With Tim Woodall, Capita People Solutions
00:00:00 - Introductions & procurement backgrounds
00:02:30 - The time has come for SoW & Outcome-based work
00:04:00 - The factors driving where responsibility for SoW sits in an organisation
00:11:00 - Evolving an outcome-based mindset
00:17:20 - Finance's effect on managing outcome-based work
00:25:35 - Compliant engagement of smaller suppliers
00:27:30 - Comparing supplier performance isn't just about price
00:34:00 - Best-of-breed systems for nuanced workflows
00:38:00 - Who is ultimately responsible for outcome-based work
00:43:30 - The value of the modern procurement team
00:46:00 - Emerging procurement trends
Jonny Dunning [00:02]: Okay, we're off. Welcome to Tim Woodall. Thank you very much to join me really, really appreciate it. How are you?
Tim Woodall [00:11]: I'm good. Thank you, Jonny, very privileged to be here looking forward to our conversation. So thanks for the opportunity.
Jonny Dunning [00:16]: Excellent stuff. Sounds like you're coping well with the lockdown, although we’re juggling kind of family responsibilities at the moment.
Tim Woodall [00:25]: Yeah, that's right. We've got a...10 months today. So juggling that childcare, we're on, lockdown ended now, which is like, which is good. But, yeah I think that balancing that will continue probably for the next few months.
Jonny Dunning [00:38]: It feels like it's kind of ended.
Tim Woodall [00:42]: There's a pub right on the corner here. And their tables are back up, and they're back serving. So that's a bit of a visible sign for me there is a bit of a shift. But apart from that, it doesn't feel like a lot of change.
Jonny Dunning [00:52]: Excellent stuff. Well, it's good to see that at least. And yeah, hopefully positive, positive things moving forward. And certainly, we've got loads of stuff to talk about, and with the kind of main emphasis my discussion being around outcome-based working models, and in particular how the different elements of HR procurement and operations align when you're looking at these types of models. And I know you've got a great visibility on different aspects of that, particularly what you're doing right at the moment. Before we get into it, I was just, I just thought it'd be useful if we could go into a little bit of background, firstly, on what you do, but also on kind of your journey, how you got there, what your experience has been kind of leading up to this around this instinct? I know you've been in the industry for quite a while.
Tim Woodall [01:35]: Yeah, yeah, absolutely. So at the moment, I'm working for Capita People Solutions, and that's a division of Capita that takes all of our HR products and services out to the customer base, whether that's resourcing lending, or pensions, or HR shared services. And then particularly looking at what is the value proposition? And how do we have digital, HR, tech products embedded in those offerings? So looking at what is the lack that the tech landscape, and how do we partner with that and bring the best of that to our customers? So really interesting, and I think, like most people, I probably ended up in this industry totally by accident. I originally started in procurement, which is perhaps why quite an interesting with SOWP. I ended up being responsible for managing a contingent workforce that previously didn't have a structure and then jumped onto the supply side and been there for the rest of my career, mostly, though. But it's been an interesting journey and some statement of work and outcome-based work, it's always been one of those topics. But I think now it's something whose time has come, definitely very timely conversation.
Jonny Dunning [02:37[: Yeah. It’s interesting, you say that it's time has come. And, yeah, it's been something that's kind of been bubbling away for the last few years, you've had people like staffing Industry analysts, spendmatters, people like that talking about it and kind of talking about it bubbling along. But now, it's kind of...it seems very clear that it's kind of... it's actually really happening now. It's important, it's current. In the UK, you've got things like IR35, and Brexit, and COVID, obviously influencing that drive towards outcome-based services. But I think globally, we're starting to see much more activity around this and much more aware in the way of procurement departments or large organizations looking at their services spends and saying, what are we doing? How much are we spending? What are we getting for our money? How are we measuring it? And it just like seems to be pretty current.
Tim Woodall [03:22]: Absolutely. And I think it's interesting because as you say, it's all something is time has come. But from a supplier side, which is where I've been, most of my career, it's always been a case of trying to stimulate the market. And that's just a reflection of the commercial models and the fact that the spend that typically exists in a outcome-based world is much more than a typical contingent program. So there's an actual incentive to go after it. But it feels they're on a journey from having to do a lot of education as to why it's sensible to manage work in that way to now. Okay, yeah, we get that and how do we actually make that happen? And how do we move forward?
Jonny Dunning [04:02]: Yeah, and it's very interesting when you start getting into the detail of where that sits within an organization, obviously, with some of the stuff that you've done previously, it's been probably more contingent workforce focus, would you say?
Tim Woodall [04:15]: Yeah, that's right. Yeah.
Jonny Dunning [04:16]: And I think you could look at it and say, well, there's contingent workforce on the one hand, and the services are given on the other. But there are definitely some kind of gray areas where there's crossover. And I think that's where things like, for example, IR35 is driving a lot of interest in statement of work, and that as a kind of output model.
Tim Woodall [04:35]: Yeah.
Jonny Dunning [04:37]: But yeah, I mean, how have you seen that kind of shift over the period of your career?
Tim Woodall [04:42]: Well, I think a lot of the initial programs I'm involved in, had this as a component of the program, the biggest driver wasn't necessarily a procurement function that was actively managing that spend or actively had a category strategy around that. A lot of the driver was coming just we need the visibility of who those workers are, primarily because we need to control their IP access, or we need to control site access. And therefore we need them in a BMS, or system of record because we need to know who they are? And which supply they're working for and who's responsible for them within the business? And almost in terms of what was the billing structure that sat behind that was in many cases a secondary afterthought. But, oh, actually, we have, we could actually do that. I think, often, a lot of these programs; I see procurement, trying to learn them. But it's been a big struggle, I think, for procurement often to get their hands on it. Because one of the contingent workforce program, you know, in the UK, almost every company of any size of Capita had a contingent workforce management program for a while on the secondary or third generation.
