How to buy performance in services procurement
What is performance, who are the key buyers and what are the benefits of measuring it?
With Thomas Eveleigh, Global Category Manager, Sodexo
00:00:00 - The gap between buying goods and services when measuring performance
00:05:50 - What's causing the change in how services are being bought
00:17:30 - Shifting mindset from input-based to outcome-based resourcing
00:26:45 - The convergence of outcomes and supplier relationship management
00:31:00 - Definition, capture and measurement of delivery
00:36:20 - Key buyers and stakeholders in services procurement
00:49:30 - RAMP and visibility of the true cost/value of services
00:58:45 - Using technology to get to real ROI
01:06:20 - The opportunity for procurement to leverage their strategic view
01:16:00 - Plans for the book
Episode Highlights
Transcript
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Jonny Dunning: 0:01 Okay. And we’re off. So, Thomas Eveleigh, welcome to the podcast. Thank you very much for joining me. How are you doing?
Thomas Eveleigh: 0:09 Yeah, good. How are you doing?
Jonny Dunning: 0:10 Very good. Thank you! Okay. So, you are currently a global procurement category manager at Sodexo. But I know these things are in flux at the moment in terms of what you’re doing. And what would be great is if you could give a bit of background on what you do, your experience, and your interests in the area of particularly services procurement. That would be really great. And then, we’ve got some brilliant topics to come on to, which also tie into some work you’re doing in writing. What I think is going to be a very interesting book. So, could you just give a snapshot background of your experience so far and what you’re doing?
Thomas Eveleigh: 0:53 Right! So, a lot of people think I sort of fell into procurement. It wasn’t a planned career choice. I worked for a startup about 10 years ago earlier in my career in which we grew from close to inception to over $60 million in revenue, 400 employees within about three or four years. So, massive growth there of what was a service organization. So, it was a branch of the world’s biggest private education firm. And procurement and supply chain was an area. Previously, we didn’t have that greater grip on them. But we needed to in order to scale that quickly. And so what we did was a lot of outsourcing agreements and engagement with service providers in order to scale that up. So, I got a perfect sandbox for learning how to manage the outsource service suppliers, master service agreements, scope of work, and framework agreements with suppliers. Yeah, I did that for about 6 years. And then, that was predominantly FM focused. And so that was a natural transition into what I’ve been doing for the last few years, which is the Academy of Management in the FM space. Which takes us up to where we are today. I am a master student as well, which is the geekier side of my interest here, which is trying to wrap my heads around some of the differences we see in between best practices physical supply chain management and service supply chain management. So, long story short, the thing that fascinates me is we’ve got about 80% of GDP in developed economies which comes from services, typically more than half of third party spend in large PLCs 500. Essentially, it is with service providers. Yet we have relatively low spend on the management and relatively low contract compliance on those third party service agreements. So, the question for me is why. What are the fundamental differences there? And that led me to the outline of a book which I’m tentatively calling, how to Buy performance, which is about how we measure outsource service performance across a range of categories. How does that differ from goods? So, there’s a whole range of different factors I’ve looked at around the growth of services but also a range of different factors around the way that procurement interacts with the business, which is really the most important piece for me. Because performance is much more nebulous and difficult to define in a service context and being able to nail that down. Especially when we’ve got output-based Statement of Work type agreements versus traditionally what would have been time and materials-based agreements. It becomes more and more challenging. And so yeah, we are trying to develop an overarching view of that and a methodology, which may help close that gap. It is the impetus for the book which is, as I say, very much in its infancy. But we are getting there step-by-step.
