businesses, and they always bring a different perspective to how you might need to move things forward. But I do take your point that if you lack a level of industry insights or industry know how about how you need to move things forward internally. And really understanding the deeper culture that might exist internally, if you haven’t been inside a company, I think it’s very difficult for you to experience that. Of course, that doesn’t mean that you cannot be successful. It doesn’t mean you have to go into industry to be successful in a consulting environment, I do think it gives you that edge of being able to have a far more realistic conversation about what people are going through. And also, you learn a lot from industry. And I think sometimes the consulting world might always think that it’s got the answers what a company or an organization is going through, but actually the people inside some of these companies have great attitudes and beliefs and leadership qualities that kind of really push through that change. And I think the consulting world can learn from industry as much as industry can learn from the consulting world as well.

Jonny Dunning:   8:06       Yeah, particularly, when you consider the last few years. So in terms of within industry, being inside a large organization having to cope with the chaos and change that happened over the last two, three years. That’s been a massive period of growth, change, opportunity, risks, all sorts of things to deal within procurement. So I think it’s a really exciting time for you to be doing this, taking all of that experience forward into onto the consulting side of it to then benefit other companies from that. But there’s a lot to think about. It feels like procurement has kind of leapt forward in a lot of ways, like you were saying earlier, but is it the Sunday Times supplement you mentioned?

Paras Sood:          8:49       Yeah. I mean, God, you must know this as well from being on the kind of entrepreneurial side of the fence as well. Absolutely. I think there’s the volatility of procurement, I think that has to respond to changing supply chain needs or changing market needs. And then there’s the volatility of entrepreneurship and kind of shaping stuff. So yeah, absolutely. Double whammy. And, I am really encouraged by publications, like the Sunday Times that have tried to bring the relevance and the impact of procurement supply chain on the business world, to the forefront of maybe the public. And that’s only a positive thing for us in this space. But, in particular, your point on volatility is crucial there’s this term VUCA that’s been bandied around at the moment, I think, procurement supply chain, right in the crux of how to help manage volatile, ambiguous environments, in that VUCA space.

Jonny Dunning:   9:50       The VUCA era!

Paras Sood:          9:51       The VUCA era, but I am really encouraged. I think if you have got an entrepreneurial mindset, jump III think pregame is actually a good place to be.

Jonny Dunning:   10:02     I am just about to say that! I think, I tend to see that quite a lot, the change makers, the people that are a bit more rebellious that people want to get things done and when quite often the conversations I have are based around things like transformation. You have got to have a bit of an entrepreneurial mindset to actually get anywhere with that sort of thing, haven’t you?

Paras Sood:          10:04     Yeah, definitely. Back to maybe my early stages of my career, I probably didn’t come through the realm of people who study procurement, and learn procurement and learn their sourcing processes and all that kind of stuff. I came through learning things on the job and trying and testing loads of different things, either in procurement or outside of procurement. And, it just happened to be that my kind of creative set of genes that were there were the things that really gave me the biggest kick out of working with procurement, because there’s so much diversity in who you are dealing with and who you are working with. But I think so people who are probably uncomfortable with that entrepreneurship journey, sometimes struggle in the procurement fashion for why it is now because there is so much movement and so many ups and downs of how people need to operate. So, if you are more process driven, or if you are more kind of, you are following a methodology, and you are more execution focused, I think that kind of procurement professionals is struggling to kind of keep up with today’s demands compared to somebody who’s coming in with a level of entrepreneurial sort of mindset shaping, influencing highly emotionally, kind of conscious of who they are working with, that they are the kind of new traits for me, that procurement is moving towards so

Jonny Dunning:   11:46     Because I was just gonna ask your question, actually, so when you are saying that there’s almost like more opportunity, within procurement? Do you think, to kind of expand that reach and build that up and influence the organization in different ways? Do you think... Because I think almost partly, is that due to the fact that compared to some functions, procurement is actually a bit newer? And maybe it’s a little bit earlier on the maturity curve? So in terms of what procurement is, there’s almost like a redefinition of what procurement can be because of all these changes and all these opportunities. But also, I feel like it’s a maturity kind of evolution thing to a certain extent. Would you agree with that?

Paras Sood:          12:28     Yes, I would, I think it’s true, procurement is a newer function compared to other areas. And if it’s come from an older purchasing kind of function or stock keeping kind of way of thinking to the more advanced elements of procurement that we are all now exposed to, absolutely, it’s lower on the maturity curve, lower on the history of what it’s done in terms of moving businesses forward or organizations forward. But I do think it sits on this kind of goldmine of opportunity. And I don’t mean to say that in a financial sense, but the opportunities are so vast in the procurement space, if you look at the ability to shape, the revenue, or the innovation side of the business, obviously take cost out the sustainability agenda, which is growing further and further. There’s not many other functions that have that ability to kind of influence different parts of the company’s strategic objectives, really, but you made a really good point about, it’s not going to come to procurement on its lap to help bring businesses and organizations forward. It’s up to procurement to demonstrate where that opportunity is really sitting and have relevant conversations around what opportunity means, as a result, rather than thinking so reactively in a demand fashion.

Jonny Dunning:   13:51     Yeah, because essentially, when you were saying about there’s this kind of opportunity for people to be more entrepreneurial within procurement and for a more entrepreneurial mindset type of people to come into procurement. When you look at the kind of future talent roadmap for procurement, something that a lot of people talk about is the need for people with greater data analytic skills. And that kind of side of it, where through digital transformation, organizations are getting access to much, much more data. And obviously, no point just having all the data, you have got to be able to use it and gain the insights from it. So it feels like, there’s always going to be the core procurement requirements of being excellent at managing multiple relationships, communicating with different stakeholders, and negotiation, all those kinds of people skills that procurement need. Then you have got the entrepreneurial side of it, and the strategic side of it. And then you have also got this analytical side of it. It feels like it’s an interesting opportunity for the type of people that come into procurement to kind of evolve as well.

Paras Sood:          14:54     Yeah. analytical mindset is probably also an important part of the skills portfolio that a procurement person will need and does need. And actually, I think a lot of professionals have been analytical in their past. But the multiple uses of datasets to drive insight or to help with decision making. That’s increased a lot more from just looking at spending analytics, for example, in the past, or maybe looking at the Market Report. I think stakeholders tend to demand more intelligence nowadays to say, “How are you helping me on my journey?” So back to whether it’s demand based, “This is what we spend, this what we spent last year, and this what we think we are going to spend next year,” I think, if there’s ways to shape data around opportunity, and say, “This is where we could be going from a growth perspective, because these companies are doing something else.” And I think that’s quite an exciting space. But I would also say, the old adage of kind of not getting into data analysis, paralysis with data and not trying to make it, become the be all and end all of where you are trying to get to just using it iteratively to help with decision making is important, I would say.