That's rarely been the case where you go into an organization, and you find that the statement of work is a tremendous program. And I think that's been part of what procurement struggle is, how do they get their hands around that? Because often, it's not been centralized enough, or it's been a lot of very dispersed. And also, it's a very difficult area of the business to engage with. And I think that's an area where there's most active resistance to procurement coming in and saying, we want to manage this. Because there's no executive relationships, you know, relationships with suppliers that, you know, business and home managers don't necessarily want to stop it. So I think a lot of the struggle over the last few years, and perhaps the reason that a lot of this hasn't got the traction that it has, up until now, has been because procurement hasn't necessarily gone and been able to articulate a way they can add value to the business beyond just visibility impacts and tactical onboarding support.
Jonny Dunning [06:41]: Yeah, I think it's a really interesting points there. I think the point you initially made about one of the drivers being...it being kind of very worker-led, in terms of identification, individual kind of worker tracking. So if you've got Accenture doing a project, you know, who from Accenture is in your building, who's got rights access rights and, you know, maybe [7:00 cross talking] rights or IT access rights, whatever that might be. And you've got to get that scenario versus and that kind of very much almost transitioning from a contingent workforce mentality across. To on the other hand, what we see is some scenarios where it's very much a, you know, we're spending 100 million a year on services procurement, what's going on with it, what are we actually getting for our money, what are the results that we're getting from that? And I think there's a lot of frustration around being able to actually measure that frustration in the C-suite, but also frustration within procurement. As you say, for people, it's difficult to get their arms around it, the resistance, it's diffuse within the organization, quite often, you've got a long tail, where you may have like hidden headcount and rogue spend going on, which is quite hard to manage, or has traditionally been quite hard to manage. So I think there were different angles at which...from which people are coming at it. And it will depend on company size, structure, culture, you know, in some organizations, the challenge with procurement might be, we just don't tell people what to do. It's just not the culture of the organization. And we see that even in some really big organizations where it's quite surprising. But in other organizations, it's very much a case of if procurement can get their hands around it, if they can get the right processes and systems and you know, the seat at the table to get this under control, then, you know, there will be mandates, and there will be set processes if they need people to go through. But in theory, that should then provide a better experience for the end-user, in the sense; they'll be using the best suppliers getting the best results out of them. And you know, the overall contribution to the business will be much easier to measure and recognize.
Tim Woodall [08:38]: Yeah, absolutely. I totally agree. And I think you know, IR35, and we can touch on that it's going to be a driver of that. But not only that, the wider economic situation, and budgets being hugely under pressure. And obviously, the financial outlook for next year is really uncertain. And if you are in an organization and saying, spending 100 million on consultants, if you could even save 10% of that, and the program hasn't been intentionally managed today, I think that's not necessarily an unrealistic target. Who doesn't want to book that sort of saving, regardless of whether it's procurement or the CFO or the wider organization? So I think IR35 helps a lot in that. But I think it's also going to be an economic imperative to look at almost every organization is going to have to look at cost savings, or they already have their financial planning for next year. And this is one area where it's very quick to be able to manage that spend, it's not like you've got a two, three-year contracts, you have to run out and you have to redo those contracts. You can impact the overall spending, the type of spend fairly quickly if you start managing it correctly.
Jonny Dunning [09:43]: Yeah, and as you say, there's huge savings to be made. I mean, even if you know if you've got services procurement happening, where it's not generally going through a competitive bidding process, for example, even that you'd expect to save maybe on 20% on average, and by putting it through the bidding process. And I think there's also, you know, organizations are taking much more of an interest in the sort of the agility of their supply chain. And so they might want to focus on a particular area in their supply chain where they're looking at sustainability, or they're looking at, you know, particular factors that they want to have within their supply chain, but also just the kind of the resilience of their supply chain and the options they have within it. If they're just kind of using the same people all the time, not questioning it and not actually taking through any kind of process. There's lots of input that procurement could add to that, which enriches that whole kind of network of suppliers that they've got and their interactions with those suppliers. And I think you're right, IR35 is...it's a good catalyst, it's a very good catalyst as a clear thing that's happening and is driving a switch to a certain extent, to from some work being delivered by, you know, PSC contractors, to that work being looked at delivering under an outcome basis, and you've also got Brexit. And as I've mentioned before, on previous podcasts, where I think there's almost like a little bit overlooked, in terms of the potential effect that has on the appetite for companies to outsource work. And I think that's something I know, that's something that's kind of, you know, customers, you guys deal with talking about that much?
Tim Woodall [11:23]: No, I was really intrigued when it came up in a previous conversation with Johnny because today if we are seeing it not necessarily being specifically attributed to Brexit. And that being an impact, but in terms of the way you've laid it out as a potential impact. So I definitely think that that's an issue, I think there's one other thing I'd throw in the mix as well, which is, as a result of COVID is the general transition to remote work. And I think that's actually going to aid a more of a transition to outcome-based work, because it's going to be less about who's coming into the office. And if I've got a team of consultants coming into the office, you know, I can see that they're there during the day. And yes, that, you know, I can make a check in terms of, you know, they know, they work that number of hours. Without work, I think that's increasingly happening remotely, certainly for the foreseeable future. You know, in an organization, I'm not necessarily going to have the visibility in terms of...did they work a full day? And I think that's going to drive the sort of shift as well to thinking about it and want to play around the outcomes. And I want to focus around the outcomes rather than understanding, you know, when did they log on and what hours than they log on? I think that could also impact there as well.
Jonny Dunning [12:28]; Yeah, it's interesting, I think it also comes back to looking at this kind of issue of worker tracking, and kind of coming at it from the perspective of a sort of a worker mentality. And I think I see these kind of two different approaches, one where people are very contingent workforce minded. And it's almost like an add-on to their contingent workforce issues at the moment that they're transitioning across the deal with IR35 is pushing this transition the way work gets done. And, but sometimes that still feels to me like a contingent workforce mentality, still talking about workers. And I totally appreciate when people are saying, well, if I'm having consultants coming onsite, is your subcontractors suppliers coming onsite, I need to know who they are because they need building access, we need to have security control over, etc. But ultimately, when people get into a real kind of services driven mindset, they're thinking about an outcome. And to a certain extent, it doesn't matter who's doing it. And that's kind of like, the other end of the scale where people are saying, I just need a piece of work done doesn't matter who's doing it, the supplier is going to get it done for me, they're agreeing to these milestones and these deliverables, these outputs, it's up to them how they get it done, as long as they do it on time into the quality and to the style I want. So it's interesting to kind of see that dynamic going on.