Jonny Dunning: 4:17 I love your curiosity! I love the passion you put into it. And you clearly have fantastic knowledge in this area. Also, you’re delving deeper all the time. So, I find it really intriguing. Obviously, we’ve spoken briefly before. Immediately, from my point of view, I just thought it would be a great conversation to share with people because I thoroughly agree regarding the gap that exists between measuring performance and buying performance in goods and the ability to be able to do that in services. It has all sorts of implications across the way that organizations culturally interact with their service providers, how they work operationally, how technology fits into the picture, how it ties into the strategy. So, I think, it’s a really intriguing area to discuss. For the conversation today, we’ll be taking the “How to Buy Performance?” Look specifically through the lens of services procurement. And I’m really glad you’re doing this because there aren’t that many people that are delving into this specifically in areas like services procurement. And I think, it’s an area of growing interest, as you say. There are so many spend, going through this type of engagement model. It is becoming more and more prevalent. And we can talk about some of those changes now, in fact, in terms of changes in the reasons why companies actually buy services. So, in your view, what’s changed in the way that companies buy services, or the reasons that they buy services? Sorry! Because if you take services on a very simplistic level, you could say, it’s just another means of getting work done. So, you’re getting things done. Your work is being done. 60 years ago, that would have just been everybody in 9 to 5 jobs for life type situation. Why do you think this has changed? What’s the difference now?
Thomas Eveleigh: 6:11 I think, there are a few different factors which basically impact everything. How do we procure physical goods? It has a basically a lag effect in services as far as I can see. So, if you look at all the major trends, since the mid of the 20th century, around outsourcing, globalization, and especially to low-cost manufacturing regions of China, it has been the obvious one. Effectively, what you’re seeing is all of the best practice for [unclear 6:48] that has firms focusing on a set of core competencies and then looking for strategic advantage from those core competencies. And then, looking for cost advantages and everything else. So, if you look at it in a manufacturing context, Apple is probably the best example. They might have Assembly in California, but a lot of the sub-assemblies and everything they do further upstream is manufactured overseas. And then, it’s imported into the US. Then, finally, the product is assembled and sold. So, if you look at globalization and outsourcing, what you’ve effectively got is easier access to lower labor costs, lower cost of capital, etc. We’ve been seeing that for decades. In fact, I think, now we’re probably seeing the backlash and some of the repercussions of that. We’re seeing nearshoring now. Reemerging is a buzzword and sourcing strategy, rather than far shoring or offshoring. We used to call it. I think, we’ve gone from... If you think about that period from mid-century, up until the end of the 20th century, there is the third industrial revolution that is starting to use computers. It’s starting to use automation in a physical and manufacturing context. We are now in the fourth industrial revolution as the buzzword for it, where we’re seeing that in a cognitive context as well. So, we’re seeing the emergence of remote work. We’re seeing, English is so prevalent now. You could basically hire from almost anywhere on Earth. You’ll find people speaking English that are able to engage with you as a supplier. But I also think about the increasing focus on looking for... This may be partially down to headcount constraints that some organizations have got limited in terms of the number of FTEs. It might be a requirement to convert fixed costs into variable costs, whatever it might be. We’re seeing the same thing on the service side as well. So, looking to gain access to either low costs or greater expertise alternatives from the supply market, rather than what we traditionally have done, which is look in houses, is the main source for that. And I think, COVID just put that obviously at warp speed because of the massive shifts we’ve seen towards remote work. So, I think that’s much more acceptable to think that. Silicon Valley, as an example is likely no longer going to be the only place where you can find highly skilled developers, programmers and people in the tech field. Because now you can effectively look almost anywhere. So, I think that globalization piece is really important because if you’re looking at a global workforce, which is all on your payroll, you’ve got massive complications around tax. You’ve got all sorts of complications around payroll taxes, how to manage them from HR perspective. When you look at your supply chain, you’ve got a lot more flexibility around that. So you start looking