Jonny Dunning:   16:12     Yeah, and I think, you mentioned the kind of diversity of opportunity within the procurement function. I think there’s also a real diversity of kind of mindsets and skills that are required and combined within what broader function offers. I have an interesting conversation with Ronnie Mora from BAT recently, and he’s previously an engineer. So he’s coming into it with a very structured, very analytical point of view. And that’s where this whole thing of how people come into procurement, there are a real diverse range of opportunities for people with different skills, that will suit different categories, and will also suit different areas within that role. But it all kind of comes together, because it is quite a broad function, you are not necessarily going to have just one type of person that can come in and do it all. Because it’s quite broad.

Paras Sood:          17:07     Yeah, that’s a really good point. I think that’s one of the things that excited me personally about staying in the space. I was from the heavy mining kind of manufacturing environment in my early stages of my career. And I was surrounded by engineers, quantity surveyors, financial people, sales people who had all migrated somehow into the procurement, [Unclear] missed by just because they have been exposed to it, or they enjoy things like negotiation, whatever. And, I am a social scientist by background. So, just looking at the spread of the kinds of individuals, like you say is, it’s quite exciting to be around different people, and you learn from different people and their approaches to how they look at procurement. And, I think that is the beauty of, of this space is that maybe other areas of business, there’s a more traditional path to, if you want to be an accountant, you have got to go through your accounting qualification. So if you want to be a lawyer, I don’t know. I was in the banking world, we had lots of lawyers in the banking world, you had to have your vocational kind of badges to get there. Whereas I think, because of that almost multi-ways of getting into the procurement profession, it’s actually created more of that entrepreneurial spirit amongst people, because there’s lots of different things you can learn from.

Jonny Dunning:   18:36     Yeah. And that must be quite exciting for you going in from a consulting perspective, in the sense of going in understanding how teams are currently functioning, what are the spread of skills and experience within that team, you are going to have, hopefully in team conversations, different viewpoints, which I think is a really important thing.

Paras Sood:          18:52     Yeah. You said diversity of mindsets and diversity of thinking. I think some of that comes from education, and just the way that you have kind of dealt with education yourself, early doors and have then you apply that to the business world. But it is also personality differences as well. You know, if you have got people who are more analytical in nature, or process driven in nature, they can help with the discipline of procurement, and really kind of keep the rigor of procurement be the engine behind, let’s say cost just for now. And that cost discipline that might come through. And then you have got other people who might have been in more shaping capacities, who were then helping with more strategic thinking and maybe the partnering of the business or the ability to look at a supplier differently and say, “Actually, this supplier is giving us far more than we can do ourselves,” all of those things, I think, contribute to that. It’s kind of skills, diversity, and it’s only a positive thing back to opportunity. It’s only a positive thing for procurement people to be a part of. 

Jonny Dunning:   19:56     Yeah, and I think it lends itself to the potential for that kind of cross fertilize causation of ideas as well. And from a consulting perspective I guess, if you have the opportunity to bring teams together and encourage that, then that will probably be quite a rewarding part of it, I would imagine.

Paras Sood:          20:10     Yeah. I think, again, traditional consulting has normally been come in prescriptive, is a bit of a diagnostic, “Here’s a recommendation. And we will do something for you.” I think the consulting world’s changed a lot. If you want to be in a consulting environment, you genuinely need to be far more outside in thinking about your own consulting process. So rather than you rocking up and being, Mr. Smart Consultant, or Mrs. Smart Consultant, you really have to start thinking, “Well, look, there’s a number of consulting companies out there, or there’s a number of providers out there, that helped generate the best of breed thinking or the best way of way of operating.” And ultimately, as a consultant, your purpose is to deliver client impact. It’s for making sure your clients are going through whatever journey they are going through to get to where they would like to get to. And if that is utilizing a multitude of companies or partnerships in a way of trying to bring that answer to the forefront, that’s the how. That’s the how that we have got to solve. Rather than feeling like we have got some kind of established way of thinking just from ourselves as a consultant, based on anything that we have done in the past, it’s got to be more innovative in terms of how we bring solutions to the market as well.

Jonny Dunning:   21:30     I like it. It’s the type of area that really gets me thinking, I find it quite inspirational when you are looking at these challenges. Partly because I am from a kind of, I have got an entrepreneurial type mindset. So I look at that, “Ah, I like that.” Really get your teeth into that. So another thing I am keen for us to get our teeth into a little bit is kind of following on from a conversation that we had at the E-world Conference recently, where I was talking about the kind of data gap in services procurement, and where it is possibly left behind in some ways compared to other areas when it comes to digital transformation. And we were just talking about whether or not the buying and contracting of services is a messy thing with our kind of, from the brief conversation we had at the time, it being kind of like, “Well, you know what, it is pretty messy.” And that was something that I thought it would really be interesting to just to discuss in a little bit more detail. So obviously, you have worked in kind of like heavy manufacturing industries. But you also worked in extremely services led industries, like banking. And what’s your opinion on that in terms of whether it is a messy thing? And if so, what that looks like?

Paras Sood:          22:45     It is a blanket statement, I will generally say, yes, so services can be messy, I think as a starting point. And, of course, there are better practices and worst practices, but generally, it’s a messy space. But I will also say that spend is generally messy, in big organizations, so if you are looking at goods and services, you normally if you are in a complex business, or complex organization, you are dealing with multiple business units, multiple jurisdictions, or buying in different ways. And So therein lies the challenge in its own right, that you are trying to aggregate and centralize a lot of that way of thinking in many cases. So therefore, starting point is, it’s pretty messy. It’s complicated, isn’t it? And then if you kind of drill down into that more, I think, what does services really mean for a business? So you mentioned the manufacturing side of things. In reality, services, we probably looked at it at the time, very much through the direct and indirect lens. And direct was, this was back in my day at Tarmac, which was part of the Anglo American group at the time. And direct materials were typically bitumen and trying to get raw materials into the supply chain, and the indirect side of things. We are pushing everything else up to that direct space, which could have been maintenance services, it could be anything to do with kind of construction and manufacturing, where you are using labor of sorts in that supply chain. So depending on what your definition of services is for your business, that’s also going to determine how complex and how messy things are. And, you talked about on the bank default, look at the other extreme in the banking side of things. Most of the business model of banking is services driven, if you think about that, and therefore services can sometimes traverse into the direct side of things.

Jonny Dunning:   24:43     That’s what I was gonna say. Naveen Amin was talking about this with regards to like, engineering consultancy. So basically, they are providing services to their own customer, if they are in customers, HS two, for example, but they have got a surveying firm, they are acting as an extended part of their organization that are actually providing those services. So those services aren’t direct. And actually their indirect is buying goods like laptops, for example. The definitions are always really important in any industry. But again, in procurement, because I feel it’s quite an evolving space, and there’s so much complexity to it, because it’s got to cover everything. I feel like the definition, sometimes it’s harder to have those as being something that’s it’s never going to be uniform across sectors, industries, locations, different types of organization, because people are buying different things. They are buying them differently; they are either offering a product or a service to the market in so many different ways. It’s incredibly diverse in that point of view as well.