Tim Woodall [13:42]: Yeah, [13:44 inaudible] a part of that, I agree, then that probably reflects, you know, which individuals are involved or which department is running. I agree that that's two different ways of looking at it. And then the second approach that you laid out, I think, it's rarer to see. But it is the right way to go. But there are organizations that are doing it, a previous life of works where there are oil and gas major, and they had every supplier, every statement of work supplier, running through the system, and then they were scoring every project that was done. And then they would review the scores of each of the suppliers. And if you know if you had two or three projects that didn't meet a certain score, you know, you then dropped off the list for eligibility for bidding for future projects for a predetermined period of time. So that type of mentality or those type of case studies perhaps needs to be amplified and perhaps wider, articulated, understood within the industry that it is possible to do that. Because I think, also part of the challenge is how do I articulate and how do I write down the outcome that I want? And I think sometimes that's been a struggle for, even for businesses to articulate, you know, I needed to come in and do some strategy. Okay, well, what's the actual outcome, and what is the outputs that I want to write down on paper? And either you end up with outputs that don't really aren't really too meaningful and are just sort of there to tick a box, or just default back to T and M. And I think that's where we've got the industry's got to continue to evolve beyond that because IR35 will blow a hole in potentially both of those models as well.
Jonny Dunning [15:19]: Yeah, I think that is the continuing education part of the process that we're in at the moment. I mean, if you look at most organizations, in most organizations, they really struggle to get people to write good job descriptions, just like just a standard T and M, it's really, really hard to get people to write good job specs. And so when you're trying to wrap work up and to package it up into an actual fixed deliverable, that's a whole different ballgame altogether. But actually, it's a really pragmatic exercise, very useful exercise for an organization or department to do. Because ultimately, it's in a lot of ways, it can be a much more efficient way of working, if it's in the right scenario, I always say it’s support in terms of whether it's best for a permanent employee, contractor, internal team, external supplier, whatever it might be statement of work, it's also support. Whatever the best resourcing model is for that piece of...to get that objective completed. And, but you know, if you're really understanding what it is you want to get done in the first place.
And I think you need to have flexibility in the way that that is then managed, you know, there are always going to be changes, there are going to be changes through the bidding process. And as a technology provider, that's something that is really interesting to us just in terms of how much flexibility that needs to be within the system you have, you need to have structure, you need to take people through a workflow. But we always kind of take the approach that we don't dictate it don't dictate the specific flow for an organization, we try and support the workflow that is most effective for them. And because some people might need more flexibility around milestones, they might be milestones to be sprints, for example, in some cases in an agile methodology, and or you might need to have these kind of iterative changes make a lot of use of change requests, but you need to track it all and agree at all and make sure it's auditable. And so I think there's always going to be flexibility. And as I say, as a tech provider, we have to we got to do the tech, but we also have to be good at making it work for different people. Because everybody seems to do this differently, in terms of the different approaches that the organizations take, would you say there's any pattern that you see, in terms of the different approaches to managing this type of work fitting into any particular type of industry or other kind of business size or anything like that, that you can kind of really pick out?
Tim Woodall [17:37]: Yeah. I'm not sure that there's a consistent trend by industry. I know most industries like to think they have a specific way of doing things. But I'm not really convinced, certainly in sort of the HR, external workforce world that there's some nuances but in general, I wouldn't say certainly in terms of looking across our customer base and looking at what our customers are doing this sort of trends that are specific to the industry. I think it very much depends on the organization, and it depends on the type of work. And coming back to sort of our previous point we touched on in dependencies, owning that initiative within the company. And going back to your paradigm of whether it’s contingent, or whether it's not or not, the one organization that we haven't really talked about there, that can often have a key role is finance. Right. And I think the, for me, one of the big impacts is whether finance is involved in the process. Because a lot of the way I think that these statement of work programs often fall down is because they haven't pre-engaged finance or finance haven't necessarily been engaged in the correct way.
And what you typically see is that the program then becomes a lot of admin work around your point about tech having the flexibility, you know, they end up having to do additional processes outside of tech too. And that's because the process is, in most cases haven't been engineered correctly, because finance haven't been bought in. So a classic example of, you know, maybe you still require purchase orders or goods received notices, where actually you can remove a lot of that if you design the processes and get the approvals upfront and understand exactly what works been engaged and who signed that off. Or you know, I see a lot of situations as they have a lot of programs where they use the VMAs or whatever the system is being used manage statement of work, almost to reconcile manual supplier invoices. And then it is always sort of work had to go on before the invoice can then be sent to finance payment where, you know, there's automated solutions that are a core part of the technology to support those processes, but they haven't been able to be deployed. And to me, I think, when I look at sort of one of the trends is whether a key one in terms of indicators of success is whether finance are a key to the stakeholder.
Jonny Dunning [19:51]; Yeah, you know, as you say, if you're trying to put processes and technology and automate, you know, the end to end kind of source to pay price as much as possible. That kind of defeats the object to be having to step out and take on manual processes.
Tim Woodall [20:03]: Exactly.
Jonny Dunning [20:04]: But in terms of what you're talking about with regards to finance buying. And are you talking about that, from a systems point of view, or from a...? Just want to go into that in a little bit more depth really, because, you know, something that we see quite a lot is, you know, but clearly a very important part of the process is how invoices are managed, how payments are managed, and all that sort of thing. Whether it's a recruitment, intermediate, and MSP managing it for a client, or whether it's a client running the process directly. So that might include for example, whatever you're using to manage your...whatever technology you using to manage your SAW process will need an interface with your finance system, whether that's a flat-file export, an API integration, or maybe just emails pointing out to a finance system or to a finance team. So is that what you're referring to in terms of the managing the invoicing part of the process? Or is it just in terms of the kind of solution design element of it, where if you got finance involved in the first place, then there'd be a lot less problems when you go to roll it out?