at the globalization piece, the outsourcing piece, we’re seeing demographic shifts as well. So, there’s a lot more pressure on public services. So, we’re seeing that in the private context and in the public context as well. But the one that’s really interesting for me from an FM standpoint is around Servitization. So I think, I mean, Sodexo is a perfect example. Sodexo is software as a service platform. So, we’re starting to see the manufacturers in the traditional sense of software developers effectively. We are seeing producers of physical goods, software, services, whatever it is, trying to engage more with the end-customer. So I’ll give a perfect example. I will illustrate this. So Rolls Royce, which is distinct from Rolls Royce luxury cars... Rolls Royce, obviously, does a lot around jet engines and the marine space. I think that’s about half of their revenue today. Don’t quote me on that. But somewhere in the region of 40 to 50%. Today, so they do. Yeah, exactly. We need [unclear 10:55]. So, they produce diesel marine engines that go into ships, which are obviously critically important for shipping container loads of goods around the world. They date for a long time about this concept of power by the hour. And a few years ago, they signed an agreement with a Norwegian shipping line. It is called Nord Line. Whereby they effectively, instead of selling physical asset, and then having third parties maintain that equipment. They use Internet of Things to get sensors on that equipment, and effectively lease it by the hour, so the customer is only paying for what they use. So if you are sitting on a dock, they’re effectively -this idle time- not paying for that capacity. But the manufacturers also got access to enormous loads of data. You can use predictive analytics to figure out when faults are going to occur. They’ve got a much greater integration with that customer. So that is a really gray area. And I guess, we’ll get on to this in a second. But that’s a really gray area. Then, is that a physical good being supplied or is that a service? From both, the perspective of the customer and the manufacturer, that’s a service agreement now. Because they can be measured on service levels, rather than on delivering the goods on time. Was it to [unclear 12:22] etc. So that’s [unclear 12:25]
Jonny Dunning: 12:26 It’s an output that leads to a series of outputs that lead to an outcome. Effectively, you’re buying, that’s what you’re buying, rather than you’re not just buying a thing. You’re buying power by the hour effectively.
Thomas Eveleigh: 12:37 Yeah. Because I mean, from the customer’s perspective, they don’t necessarily want a diesel engine or a diesel generator. What they want is to move goods quickly and cheaply into port so they can sell them to the end-customer. That’s the output they’re looking for. And if Rolls Royce can support that, you’ve got much greater integration of the value chain. And I’m sure we’ll get on to this, but much greater integration of the buyer and the supplier. So, supplier relationship management becomes fundamental to making that service supply chain function properly. So anyway, that’s some of the big picture stuff behind it. I think, globalization, outsourcing, a lot of the stuff we’ve seen in the physical world now has really taken off in the service’s space. And I think... Have you ever read Tom Friedman’s book, The World is Flat?
Jonny Dunning: 13:25 No.
Thomas Eveleigh: 13:26 So, it was 2004 or 5 or 6 somewhere around then... He does a huge amount of research on globalization and takes some brilliant case studies from all over the world on exactly that. So, call centers in India or... There’s a great example is JetBlue. So, they’re headquartered in Salt Lake City, which is a home to a large number of the Mormon community in the States. Because the CEO was a devout Mormon and really focused on family values and wanting parents to be around for the kids and that kind of stuff, he had people working out of their call center remotely, as far back as like, 2001 or 2002.
Jonny Dunning: 14:10 Wow!
Thomas Eveleigh: 14:10 So, Tom Freeman goes into to exploring how this is working, how they start to manage performance. So, even at the employee level, you’re starting to see this shift, as you said, from measuring bums on seats, from measuring inputs to measuring outputs, and having different performance criteria. And that’s again, some of the things that got me thinking here around it. Plus, this trend is not going to stop. We’re not... This isn’t going to stop until 2022. This is something that we need to be prepared for. Because I think that performance gaps are going to get worse unless we can wrap our heads around. How do we measure performance? How do we manage performance in a virtual global world where we’ve got access to talent, not just all over the world, but from suppliers all over the world, from freelancers all over the world, from...? And there are all sorts of implications around that. But what I’m specifically focused on is how we manage performance. How do we specifically third party service supplier performance?