Paras Sood:          25:44     Yeah, I think you are right. I think that you cannot have a uniform definition of services, it’s possibly unique to the industry that you are in, or is possibly unique to the relative company you are in, I think, as a professional, who if you are trying to cut through what services and what’s not services, you have just got to recognize what your business model is really entailing. So if you are a bank, or if you are a services based company, maybe even a large consultancy, for example, and services are far more at the front of what you do. You need to know where you draw that join the line on services compared to consumables or anything else that you are going through. So I think just having the mindset of knowing what services is, is an important thing. But back to your point around complexity, yes, I think there is complexity. And I think that the complexity is driven mainly by humans.

Jonny Dunning:   26:41     Often humans are very much part of that service, aren’t they? So I always think of, because a service could be wrapped up as like, I don’t know, works, where it’s a project, where there are, some goods and materials as part of it. But ultimately, a supplier is delivering an outcome to an organization, and it’s their risk, and they have got to deliver that outcome. They are not necessarily delivering things that are easily measurable in terms of items and goods and objects, so intrinsically, when you are buying goods and materials, they are physical things that you can identify, you can weigh the measure and then look at them, they are there, and you can assess them. Whereas that services area is a bit more kind of intangible. So it could be a very wide range of things. But generally, there was a level of human labor based input skill based input. And that kind of intellectual property involved with what it is you are purchasing. And where there’s people, it’s always a bit more complicated, isn’t it? Because it’s never just as tangible as just a thing. 

Paras Sood:          27:44     Yeah. And that intangibility is, in some ways, trying to apply structure and outcome logic based things to a quite subjective area. People are subjective, generally, of course, you can, there’s far more cookie cutter or off the shelf kind of outcome based contracts that are wrapped around services nowadays. But if services are increasing as an area generally, that means that mindsets are increasing or trying to translate what’s going on in somebody’s mind or a company’s mind into a contract or into a buying behavior becomes more complicated. And it’s harder to measure as a result. So therefore, trying to get the right thinking within a kind of process driven capacity. I think it’s harder when you have not got nuts and bolts or widgets and whatever else that you are trying to purchase.

Jonny Dunning:   28:42     Yeah, I was actually reading an article recently talking about the difference in value in what you are buying based on whether you are buying it on in services, based on whether you are buying it on a time and materials basis, or an outcome basis. An upfront, a lot of organizations will look at an outcome or output based arrangement and say, “Well, actually I can’t define that. I just need some people to be working.” Or they might look at an output based arrangement and say, “It’s going to be more expensive.” But there are other things to consider within that. If you can’t define what it is you need to get done to start with, even if you can’t define the definition stage, then I feel like that has its inherent risks from a strategic point of view, in terms of, well, what are you trying to do? Because it’s very easy to have people working on something without necessarily a clear endpoint or outcome. And so therefore, cost can run and therefore, is it going to be more expensive? Whereas if you are getting a supplier to deliver something on an outcome or output basis, they are taking risk for delivering something for pricing it. Obviously there’s so much nuance to it, even if it’s an output basis. How is that priced? How is that structured? How is that changing along the way? IT projects, for example, often have iterations sprints, whatever it might be, but I think the world is feels like it’s moving more towards an outcome or output based mindset, in a lot of ways, just even if you look at the consumer world, but also how that’s transitioning to the business world as well. 

Paras Sood:          30:13     Yeah, I would agree. And I think the inherent challenge of services are that getting to outcome based ways of thinking requires you to have a bit more forward thinking capacity, like you say, not a never ending kind of labor arbitrage or a never ending kind of body chopping of bringing people in, and it’s just captured in a statement of work. It’s more about how would you see that service evolving over the course of time. And I think some of that challenge, therefore lies in, again, with big organizations that we are probably talking about, big organizations here, mostly, but in big organizations, the contractual landscape for those big organizations can sometimes be a kind of shooting in the foot of that situation, because they might have a large scale contract. But the statement of work behavior, or the buying through statements of work is not really tallied up with that overall master services contract. And therefore the outcomes are mismatched as a result. And as a procurement person, or as somebody in the business, you are trying to marry the outcomes with the stakeholder needs. But if you can’t tally up what’s going on, in terms of the way you buy off your framework agreements, or the way that you buy off the strategic things that you have been doing, you have been developing in the first place, then there’s always gonna be this mismatch. And that’s probably frustrating for stakeholders as well.

Jonny Dunning:   31:44     That’s a really interesting point. I like it, because we are getting into some like fairly technical stuff yet. So when you say there’s potentially a misalignment between the MSA and the understatement of work, one of the things that we see a lot is that where organizations have these large MSA is in place with big providers, for example, big IT providers that are doing lots of projects for them. Doing the strategic sourcing, they have got a really good handle on that, they are using their source to pay suite to do the kind of supplier sourcing, the Contract Lifecycle Management, the Risk Management, and put those master services agreement or framework agreements in place. But it’s the complexity and the volume of the drawdowns, the call offs, where it is pulled into a statement of work. That’s where for a lot of people, there’s a disconnect. And that’s something that in what we do, we saw that quite a lot, something that was being worked on in the public sector back a few years ago, where that was really being the public sector frameworks that dealt with like consulting and professional services were really trying to get on top of this. But that’s a really interesting one. So when you say, the kind of misalignment, do you mean, in terms of what the objectives around an overarching framework agreement are versus what a statement of work actually trying to achieve? Or do you mean kind of aggregating up the measurement of what’s being done to look at the MSA? Because the MSA is obviously setting aside the terms. And you would assume that most statements of work would refer back to those terms effectively. So they are working in the manner which in which they should be? So are you talking more about what objectives are being achieved? 