Tim Woodall [21:05]: I think a large part of it is solution design. But I think it's wider than that. Because I think finance often have really strong relationships with the business and having them maybe bought into why you're doing it. And then also championing while you're doing it, I think can make a huge difference to the program. And you know, finance also got a vested interest in procurement in saving money as much as possible. And where the process if it's done correctly, it's not just a case of the you know, the solution working well, the pieces of tech, if anything, often, we will see actually there is a significant automation or time-saving potential for finance. And then it can remove a lot of the work that they have to do when this isn't, isn't well structured. And therefore you get their buy-in because you're significantly improving their life and reducing the amount of engagement they have to do.
Jonny Dunning [21:55]: Yeah, I mean, when you put it like that, the involvement of finances, they should be one of the key drivers of putting these types of programs in place. Because, you know, ultimately they should be looking at what's happening in the business and saying, okay, we spent 150 million last year on services, what do we get for it? You know, what were the projects, who did learn, what was the result, was it on time, our budget, which supplies were using, are they're doing a good job? And that's where they need to leverage procurement, the procurement needs to be given the tools and the mandate to do the job, to be able to provide that sort of information. So I do agree they are a crucial, crucial stakeholder. And I think quite often, you'll see the decisions around these sorts of things sitting with, for example, the CFO, and a lot of cases where they want to sign off a process.
Tim Woodall [22:41]: Absolutely. And there's a large organization that we've been working with, the first thing they did, when COVID hit...the first sort of a policy change that the CFO made, was required all SOW contingency spend to come across his desk, and to receive his approval prior to, you know, any form of sort of market engagement, supplier engagement, whatever it may be. And there's two immediate things that stood out as a result of that, one of which is that process all had to happen by you know because they hadn't set up properly an SOW process. So, you know, there's a whole set of work where somebody who worked in the CFOs, office was closing it all off by email, and collecting up all the information’s of business and doing a very manual process to put it in front of the CEO. Second thing is the number of requests dropped by 20%. Because people don't necessarily want to immediately flag on to the CFO, by the way, and he's going to get this consultancy spend unless they've clearly thought it through. And they've got a very clear case to add to why they want to go down that route. Because they know that there's also immediately questions they're going to come back to, you know, why can't you do this internally? You know, why do we need to go to a third party? What outcome are you hoping to achieve, and to appoint an outcome?
Jonny Dunning [23:53]: Yeah, and it kind of ties into what you mentioned earlier about resistance from the business. You know, ultimately, there’s keeping people happy with having to, you know, whether they have to go through a process or not, or whether to get something signed off or not, but, you know, COVID has kind of pushed that into quite sharp focus in the sense of some organizations are going to say, Look, I'm sorry, but you're going to have to toe the line on this. Because you're the survival of the business, we've got to get these things under control. So you may find that a bit annoying, but you're going to have to just get on with it. And you can see where these major market changes were factors like Brexit, IR35, COVID, in particular, and they just kind of put a different slant on it in terms of the business priority.
Tim Woodall [24:36]: Yeah, temporarily.
Jonny Dunning [24:38]: And I think with regards to corralling that, and as you say, in the situation, you just described where that CFO is signing off all SOW. Was that literally at any level, or was it kind of like, you know, above 10K or 100K or something like that?
Tim Woodall [24:57]: It was, it was any consultancy spend and it wasn't even the signing off of the SOW. It was a signing off to go to market and then signed it...essentially an approval to spend.
Jonny Dunning [25:07]: Yeah. I mean, we quite often see situations where if an SOW is going through at a certain level organizations will say, Okay, if it's over, you know, 50K, that needs to go in front of the CFO, but other stuff might be signed off by line manager, etc. And...
Tim Woodall [25:22]: Yeah.
Jonny Dunning [25:23]: But I think it's in the tails spend where there can be a lot of jiggery-pokery, you know, people getting around headcount freezes, disguised TNM. And, you know, people are very good at breaking stuff down into smaller and smaller chunks to try and get it under the radar where they need to.
Tim Woodall [25:39]: Yeah.
Jonny Dunning [25:40]: But also, that's where some of the small, innovative agile suppliers, as well, which I think is really crucial organizations are more aware of them. Because, you know, if you're using one of the big consultancies, everyone's aware of them. And they're going to be a default choice in lots of cases, which may be the right choice may not be the right choice. But if you don't have the data, you can't, you know, ascertain that, but there are these agile suppliers as well, that needs to be considered. And I think that's something that procurement departments are getting much harder on.
Tim Woodall [26:09]: Absolutely. And there's another organization we're working with as well, who’ve actually slipped that around and, you know, I think, actually, rightly, from a risk perception of saying actually, the biggest IR35 risk is with the smaller suppliers, who might be a one-man band, or who might be more of a sort of hidden contractor versus your… if you're going to hire Accenture you're not going to have an IR35 risk, that's clear. But if you hire you know, these smaller contractors, then yes, it may be classified as consultancy, but it may well fall into IR35 scope if it's not properly defined. So that organization that said everything, anything under 100 K is where they're going to manage their thought rhythm. There SOW spend, partly because procurement have said if it's under 100 K, we're not interested in term, we've got the bandwidth to support it, we're focusing on the bigger, bigger pieces, which is interesting, but anyway, but also because all they have perception, that's where potentially the biggest IR35 risk is involved.
Jonny Dunning [27:06]: Yeah, I think that's certainly very valid. And I think it also kind of reinforces the point I was making earlier that, you know, getting away from that kind of headcount mentality, and that worker mentality of just kind of applying that across the SOW. It needs to start right at the beginning, where you're saying this is not a roll. This is a piece of work, it's like, even when you look at things like rate cards, I think that's kind of a kind of, I find it weird, sometimes, of course, it's got its place. And but you know, if you're assessing Deloitte versus Accenture, based on rate cards, you know, to a certain extent, it's academic, because one of them might take twice the amount of time to do the work than the other one.
Tim Woodall [27:45]: Absolutely.
Jonny Dunning [27:46]: So I think, yeah, just really for organizations to take the view of, you know, start point is what needs to get done. And there are some innovative companies coming through at the moment that are helping out obviously, organizations that are that I'm sure you guys do, as part your service, help people define the work that they're trying to carry out. And we sometimes see in a scenario, if we're deploying for a client via an MSP, for example, or an intermediary, then they might...the intermediary may well, like triage, the statement of work when it comes through and actually add to it help sign it off, and all that sort of thing. And so I think there's a lot that can be done around that. But if you get that right, you're long way down the process to doing the rest of it correctly. But then you still got to make sure that contracts are in place, workflows are followed, you know, milestones are actually achieved, and also that the way that the work is carried out is consistent with what was agreed. And so bearing IR35 in mind, people just have to come in line really, because otherwise, they're going to be closing an unnecessary and unacceptable business risk. And I just don't think that's going to, you know, kind of slide anymore.
Tim Woodall [28:57]: Yeah, I totally agree. And maybe just to pick up on the point that you were making about the rate card. Yeah, I really agree. You know, you can just looking at the rate, or if we want to call it in procurement language, the price in isolation, I think, is a really poor way of looking at it. And in particularly, if you're looking at savings, just to say, you know, we're just going to look at pricing that day in terms of terror in terms of savings. And the client who I mentioned a while ago, who had to look...who was scoring all of the consultancy provided, they always talk to him about a 40, 40, 20 approach, when trying to manage and reduce the overall level of spend, of which only 20% was priced in terms of trying to achieve a savings target. 40% were demand management and 40% were specification, so understanding, you know, right upfront, why do you actually need it in this way? And why do you actually think you need this type of work or this type of supplier? And triage in that in that way with that type of mentality at the beginning was the biggest way they were able to reduce the overall spend rather than just purely looking at the actual price so, I totally agree with you, rate card is just one part of the piece and not necessarily a particular important one.
Jonny Dunning [30:10]: Yeah, and ultimately, supply comparison is complex. And it's not. You know, if you look at supply comparison in goods and materials, it's far simpler. It's much more binary. And, you know, if you're buying 50 red widgets, and, you know, that's far simpler to say, yes, I got them, they're worth 50, they're of the group quality, and I got them on time, at my five depos, for example, compared to a piece of consultancy, and you know, it might be a major strategic piece of consultancy, that's critical to the business. And, but when you're actually making the choice of which supplier, you go to, if you look, historically, the work you've had done by various different suppliers, is a much more complicated scenario to try and compare them. Because you can't just compare project to project could pretty much every project is different. And it's something that I think, I feel like that is like a future step, or it's not the first step right now people just need to get the spending under control, they need to put the proper systems in place, they need to have the right processes in place, you need to use the right partners to help them manage this type of spend.
They need to understand, well recognize the importance, and execute a plan to manage this spend. But definitely, there's huge scope for that supply comparison piece. Something we've been doing loads of workaround with our SPX scoring system where you're looking at various different metrics around suppliers. But it has to be qualitative and quantitative. But ultimately, you need the information stored within a system to be able to achieve that. But that's where you start getting to see the really clever stuff where not only can you retrospectively look at the performance of suppliers, supplier X performed really well in this category while we're using him in that category. They've never performed well in that category. But also you can get more into the kind of strategic predictive side of it, where you could say, this piece of work looks like it would be most effective and carried out by one of these five suppliers based on the information that we've already got. And that's a decent, that's kind of a couple of steps further down the line.
Tim Woodall [32:12]: Yeah, I agree. And actually, one of the things that stands out in terms of just that direction of trouble that you've just articulated in particularly when we're thinking about sort of innovation supplies, one of the models that I'm starting to see, emerge side and this is driven by some of the tech platforms, is where you almost build up a marketplace of let's call them consultants or consultants resources. And then whether it's sort of a service or whether it's a tech, you know, you understand that there's a need for a project or need for a piece of work. And then part don't look at matching that against consultancy in the marketplace and bring those people together who is going to be the platform they work together as a team. But that's also true, that could be true of a lot of the big, big consultancies, suppliers anyway. But actually then saying, actually, what we do is we will take ownership for the deliverable in terms of the climb.
And I'm going to go back five, six years ago, this was, you know, pitched on a this being a concept of somebody who's building a marketplace. And it was, you know, it felt obviously a great idea. But probably the market isn't quite ready now. And I wonder if in terms of who this supplier is going to change as a result of that. And with all the things that we've talked about, there's the sort of the acceleration of moving to outcome work as a result of IR35. And the other things to talk about that model is something that could really come up. And, again, that makes comparison on one level easier, because then you're comparing a team, say, from one of the consultant devices with a team of people, of professionals people together with a much lower markup. But it also makes it difficult in all the ways that you've, you've outlined as well, in terms of trying to compare the players, which I guess is exactly why systems have evolved separate to sort of the general procurement systems. You know, it's one of the questions that I've been asked, why don't you? Why do you need a separate system compared to an Ariba or a Coupa that does service procurement along with everything else else? And the answer is because it's so complex and so nuanced that you can't just buy people in the same way that you buy goods and services, there's a there's a lot of different variables and factors have to be brought into play. And that's why there's a need for specialist systems to pull back.
Jonny Dunning [34:17]: Yeah, I totally agree. And companies are much more comfortable with the idea of using best of breed technology for specific functions these days and knitting it together using you know, sensible simple integrations which are, you know, much more common these days. And there's no reason why specific technologies can't kind of compliment or enhance an overall, you know, procure to pay or source to pay kind of overall procurement system like Ariba or a Coupa or an i-valuer and, but you can't expect one thing to do everything to the greatest highest level, it just is just not possible. And when you look at some of these big systems, you know, it's a fast-moving world now, innovation happen so quickly. These systems are big, they've got big customers, they've been around for a while, you know there's so much more difficult for them to adapt as things change, which is where, you know, their adaptability is based around their ability to integrate with new fast-moving solutions that might be only fulfilling a particular part of the process. But they might be doing that very well, so I think people are much more open to it because I think there's a general understanding that, and, you know, if you look at a lot of those big procurement systems, I feel like my personal opinion is I feel like they're more geared towards goods rather than services.