Paras Sood:          33:21     I might answer that question in a slightly different way, politician. But I think that there’s another starting point of that value chain, which is something that we found quite interesting ourselves. And you mentioned strategic sourcing, but category strategy and where category strategy comes into the ability to think about sourcing and strategy as a whole. And that’s a starting point of where maybe some of these behaviors get quite complex. So some of the research that we have done, I can’t take any credit for the team that Future Purchases have done historically, we identified that about 68% to nearly 70% of spend, or value is unmanaged because we are not having strategic enough conversations with our stakeholders effectively. That’s a high if you look at that, that’s a high percentage. Absolutely high percentage! And that is a starting point for buying strategic sourcing behaviors that might be more upstream. So, if the starting point is that actually we are not really having great conversations initially about alignment of objectives, alignment of what if it’s in a services, capacity, alignment of what those services might be, there’s a lot of value that’s left on the table. Then you translate that into strategic sourcing or even into sourcing, and you are hoping that in that strategic sourcing phase, you are being far more kind of thought provoking around how to bring different services spend together under one umbrella. But it’s only going to be as good as the category strategy that you probably started with, which we know is probably barely left on the table. So then you get to the end of your sourcing phase, and you got to a large MSA, large contract. And you built this large contract, you feel like it’s answering multi-jurisdictional needs across the globe, you have covered all your bases in terms of the kinds of services that you want to deliver, you have got some measurability around it, major negotiation, public sign off, everybody’s happy, and the business and procurement have signed off a big deal. And then buying behavior starts. And I think when the buying behavior starts, it’s in some ways, completely different to the strategic upfront contracting phase that you have gone through to try and architect the best deal for that business or for that organization. And then you enter the buying behavior of people just needing to get what they need to get, wanting to, it could be a contract on major complex statements of work, which can be huge major outsourcing deals, or major projects, whatever it might be. And unless they are very aware of what has been done upfront, and they have strategically aligned stuff upfront as much as they possibly can, there’s always going to be a bit of a disconnect, because the demands and the needs of the day will largely just take you down, “Here’s the supplier, let’s get our statement of work sorted.” And I think it’s incumbent on the kind of post contract procurement professionals and post contract business professionals to make sure that that MSA is coming together with that statement of work. Because some statements of work can be more complex than MAS. So there’s got to be a level of dialogue that really kind of keeps talking about that, that connection between contracts. And then that will help with the statement of work becoming far more applicable, but also efficient with the way that you want to work because you are not having to reinvent the wheel in the statement of work world. But you are seeing as a natural extension of maybe the hard work that you have done previously. There’s probably another school of thought around that as well, in terms of why do we need to take large MAS? Is there a real need for large MSA is or should we be focusing more on actually really well thought through statements of work that answer business needs? And because they are where the service has happened, whether the actual delivery happens, so to speak. So I think there’s a connection, that procurement needs to help enable with that value chain and making sure it’s coming right from the stakeholders all the way through to the delivery, through the actual statement of work itself.

Jonny Dunning:   37:40     Yeah, so you come up with some really interesting points there, I was just making a few notes here. So there’s quite a few of them. So I am going to try and kind of go back through it, it’s good thing I make notes, I would literally would have gone, hop from one to the next, then forgotten all of them. I made a note of a phrase here, flow down, I feel that flow down is just an absolutely critical part of this. So the flow down of those terms, from the MSA to what’s being contracted and what’s being delivered and procured within the statement of work. Clearly, that’s absolutely critical. But the other area of flow down that I think, is super critical. And this is just the flow down of strategy. So for example, the strategy might not be flowing down effectively into even the MSA or into the originating category strategy. But then when you look at it on another level, is the category strategy flowing down into how business users are thinking about it. It’s all got to connect up really, isn’t it?

Paras Sood:          38:34     Yeah, I think you have hit the nail on the head that, there is a common behavior that I have seen, certainly when I was in the banking world, but also in other worlds where you really caught in the service level agreements, and KPIs or Key Performance Indicators of what’s going on in the contract. Because you think you have got to make sure that if somebody is transacting off that contract, it’s always pinned back to some measurable thing. But actually, what’s more important is what you have described, which is, what is the strategic objective of that service area or that category or of that business division or business unit? Are you meeting the relative needs where they are trying to get to in terms of how they want to use services or any other kind of spend behavior? And that’s regular dialogue, regular kind of discussion around it, the probably sometimes needs to use the contract as an instrument of mimicking what you have been talking about with strategy. So flow downs, a good term, I would say, but it should be extensive as you mentioned, it should be that you are fully clear on what the business needs are from a strategic point of view. And you are also clear on the practical elements of how that can work in terms of just getting on with purchasing and sourcing, and buying services accordingly. But I see a lot of mismanagement of the strategic space in that flow down, for sure.

Jonny Dunning:   40:07     Yeah, it’s definitely something that, that kind of comes across in in conversations that we have where we hear about these types of problems. I think when you mentioned about like post contract dialogue, I mean, in my experience, when it comes to services, post contract is where the big gap is. So organizations are pretty good at putting a contract in place. But firstly, and I am always harping on about this. But in terms of capturing those contracts, or those statements of work digitally, most organizations are incredibly bad at doing that. Typically, you will end up with a scanned in PDF that’s stuck in a file repository somewhere and that’s it. And that might have some outputs or milestones against it. They may change during the project, there may be measured against there may not be but it’s not a neat process. I always have this kind of neat and tidy mentality of thinking of things tying up along the way. But talking about that post contract dialogue, is such an important thing for that connection between procurement and the buying stakeholder to ensure that there are strategic objectives involved in it. It also ties into the pre contract phase where the actual requirement has been defined, because that’s one of the things about creating an outcome based agreement. One of the most difficult things is actually designing what the outcome needs to be before you have actually got into it. And as I say, that sometimes needs to change along the way. But that’s services contracts are designed to flex and change along the way. And I think clearly, if a buyer is buying something, a technical service, the buyer might have a good level of expertise in it, they might not, the supplier definitely will have or certainly should have. Procurement probably won’t. So, they will have a broad understanding of it. But what procurement can provide is the kind of guidance around structure, content and the strategic direction of it. So I think it kind of plays into how different organizations work from a cultural perspective, in terms of how hands on procurement are, how much they get involved. But there’s a lot of value that can be added, and that the business does need to be added in terms of ensuring that there’s a strategic focus to a project is being carried out. Clearly, it’s going to be more or less important, depending on how much that projects worth. But a lot of this stuff goes on where it’s just, as you say, the business user is just reacting to the, “I just need this now.” And I think some of that can get left behind.

Paras Sood:          42:20     Yeah, I think you have captured that pretty well, actually, Johnny, and what that’s made me think about is what seems to get caught up in that kind of connection problem between procurement and the business or pre contracts and post contracts is roles and responsibilities. And I would ask challenging question to most organizations, who owns spent? Who owns you services spend? Is it procurement? Is it the business? Who owns the contracting process? Is it procurement? Is it the business? Once you get into that kind of level of challenge, you probably start having a formal healthier conversation, because what you described is procurement become the facilitator, the methodology, in some ways, the consultancy, to the rest of the business, of how they help, advise and shape and facilitate that progress for the business to reach their outcomes that they are looking for in terms of buying behaviors. But the business stakeholder is really the owner of the delivery of that work. But they could be brought in far earlier into that cycle of definition with procurement, so that they are becoming an integral part to it. And they are not just seeing as a transactional partner at the end of the procurement value chain. But instead, they are seen as a kind of a mutual implementer of what that might be in the earliest stages. And I still think that roles and responsibilities around the contracting and buying of services is fragmented and not challenged enough or articulated enough in terms of who should play what role in making it work.