Tim Woodall [35:35]: Yeah, I agree.
Jonny Dunning [35:37]: But that's partly because the good side of it is simpler. And it doesn't necessarily require something completely separate on its own. But it's also interesting what you're saying about the marketplace side. I mean, if you look at contingent workforce, you know, the growth of marketplaces in contingent workforce is one thing. But also within larger organizations, the growth of use of, for example, private samples, is another aspect of it. And I think the same stands true when you look at services procurement because organizations want to work with their suppliers. And in a lot of cases, they don't necessarily want more suppliers. They want to rationalize it to less suppliers, but they want to make sure they're working with the best suppliers, and they've got great relationships with them. So I think that's where we're certainly seeing the appetite for these almost like private supplier populations, for large organizations to manage because they'll have specific contracts, specific onboarding criteria they want to work with particular organizations, that will be different to the way that somebody else works with them. And that's where I think the marketplace model is difficult to transition across lots of big enterprises because firstly, the marketplace has to define and has to choose the suppliers; they also have to define what a good supplier is. Is there a marker of what a good supplier is? It's also down to them to say what onboarding requirements there are. Whereas that just not going to suit everybody, in my experience. So I think it'll be interesting to see how that plays out. But there's definitely lessons that can be learned from one to the other.
Tim Woodall [37:03]: Yeah, and yeah, I didn't think of the concept of the pirate, the pirate is applied, like me, there's sort of the marketplace doesn't necessarily totally matter cost because you've got that need to bring people together in a project. Whereas on a contingent marketplace, it's always one for one, right? It's more with the person, whereas here, you're talking about one too many. And so I think there's a lot of ways that could play out, those different tools, supplier marketplace, one was really interesting to see which direction they go.
Jonny Dunning [37:35]: Definitely. So going back to the kind of the ownership and the stakeholders involved in these type of services, procurement programs, so obviously, clearly, you know, there's a huge amount of...huge importance in the involvement of procurement. It's massively important that finance are involved in the process, you know, quite often operations need to be involved. And as part of this, and in some cases, it's very relevant, and it crosses over a lot with HR. But what are you seeing and what is your opinion on where the kind of ...who's ultimately responsible? And where are the stakeholders said that should be driving this and managing this process.
Tim Woodall [38:16]: It's interesting, you've touched on HR, I'm struggling to think off the top of my head any statement of work programs that have HR as the sole owner, or the prime time owner. In some cases, they're involved. But when I first started in sort of my career in the contingent workforce industry, you know, it was there was always a sort of like, are HR going to be involved in contingent? And in many cases, your financial HR department saying, nope, not interested. That's totally gone out of the window now on many programs, and many kinds of work with HR is a biggest stakeholders in procurement. And in some cases, you see procurement just involved there, whenever it comes to a contractual piece or KPIs or whatever it may be.
The same is definitely not true for SOW, and I wonder if the industry is going to go in a similar direction of travel, as HR will continue to see the number of permanent employees or the percentage of permanent employee population shrinking and want to get more involved in NSW. But, you know, in almost all cases, the main owner is procurement. And I think the key thing for me comes on, and I would say there's nothing that's critical. But what relationship that procurement have with a business or operations or whatever the term we want to come back to. Are they just seeing a business piece? just you know, you need to have a contract, and it's got to have the terms and conditions in that there? Or is it a function that is really going to add value to the business in terms of helping them to think through what do they need? How do you qualify? How do you find the right suppliers? And this is a problem I think that MSPs have struggled with in terms of their relationship with business stakeholders. Being able to have that intimate knowledge because there are so many different suppliers, being able to talk to a business or talk to a project manager sensibly about what the supply landscape looks like for their particular area, or for their particular project.
And I think in many cases, procurement isn't necessarily able to do that, and haven't got the knowledge to do that. And it'll be interesting to see, other lots of tools emerge, that really give a market analysis of which suppliers might be a good fit for a specific project or, you know, using a lot of the data that is out there to I guess, arm procurement to have a more meaningful conversation with a business. And that’s me, key to a successful managing SOW program is where the business owners see and recognize value that procurement brings beyond just being a tick box process. And a painful exercise that they have to go through to get done wherever they need to get done. And they may end up doing what they were going to do in any way with maybe a few tweaks here and there. That's where we see the sponsorship landscape at the moment.
Jonny Dunning [41:01]: Yeah, I couldn't agree more with regards to the importance of procurement in this process and their ability to add value. And so go back to what you were saying there with regards to, you know, processes happening, how can procurement, understand the supply lines go for a specific area? I kind of see that there's different points that they could get involved in add value there. So they could try and get involved upfront and say, okay, you should be looking to select one from one of these 10 suppliers that I've taken from our supply directory and look to their historical information. Now, that's the kind of point that companies want to get to. But right now, even if projects went through a competitive bidding process, and supplies of that company is already in contact with, were part of that bidding process.
So relevant suppliers were included in bidding process, if that information is captured, and that data is available, then procurement can certainly get involved at the point that bids are starting to come in. And even if they're not coming in, even if they can't provide those insights at the very upfront part, because as I say, that kind of comes later when you've got a more mature program. But there's huge value in just doing that, as I said, you know, value in just running competitive bid process. Also, there's value in using supplier input to tailor this statement of work, to the most effective ways to get it done. Suppliers can come back and say, actually, you don't need those six milestones, we can do it in four, or actually, a more effective way to do it will be like this, this is the way that we would suggest you do it. And that may lead to revisions as you go through to the point of work actually being agreed. But procurement can get involved in that kind of bidding and buying process.
And where, you know, the business stakeholders might not have the time. But also they might have to close a relationship in some ways with some of the suppliers. So they can't necessarily get involved objectively. So, therefore, it's very useful for them to be able to lean on procurement to say, you guys sort that out for me, go and have the battles go and have the kind of you know, straight-up conversations, nail it down, and we'll work with the best supplier. So I think there's massive value. And there's the top-down value as well of the CFO being able to say, what do we spend? Who do we spend it with? What do they do? Did it work? Was it a good result? You know, what do we get for the money? Should we ever do that again? Or is that a lesson learned? So I think there's huge value. But I feel at the moment that there's an emerging recognition of procured the value of procurement. And I think that's, I think with things like COVID, and the economic climate, we'll likely see over the next couple of years that's going to grow. I don't know if you agree with that.
Tim Woodall [43:32]: I would agree in terms of a general…Yeah, as a general rule, yes, absolutely. I think, you know, procurement sort of five, maybe 10,15 years ago was seen as the, you know, a bit of a sort of paper pushers and, you know, tick box, I think there is more recognition of the value they can bring. And I agree with you sort of the holy grail for procurement is being able to come and articulate the market landscape and provide insight the types of business and no, but perhaps the most obvious starting point to your point is, we can help you negotiate an SOW. And that's not just putting it known, a basic set of terms and conditions, but actually, helping you to our earlier point about what is the right outcome, and how do we structure this in the most meaningful way to get to get done what you need to get done? I think you’re right, procurement coming in at that point is, A, I think the most likely point of entry where if they haven't been engaged before, and B, you can add some value without having to break the supply manager relationship.
Jonny Dunning [44:31]: So if we take a scenario where you've got a service procurement category manager, and a business stakeholder wants to get a piece of work done, how in most cases, how much value do you think that category manager could add at the point of creating the requirement? Do you think in most cases, they could add a lot of value just by using sensible and general procurement practices to say you need to be talking about this, you need to talk about what's going to happen with you know timings, delivery. If there's anything else associated with it, do you think or do you think that in most cases, the understanding of the requirement is so specific that it makes it hard to apply those general principles? Or do you think you can kind of contemplative that to a certain extent where procurement could help on every requirement?
Tim Woodall [45:17]: I think for the majority of cases, it would be the former that procurement should be able to come in and add value in terms of, have you thought about this? What's the exit plan for the supplier? Or, you know, are we going to do a handover of IP in terms of what are they creating? How's that going to help us out of our ongoing capability? You know, are there resources that we can talk about? What type of resources are we needing? Do we even have those types of resources internally, before we go externally, you know, is this supply or contracted? I think there is definitely, in the vast majority of cases, and maybe there's some very technical where that might be too niche. But in general, I would strongly advocate with procurement being able to, procurement should be able to add value at that point, [45:50 inaudible] articulated.
Jonny Dunning [46:01]: Yeah, because I feel it's logical to say that they don't need to know the...don't need to understand the detail of everything of you know, a very complicated IT project. But the fundamental principles of what a requirement needs to contain will follow throughout.
Tim Woodall [46:18]: Yeah.
Jonny Dunning [46:19]: So it's going to be interesting to see how this kind of pans out over the next few months, obviously, a hell of a lot going on, particularly in the UK. Be interesting to see, I feel like the UK is going to take a step ahead of the rest of the world because it's being forced to around outcome-based and managing SOW. And I know there's quite a lot going on in the US. I mean, obviously, some of the kind of...some of the laws around disguised employment, particularly places like California are mirroring things like IR35 pretty closely. I know there's similar stuff going on in places like Belgium and the Netherlands, as well, to a certain extent, and, but I do feel like the UK is going to get a head start on this, will be forced to take a bit of a lead on this. And what do you think in terms of what you expect to see in 2021? What sort of kind of timescales and obviously got the clear inflection points of Brexit in January, IR35 in April, but what do you expect to see in terms of a kind of process over the course of 2021?
Tim Woodall [47:20]: Well, I think, yeah, I'll come back. I mean, I just wanted to touch on your point about the UK almost being forced to go ahead. And I agree with that. And, you know, it's easy for us to sit here in the UK and say, yeah, we're going to be the, we're going to be the first but what's interesting is, you know, the UK Government is themselves looking at it. So they're looking at sort of establishing almost their in-house consultancy provider, Crown Consultancy was on the front page of the papers a few weeks ago. Were saying actually, you know, we...I can't remember the figure was but we spent a huge amount with external consultancies across government. Do we need to be we need to understand what that is because we think we're spending far too much money? And next articulating what, you know, to the point the questions you asked about the CFO, who we're spending with, what are we spending it, why are we using them? And should we be using their supplies in the first place?
It's a big list because it's a government. But if they truly move that on, in terms of almost saying we're going to have a almost like an in-house MSP for managing SOW spend across all key government departments, that I think it becomes a very significant game-changer for the general SOW model in the UK. And it's all something that a lot of people can follow. And a lot of organizations has a template. So that, you know, it's very early stages, and there was only a few details that really were made public. So who knows which direction that goes in and which way they go? But, you know, the fact that government is really [48:56 inaudible] the government again, I think, place your point about this being the UK having to go ahead in a lot of this area. Where do you think, I think 2021 will go, I think very little will happen between now and April. You saw where it was almost a dry one that we had last year, that organization or other organizations would prepare themselves and we'd be really prepared.
I'm not convinced that the case some organizations that we talked to, I think a lot of people, the minute it was suspended stopped whatever work they are doing and put it on the back burner, particularly with COVID. So I think there's going to be a lot of scrambling in this sort of the first few months after April after it goes live. And it'll be interesting to see which model or which engagement model, I think there's already been some form of shift anyway to do sort of more statement of work, but I think it's not necessarily truly outcome. And I think that's going to be...they'll almost be a staging point where we have this SOW and there'll be some extra SOW and then it will be pretty quickly questions will start being asked Okay, is this actually truly a real SOW and then that will trigger a lot of I think organizations to think more meaningfully about, how do we structure this quickly? And how do we move to more thinking about outcomes rather than just an alternative engagement model to PSE contractors?