Jonny Dunning:   44:07     Yeah, I like it. And just thinking back to you mentioned about your university studies in social sciences. So when you were talking about the category strategy. And then this other thing coming into play called buying behaviors, that must have related quite a bit to some of the stuff you have done in terms of, it’s a lot of, it’s like human psychology and social practices, isn’t it, in terms of how these things occur?

Paras Sood:          44:31     Yeah, that’s fair comment really! I think, I don’t approach the way I look at procurement from an engineering mindset or from a hugely technical mindset, actually. For me, it’s more about a network of connections. And, I think that is, within procurement, it’s outside of procurement, it’s with suppliers, the whole gamut that you can imagine, around that and for me, a lot of that is about alignment of objectives between one stakeholder and another stakeholder and trying to get on a similar page of sorts, which is a far more socially driven, behaviorally driven conversation, as opposed to a technical conversation. So I do think it probably emanates somewhere from my earlier life, but for sure, it translates into, for me into exactly what procurement is exposed to on a day-to-day basis in that space.

Jonny Dunning:   45:31     Ultimately, it all comes back to what’s the business trying to achieve and how is that reflected in these individual departments and individual buying stakeholders in terms of what they are trying to achieve, that plays into their particular contribution to that overall objective? It’s just the strategy and the communication of that strategy is so important. And like you say, it’s not a mechanical process. In some ways, it’s a very social process in terms of the communication of that. I mean, we talked about entrepreneurial mindset, startups scale up businesses, they have to communicate their strategy, effectively, they can’t have any inefficiency, you have to have everybody rowing in the same direction, but buying into where you are trying to get to, buying into the objective the destination. And that’s where you can get people with different backgrounds, different thought processes, different input, adding value to that process of trying to get to the destination, because it’s just, you have got to consider all the different factors. That’s something that, for me is a beautiful thing, as a someone with an entrepreneurial approach is critical. And obviously, the bigger and the more successful companies kind of get watered down and lost. And like you say, these big organizations are incredibly complex, in many different ways. But the factor of this kind of concept of the roles and responsibilities and where the things sit, I think it’s a much more open conversation than it was. And I think procurement are in a better position, to certain extent, kind of push that conversation in some cases. But when you look at the process of what it is trying to define what it is you are trying to buy, and then trying to contract with the best partner and then trying to deliver that effectively, that be at the beginning is so critical. And there’s a real collaboration opportunity there. Because I think, a lot of cases, buyers, it’s like, you are trying to get people to write a job spec. People hate it! It’s hard enough, trying to write a scope of work is even harder, you are getting really into what is it I have actually got to do, how to actually define that? But it’s a critical thought process. If a department is trying to do something properly for the company, if they haven’t thought about that effectively, then that is a concern. Now, it might be that they look at it and just go, “Well, this is not my area of expertise, which is why I want to bring in expertise.” But there’s an opportunity for collaboration as well, where there could be collaborating with a single supplier or multiple suppliers to try and define a requirement. And we see organizations from a technology point of view, they are not necessarily just running opportunities, tenders, they might be running expressions of interest, where they are just like horizon planning on what capabilities they have got within their supply chain, or actually looking ahead and going, “These are the types of problems we have got coming up. What type of solutions do people see coming towards them?” So I think there’s a huge opportunity for collaboration and defining what outcomes or what the direction needs to be. Even when it’s with suppliers, I think, procurement have got quite a big role to play in helping coordinate that and kind of guide the process.

Paras Sood:          48:36     Yeah. Back to this kind of it’s a network of connections really. Whether it’s the contracting process, whether it’s the alignment process, for me, it procurement is at the center of multiple stakeholder discussions. And if procurements not really in listening mode too much, it may be loses out on the nuggets of what the business needs versus what the supplier can offer versus where procurement can play its role? So I think that there’s real opportunity for procurement to become less at the forefront, but more in the kind of advisory capacity of a business’s ability to move forward without internalizing thinking too much within the organization. But externalizing it a bit more to help push things forward.

Jonny Dunning:   49:29     I mean, procurement have got so much information because they sit at this juncture, with all these different departments and all the kind of internal data but also the external information, that a lot of other departments just don’t have. I always think it fascinating, particularly when you look at it from a consulting perspective, if you are a Consultancy Category Manager or you are managing those types of arrangements, you have got this kind of like multi-directional view on what’s happening. You have got the internal stakeholder view of, “This is what we need to get done. The supplier is doing a good job or actually the supplier is doing a bad job because of X, Y and Z.” And then you have got the suppliers viewpoint on what needs to be done, how it should be done, and actually their view on internally how the stakeholders are supporting it. Because from a consulting perspective, your job could be made very difficult if the internal stakeholders aren’t supporting the process, they are letting you down, they are not providing the right information. They are not doing their part, you really at the kind of fulcrum of a lot of information. 

Paras Sood:          50:21     Yeah, fulcrums, a good sort of definition of that. And in a category strategy, or strategic thinking, that’s probably, 20 years old, maybe longer, 30 years old, of trying to have a strategic alignment with the business. And make sure you are having that upfront conversation, where you are bringing those kind of multi-stakeholder needs together. But then we have kind of moved more towards business partnering, and business partnering, whether that’s through category strategy, or its independent, business partnering is exactly what you described, it’s that ability to hold together a set of needs from multiple angles, and then try and work in unison around that business partnering set of objects or business objectives through a mindset of partnering more with the business, and bringing all of those rich datasets and informations and people and institutions together. So that you are getting the best out of that kind of integrated business needs conversation, as opposed to, “Here’s some demand. And this is where you need to get to or here’s where we can aggregate, this is where you need to get to,” is a far more enriched conversation through that business partnering kind of dialogue that you get.

Jonny Dunning:   51:41     And do you think that’s appreciated to the level that it should be within most organizations, in terms of other parts of the organization, whether it’s the C-suite or just other functions appreciating that role and that opportunity with procurement?

Paras Sood:          51:56     I think I have maybe used this term in some of the lives before, but I think procurements going through a bit of an identity crisis. And so to your point, I don’t think it’s appreciated. But also, procurement sometimes feels like, “We are the forgotten stepchild of business.” And at the same time, procurement knows it’s the one that probably can help facilitate those conversations. So sometimes it overcompensates for its ability to say, “We need to be at board level conversations, or we need to be the most strategic thinkers that are pushing stuff.” I think, trying to drop a level of ego in that conversation of a procurement professional or the CPO in their organization is important and just becoming a bit more of that facilitator role a bit more of the conduit to bring those areas together. And that starts with, have you even spoken to your key business partners about what their needs are, just generally in a non-kind of prescriptive procurement fashion? But generally in that kind of, what do you need, and let me understand what you need from your delivery requirements. But getting into a healthy dialogue around that. And I think that people who start with that conversation more so have already started the business partnering dialogue. Now you can amplify that, you can amplify that through far more structured facilitation, or bringing multiple stakeholders together, multiple business units together. But by starting that, you are changing the game of the conversation less to a sourcing approach, less to a kind of buying approach, more to a needs analysis approach. And, also allowing for a level of challenge, if demand is this, and the business thinks what they need is what they should get. But you recognize as a procurement professional, that you can shape that demand through different ways by engaging suppliers or engaging other places. You give yourself that opportunity to have that conversation more in a business partner and conversation. But it does require to be able to build relationships with your business, that are not around procurement. And some organizations structure themselves accordingly, you might see in other financial institutions, or maybe even technology institutions, vendor management offices, that kind of set themselves up to try and become that conduit between the business and procurement. But that doesn’t always have to be the case. You can abandon the notions of being a traditional sorcerer or strategic sorcerer, just put that language to the side and then just say, you are part of the procurement and the external engine that bring supplies to the floor. Let’s have a conversation about what your needs are and how we can match that.