Jonny Dunning [50:10]: Yeah. No, I agree. I feel like people are...I feel like companies are more likely to be prepared earlier than they were last April. And, you know, even if I look at this period now, compared to the same time last year, you know, there was...we were still waiting for the election. So, you know, to a certain extent, people are saying is, IR35 even going to happen? What if, you know, if the conservatives don't get in, then is that going to change things? I think there was a lot of stuff that was kind of hanging around. Whereas now it feels more definitely and obviously, you know, with COVID, everything feels uncertain to a degree. So yeah, I think what you're saying makes complete sense, what you're saying about the government approach. And that's really interesting. That's really interesting.
And, you know, ultimately, if the government are kind of precipitating this type of action, through IR35. And obviously, these changes have taken place in the public sector already, two-three years ago. Yeah, that's very interesting. If the government really fully get on board with it, then I think that's just going to drive the change even faster, is just going to change working practices generally. As I said before, it's still always horses for courses, there's always going to be, you know, the right scenario is to use contractors, the right scenario is where it needs to be permanent employees. And the right scenario is where it should be outcome-based deliverables. But I do feel like the fact is we're experiencing at the moment, and the world is obviously experiencing COVID, that's just driving so much change in a lot of areas. And like you make with the example about remote working, it's just changed work massively.
I saw a graph the other day of the increase in the number of people who now have a dog, and it would restrict them from being able to work in an office, the true metric of whether people are going to be going back to working from an office or not, but there's all these kind of factors that, you know, have just changed and just become different and how many of them will remain and how many of them will obviously, got vaccines coming through now. And how many of them will then just flip back to how they were or how long that'll take. But generally, when you get these kind of major events, technological change happens very, very quickly. And it forces that like the use of, for example, Zoom. And I think it's going to be really, really interesting. And yeah, I think there'll be some positive change, hopefully, that really comes out of it. When you look at some of the stuff that's already going on, that's just totally disorganized, and kind of a bit. bit too much in the gray areas. I think it will just make things more organized, because people will have to be, and it should have benefits for big suppliers and small suppliers. And for organizations, it just means everybody has to do everything properly, also a much greater degree. And yeah, certainly going to be interesting. And any further thoughts in terms of what you're expecting for 2021?
Tim Woodall [53:10]: Well, I think IR35 will definitely happen, because I think that always, you know, and look at what the government's saying about...
Jonny Dunning [53:15]: You sure?
Tim Woodall [53:17]: If you look at what the government saying about the state of the economy, hints that they need to raise taxes, potentially, in the future, I still got to see them walking away from this in terms of this being an income source, at this point, so I put more money on it, then. Yeah, I'd be very confident. In terms of well, I think it will, what will be really interesting is what it will do to a lot of unless a particularly IT, you know, recruitment, because that's where a lot of sort of, there's, you know, obviously the biggest areas, traditionally, and historically PSC contracted with. I think there's going to be a shakeup in that sort of industry in the IT recruitment system, which ones are going to move to the new engagement models, and who's going to be able to create something truly differential and market meeting? And that's going to be something for me to watch in in terms of that types of, they're all there as a contact with the biggest impact and will probably have to be the first movers in terms of moving more towards these models. So there could be some form of convergence between typical provision of IT resources and some of the, you know, the big IT outsourced large-scale providers of the cognitive workflows, and there probably be some sort of convergence between those two ends of the spectrum. What balance, like will be really interesting to see.
Jonny Dunning [54:34]: What about the potential for recruiters to offer kind of project and consulting services and move up the value chain? Is that something you think we might see as well?
Tim Woodall [54:46]: My reference point for this is looking at how of MSCs and the vast majority of MSCs have come out of recruitment backgrounds and recruitment consultancies. It's a very hard leap to make to really, truly structuring a procurement program in all of the ways that we've talked about. If you're bringing in people whose background is recruiting, it's just a totally different mentality to your point and a different skill set. And I think that's also been one of the, frankly, one of the reasons that a lot of organizations have struggled to adopt it because they haven't necessarily been unless there's some exceptions to that. Not necessarily been able to truly articulate a procurement mentality around the statement of work program. So I still would see organizations making that jump. And I think the other big thing is what will truly add value to the client is taking ownership of the deliverable or taking ownership of the milestone. And I see organizations, many organizations struggling to sort of from a risk and liability perspective, wanting to sign up for that, and adjust their engagement models that much where they're going to need to take that in because it will still remain price competitive. But then a lot of organizations will want to place that risk in and of having to do that. And that will, I think that will remove a lot of them from being able to make that leap.
Jonny Dunning [56:00]: Yeah, it'd be an interesting dynamic to watch, because I think I take on board, what you say about the difficulty in transitioning and the gap there is but you know, we're certainly seeing some organizations who are setting up, you know, almost like sub-organizations where they're recruiting people, you know, purely from a procurement background. It's very divorced from the kind of general recruitment operations, but they're just trying to leverage their access to expertise and their access into customers, and just provide fulfill a different slot on the value chain, but I think we're going to see all sorts of different kind of operating models coming up and bubbling up and around in 2021. So it should be very interesting. And I think there's going to be lots of opportunities, as companies look to move forward and do things in a different way. Because there are clear drivers that mean, they have to make changes, whereas otherwise when you look at models, like outcome-based, I mean, it's already massive, you know, SOW spend or service has been something like four times the size of continue workforce in most organizations.
Tim Woodall [56:58]: Absolutely here.
Jonny Dunning [56:59]: But the recognition of it and the sophistication is behind something like contingent workforce at the moment, but I think that's definitely going to change. So yeah, it's going to be an interesting year ahead. Anyway, listen; I really appreciate your time. That's been a fascinating conversation, and some great insights from you really, really appreciate your point of view. And yeah, good luck with everything. And yeah, hopefully, speak again soon, but thank you so much, really appreciate it.
Tim Woodall [57:26]: Now, I've really enjoyed the conversation. So thanks. Have a good day.
Jonny Dunning [57:31]: Excellent. Thanks a lot, Tim.
Tim Woodall [57:33]: Cheers.