Jonny Dunning:   54:43     So it doesn’t necessarily need to be encased in like a formal doctrine or searches. It can be quick because I had a conversation with Simon Jill recently and he raised an important point. His kind of concept is, “If you want to be at the top table, make sure you have got something to say.” So it’s not just about procurement having a right to dictate this or that, or take an approach of just this is the procurement way of doing things. It’s about having those conversations and building up those relationships. And so that the story can be told to kind of sell the opportunity into the business, but also bought get supplies to buy in and get stakeholders kind of understanding that value there. There’s so much of it’s around communication.

Paras Sood:          55:26     Yeah. And I liked what you just said there about having something to say, procurement people shouldn’t really be generalists, they should know that their trade back to trying to bring the best of everything into that one conversation. So, I think in those conversations, you want to be seen as an intelligent procurement professional, who is coming into that conversation with bring those things together. And that, therefore allows for you to have a wider conversation with C-suite stakeholders or with anybody else that you are dealing with on a needs basis. But if you come with a prescriptive way of thinking from the outset, it’s just human nature, you are going to get a backup, if somebody says, “Well, here’s my seven step methodology, or here’s my framework, here’s how we are trying to aggregate X, Y and Z.” Structures can always be appreciated if there’s no structure. But that informality of conversation to start with is probably a good starting point. And we should learn a lot from the sales community in that regard. People who have either had experience in sales or been on that side of the fence. It’s a mix of formal kind of sales development. And it’s a mix of informal sales development. And a lot of it is just about relationship building. So you can skin the cat in multiple ways in that regard. But it does require you to have just a bit more of a humanized, authentic conversation with the stakeholders, not something that is just about, “We are in this function, you are in that division. How do we meet your needs, kind of thing?”

Jonny Dunning:   57:07     Yeah, exactly. I think your reference to kind of the sales side of it is very true. Because if you don’t have these conversations, you are never going to fully understand the problem. And from a sales perspective or commercial perspective, you always need to understand that what is the problem that the end customer is trying to solve here? So, procurement could go into those conversations thinking, “I know what the problem is, we have got our structure, you just need to follow process.” But actually, there’s nuance to it. And in those conversations, there will be an important thing to understand, which again, feeds through to that overall company strategy, that then procurement are driving towards that as well, because that communication is going down through these different departments, procurement know what their role is, within the overarching organizational strategy, the buying stakeholders know what their department is trying to deliver, and how they are contributing to the overall strategy. But procurement might not have a particularly good understanding of what that department how they are trying to deliver on that strategy and what their objectives are, if they are not having those conversations. 

Paras Sood:          58:06     Yeah, I agree. I drew quite a few parallels between procurement and HR. And you mentioned extended workforce earlier, and I think, not just from a buying behaviors and statements of work, where you buying people through HR, and you are having to buy people through procurement, but the extended workforce concept, for me straddles both. And actually, if you look at procurement, we have got a bigger lens on that extended workforce than HR do. But we are kind of looking at things in a similar way, we are looking at trying to get the best out of the people that join this organization and increase the performance. I feel exactly the same that procurements intentions to some degree. So think about the rigor and the level of thinking that happens between HR professional and their stakeholders in terms of getting the right talent in or making sure that the performance of a team is working. Why would procurement not have that same level of dialogue in a way that is really performance driven, but trying to get the best out of our suppliers and the multiple people that might exist in that supply chain as a result? So I see massive parallels. Always seen that through my career, but it’s interesting how little those functions tend to talk about the similarities between them as well.

Jonny Dunning:   59:30     Yeah, it’s all about understanding, isn’t it? Getting to the heart of it, and ultimately, you are dealing with people. So yeah, it’s a very interesting parallel. I think one of the things that I really missed in conversation with Georgina Jones is quite a while ago now, hopefully, we will be able to catch up again soon, but she was talking about just capability and capacity. And ultimately, if you look at an organization, whoever is ultimately responsible for that organization. Just needs to know, what are all of my available resources? And what is the most effective use of all of those resources that I have at play, internal resources, external resources, different departments, how it all interplays? It’s kind of one organism, it’s just an extended organism, so that overall capacity and capability needs to be managed to a certain extent in the same way that you would try and manage the external versus internal.

Paras Sood:          1:00:27  Exactly right. We talked about capability and capacity a lot actually through FP. And, actually, those two axes are exactly the same axes that we have on procurement side of things with the HR side of things, if you really look at it, they might be sliced in different ways, because capacity through procurement could be vast, you have made your outsourcing agreements or made kind of look at a Global Business Services need for a business where you effectively outsource your entire headquarters or your back office functions or your middle office functions. That is a massive extended workforce capacity conversation. But within that, is a whole dimension on capability. That is, are you bringing the right kinds of people to support that organization through procurement or through an outsourced function? Likewise, if you are having that same conversation, maybe more intimately through HR, because you have inherited, people that you have recruited, and that’s part of your core business. But I would say that there’s very similar dimensions on both sides.

Jonny Dunning:   1:01:34  Yeah, it also ties into that kind of future planning, horizon planning, whatever you want to call it, where you are within your workforce, you are looking at grad schemes or apprenticeships or just kind of outreach, where you are starting to think about, what are the future roles this organization is going to need to have? Exactly the same supply chain, which I think is very interesting, when you look at the lack of visibility of the supply chains that some organizations have. I mean, things like sustainability scope through for example, is increasing, is another angle on why organizations need visibility of their supply chains, which I think is sometimes the visibility is contend to be naturally better on the goods and materials side of it than the service side of it. Obviously, not always going to be the case. But just understanding capability. Again, that ties into it, because you look at and just the opportunity to engage with smaller, more innovative suppliers, things like that, it can kind of get left out if that information is not being captured properly. And that visibility is not available across the organization. But it’s so critical, and it’s only going to get more critical as organizations need to adapt faster and new things come along. And again, it ties into the HR kind of comparison, you mentioned there. You also mentioned axes on capability and capacity. Apart from that giving me mild PTSD, when I am thinking about yesterday, when I was trying to help my daughter with quadratic equations as a graph insertion points, that which literally gave me flashbacks to that. That’s really interesting one when you talk about that axes, so does that apply? How can that be applied to for example, category strategy?

Paras Sood:          1:03:10  Yeah. Maybe it’s qualified my thinking, it wasn’t to do with quadratic. 

Jonny Dunning:   1:03:17  Honestly, I don’t ever want to think about ever again.

Paras Sood:          1:03:19  But I think to qualify that, in simple terms, capacity is, have you got enough fuel in your organization to deliver against what you need? So have you got enough there, so that you are not constantly looking at an absent bench of capacity that’s there. And capability is, are you doing the things that you want to be doing as an organization, and then building the competencies behind that to make that successful? And I think in the procurement world, back to capacity comes to your extended supply chain. And capability constantly extended supply chain. So, there’s so much! I think it’s more than the realm of HR, not to knock HR. But it’s more than the realm of HR, because of that supply chain visibility, and tearing that you go through in procurement. And the multiple services that are really reliant on other services or the multiple companies that subcontract other companies, etc, etc. So I think trying to apply that lens is probably not the priority of when you are procuring or setting up an agreement with the service providers in the supply chain. It’s probably not a priority to think about capability and capacity all the time. But if you can bring that to the forefront, you then start having a much more strategic conversation alongside your HR function. And you start, maybe there’s probably thinking out loud here, but maybe you are thinking about, well, what are the talent objectives that you have in your HR function? What are The talent requirements that you push through, why wouldn’t you replicate that in the supply chain? In terms of that capability capacity thinking, so why don’t you look at trying to get the best out of supplier X, because they have got great talent that comes through? That’s the augments what we have, or we can’t build internally. It’s a really interesting parallel, I could talk about it for days.

Jonny Dunning:   1:05:22  Yeah, I totally agree. I think, in terms of my particular kind of subject matter expertise is generally around how organizations get work done through different means, and ultimately, kind of how they use technology to get work done? And there’s so many crossovers with in on the services side, I find it absolutely fascinating how organizations manage it, how they view it? But I have not heard anyone kind of bring up that HR procurement comparison before but I think it’s a very valid one. It’s raised some really interesting points. So, in terms of the kind of hot topics that you are looking at, at the moment, moving forward, what are the areas? We spoke about some areas there that are extremely critical problems suffered by a lot of organizations and so quite core issues there. What are the sort of hot topics you are looking at the moment? You mentioned, the kind of category strategy type approach. And you also mentioned like business partnering, are those areas you are seeing coming up a lot are looking at and what other areas you kind of focused on at the moment?

Paras Sood:          1:06:27  Yes, we have talked about business partnering, it is an area and it, whether business partnering is standalone as a kind of discipline that you want to build a function around, or you want to make it as part of category strategy. The concept of business partnering for us is really important tool for better conversations, and better outcomes with stakeholders. So that’s one area. We also just touched on capacity and capability, which is for us around our operating model, way of thinking from a procurement point of view. So to maybe just dissect that a little designing an operating model for your future capability is crucial. So if you are a procurement professional CPO or trying to set up a procurement function, and you are designing your operating model, in terms of how you want to work with the business, how you want to work with suppliers, how you want to bring in the right talent into your organization. What are the things that you need to go through, one of the things that you need to question in terms of getting that model right to start with, and that’s really a precursor to then recruiting and designing your organization of, we need category managers, we need contract managers, we need supplier relationship managers, before you even get into that, we are looking to apply a lot more thinking into the debate of where’s the organization’s value and what’s the operating model that needs to talk to that organizational value from a procurement point of view?

Jonny Dunning:   1:08:03  So they are quick question on that. So with those operating models, how structured and formulaic is it? Or do you see it as in terms of choosing from a range of operating models to suit a particular need, versus how organic is it, the process?

Paras Sood:          1:08:19  Like anything operating model is not a new concept for business or even in shaping an organization’s needs. So that having a level of method behind it, there’s certain things that you are always going to keep in an operating model framework, like strategic objectives? Are you aligned with that? Processes and technology, have you defined that? Interactions between different things, they are all kind of core concepts of devising an operating model, I definitely wouldn’t go into an operating model discussion prescriptively with an organization because there’s things that organizations can learn from other organizations about how they might have set up operating models that can leverage those things around strategic objectives, process, tech, all that kind of stuff. But normally, an organization is going through its own unique value chains of sorts. And also, it’s unique only interactions with key stakeholders or with key suppliers. So the operating model conversation for us is more about getting to the heart of, what’s your overall organization’s goals. So, is revenue the main driver or is growth the main driver or is cost optimization the main driver? - Really aligning to what those strategic goals - Is sustainability the main driver? Aligned to those goals and then trying to shape an operating model with some of the method that is uniquely identified to those goals in your business, with that business unit, with that kind of central organization and trying to map that all out. So, a mix of having a method but really getting more intimate with what’s, again, the behaviors of what’s going on in the organization already?

Jonny Dunning:   1:10:07  Yeah. So I think, when you are talking about that as a strategic approach up front, what do you see? Or what do your colleagues FP consulting see in terms of the knock on effects of not putting that in place, not kind of standardizing things correctly?

Paras Sood:          1:10:25  Yeah, I mean, relate back to some of the conversation, we were just having around misunderstood buying behaviors, or misunderstood kind of ways to contract or manage statements of work or measure statements work to get to outcomes. They are all symptomatic, to some degree of not getting to or not having a clear operating model in the first instance. And roles and responsibilities. We talked about that. That’s a great segue between that operational reality and the strategic conversation. So if you have not designed your operating model, knowing how procurement needs to interact with the business, and then you start trying to get into outcomes based contracting, where everybody knows what their roles are, I don’t know how you will do that, unless it’s by coincidence, it’s got to be a bit more of a scientific way of thinking, say, procurement has decided it’s going to work with the business in this way, that might be through category strategy, might be through business partnering, it might be through just informal conversation, and then that’s going to flow, using your term, it’s gonna flow down into that operational reality. So that’s how I would stitch the two together, there is a massive knock on effect. Operating models don’t need to be seen as like the panacea of solving everything. But they should definitely be thought through if you are leading a large procurement organization in the company.

Jonny Dunning:   1:11:50  Yeah, I love it. I feel like you have got a natural level of curiosity, that you are going to delve into stuff and you are going to want to know the reasons why certain things happen. I think that in terms of what you are going to be doing moving forward and what you are doing now, you are really gonna be able to exercise that, aren’t you going into organizations and trying to unpack what they are actually doing and why?

Paras Sood:          1:12:10  I hope so, Jonny. Yeah, I think some of it’s through experience of trying and failing on certain stuff, putting in something prescriptive, then realizing that something else different is completely going on. And then... 

Jonny Dunning:   1:12:25  The model changes or whatever. 

Paras Sood:          1:12:27  Yeah, exactly. So some of its by going through those learnings of what’s not worked. But also, I think, certainly in the consulting side of things, there is a tendency to be quite conceptual, which is good, because it can help elevate the conversation and take people out of the situation. But they are not really want to be part of the change. And if you really want to be part of the change, as well as kind of marry the good strategic thinking together, you have got to get under the hood of maybe somewhat unpopular conversations and or unpopular behaviors. And again, some of the stuff we have been discussing around procurement working with the business or the business buying what procurement sell, that breakdown of communication is often behaviorally driven, or something that’s kind of happened as a problem in the past with how procurements work with the business. So if you don’t get into that conversation, of maybe what’s happened, and then think of a path forward, you just putting processes in place and sticking plasters in place to maybe some underlying things. So, I think my curiosity is probably naturally born from recognizing that if you really want to make an impact in an organization, you can’t shy away from getting your hands dirty with the change journey.

Jonny Dunning:   1:13:48  And you can’t ignore previous problems. I love the fact you are just kind of saying, well, not everything’s ever necessarily gone 100% in all cases. I think, not having a defensive attitude is critical for the development of procurement functions within organizations and the development of it as an industry or as a profession. So, for example, having conversations or conversations operating in the market, where people are talking about, what went well? What didn’t go so well? I think it’s just great. I think it’s so useful, because what you don’t want is necessarily like people from organizations to be engaging in conversation, whether it’s events, on podcasts, interviews, whatever it might be in publications, where they are just saying, “We did this, and we did a great job and that’s it.” It’s when people accept and go, “Well, we did this and that didn’t really work out and we learned this,” there’s so much learning to be taken from and I guess going on a consulting basis, the maximum value an organization can extract from that as being non-defensive and going, “Well, you know, to be honest, there was this, there was out and these things didn’t work out and what’s the best way forward?”

Paras Sood:          1:14:58  Yeah. Personally, that’s how I have learned. I have not learned through knocking out the park every five seconds. It’s through, hopefully doing some good stuff, but at the same time, going to the depths of really the low points that then realize how do you get out of that low point to get to something hopefully, that’s a bit more meaningful for that organization. I think you talked about sustainability and kind of, I think it’s exciting all of us to some degree in our profession, but more broadly. And but back to where the sustainability plays a role, where does it not play a role? If you come in with a prescriptive way of thinking or with a market way of thinking, which is, straightaway jump into kind of decarbonisation, and cop 22, in whatever might be, it might be driving the conversation around that debate. For me, that’s one part of the ESG or Environmental Social Governance equation, really, that’s come about. And we should be as professionals, working out how to pinpoint what’s relevant to what part of procurement, so in the services capacity, actually governance and social compliance is far more important, then, some of the carbon reduction side of things. So I think us getting used to unpicking, unpicking maybe what the market is talking about is a crucial part of us having that relevant conversation, but also recognizing that, it doesn’t need to be the same for every single organization. 

Jonny Dunning:   1:16:38  Yeah, it’s not a generic approach. And in your approach to what’s defined by the market, the wider market as a whole, it’s still got to be applied to that specific organization.

Paras Sood:          1:16:50  Yeah, definitely.

Jonny Dunning:   1:16:52  You are gonna be busy.

Paras Sood:          1:16:55  I hope so. My emails.

Jonny Dunning:   1:16:58  But it sounds really exciting. I love it. And I always appreciate it when people are doing things that are entrepreneurial, and I just love problem solving. I think, the idea of wanting to stay static is something that I find very difficult to, is not really my mentality. So the idea of the kind of problem solving exercises you are gonna be going through, and you are gonna be taking organizations through a thing. It sounds really exciting, and hopefully very rewarding. 

Paras Sood:          1:17:26  Yeah, fingers crossed. 

Jonny Dunning:   1:17:28  If it all doesn’t work out, there’s always the band. 

Paras Sood:          1:17:30  Yeah. I don’t know, if you are allowed to say that. We have probably been blacklisted somewhere at some point. But yeah, everybody’s got different strings to their bow. I think that’s important as well, actually having a level of just kind of perspective in life, problem solving is at the heart of certainly what I am trying to do and what people around me have done in the past. And that’s what keeps us excited, but it’s one part of life. And, I think everybody’s got different facets to their life as well. So trying to get that perspective of doing something that’s hopefully productive and contributing, and people walking away thinking we have made a meaningful change. That’s one part of it, but not the detriment of everything else. 

Jonny Dunning:   1:18:19  Well, like you say, that’s incredibly rewarding as well, if you are going into organizations, you are giving them meaningful change, helping them execute it and taking them along the journey. That’s pretty rewarding! But you have got to think about family life, your health, all these things as well, haven’t you? It feels like there’s a lot more to balance or a lot more to think about and balance these days where I feel like when I first started out, in employment, it was, obviously, I was younger and had zero responsibility. But it felt much more prescriptive in terms of a kind of flight path. I know, obviously, the way that everyone works these days, and the changes in that have had an effect on that. But it’s almost like enabled people to have a bit more of a broader viewpoint, in terms of how involved we want to be with our families and our kids and how you have to manage personal situations as well as work. 

Paras Sood:          1:19:11  Yeah, I probably get shot for saying this. But I think that lockdown, the pandemic was a bit of a blessing and a curse for a lot of people because it gave people that ability to remember what’s important in terms of managing balance of those elements. But at the same time, I have to admit that coming out of that time has been again, really liberating for somebody like myself and probably somebody like yourself, Johnny, where, you know, we want to get together with people we want to drive that change. There’s nothing better than meeting people face-to-face when it comes to moving things forward and progressing stuff. But at the same time, you got to do that in tandem with everything else. So I think we have gone through a large learning as a society, I have a feeling that, but you are really excited about working with different organizations and companies and getting into that change mindset. Again, it’s quite an exciting space.

Jonny Dunning:   1:20:14  Yeah. And like you say, and it’s ultimately about meaningful outcomes, and you have clearly got a desire to bring about excellence. And I think, there will be some great challenges along the way and great opportunities, but it’s something where organizations can get a huge amount of value from increasing the effectiveness of their procurement function. And it’s a massively exciting and evolving space at the moment. So yeah, really interesting. And wish you all the best with that.

Paras Sood:          1:20:42  Thank you very much. I really enjoyed it!

Jonny Dunning:   1:20:43  Excellent. Well, thanks so much for coming in. Great to chat. I think there’s loads more we could talk about. I will have to do around two at some point. But yeah, I really appreciate your input. And yeah, great to chat. 

Paras Sood:          1:20:55  Likewise, Jonny.

Jonny Dunning:   1:20:56  Cheers. 


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