Jonny Dunning: 15:06 Yeah. So, when you look at that shift from input driven to output driven, I do think COVID-19 had a massive effect on that, just the lock-downs, remote working, having to spread out. But prior to that, there was the growth of the gig economy, which was also pushing more task-based and output-based buying of services, whether it’s on a consumer level or business level. And, I just think there was more of a shift in that direction happening anyway. Partly, it is due to things like talent shortages with the growth of high tech industries, and you look at where the focus is around things like cybersecurity, tech development, and digital transformation, you can’t necessarily find those experts within your workforce. You can’t necessarily hire them. So that was pushing this outcome-based outsourced or service-based agenda as well. And I also think that there’s a fundamental underlying change in the way that people work. Maybe, it’s a cultural change but also just a change in what and how people want to be measured, and how people want to be recognized. So, COVID-19 made that really clear. When it’s like people are working from home, well, what are they doing? Well, they might be taking the bins out, walking the dog, looking after the children, homeschooling or whatever. But it might be that they’re still doing a really good job, or maybe they’re doing a better job. But they’re doing it. They’re fitting it in when they can. And they’re just fitting around their life. And I think people are starting to want to work differently, particularly when you get people who are in various areas of high skill shortage. So, take cybersecurity, for example. Do they want to work in a permanent job? Maybe. Maybe not. Everyone’s different, obviously, people have different personalities. But if you’re highly in demand, then maybe you just want to focus on the things that you find particularly interesting. Rather than being put into a situation where you have to work on stuff that’s maybe a bit more outside your real core area of interest or maybe even outside your core area of specialism. So, I feel like there’s this general societal trend towards output-based. But yeah! COVID-19 thing had a big effect on that. But when you look at... So that’s the supply side, in terms of how people work, and how people get things done. But from a buyer’s side, it feels like that shift was taking longer, but it’s been sped up by COVID-19. Because when we were talking before, one of the points you made was that it’s difficult for companies to move from an input-based to an output-based mentality. Let just talk a little bit about your thoughts in that area.
Thomas Eveleigh: 17:47 Yeah! So this is something I’ve seen much more practice than in some of the research that I’ve been doing. It’s often difficult to get a change implemented unless it’s forced externally, which is what COVID-19 is doing. So often, there’s an awful lot of work that has to be done around figuring out how we’re going to measure... How a task gets done? And I can’t really speak to the HR piece. The personnel piece is much more your realm of expertise. But looking at it from the supplier engagement standpoint, that what... I think that first phase of this was taking what would traditionally have been done in the house where the only measurement for that is the number of hours.
Jonny Dunning: 18:47 Yeah!
Thomas Eveleigh: 18:52 The actual performance during that time and how we measure productivity, I think we are getting much better at that. But typically, the unit of measure is hours worked. And then, just taking that external and measuring that based on -that could be- day rates or hour rates or whatever it is. So, essentially, you’re taking a task that would have been done in-house and outsourcing that. And, I think, there’s quite a clear distinction in the US, typically between sort of 1099 and W-2. And you’ve got a clear line between that in this country. I think that’s obviously been blurry for quite a while and HMRC started to clamp down with the IR-35 legislation and trying to trying to narrow that down, but really that’s good and a bad thing in a way, I think. Because it’s going to force companies that want to outsource the task to start thinking more in terms of putting that into a performance-based spec instead of a conformance-based spec. So that could be a statement of work, service level agreement, whatever is going to be. Something where we’re measuring milestones, measuring outputs, rather than measuring inputs effectively. But to go back to what I was saying before, it’s usually very challenging to get stakeholders to look at buying based on outputs. And until we start seeing the cost of labor and the cost of that input going up without seeing an equivalent increase in the performance, we’re trying to measure. So that could be, for example, uptime on an asset in an FM context or specific KPIs measuring or maintenance. But in a consulting or professional services context. that could be a particular success factor we’re looking at for the business. So typically, a stakeholder will have a value driver they’re looking at. But it’s operational, financial, and some strategic measured they’re looking at such as customer growth, or revenue growth. And then, based on that they’ll have a specific outcome, they’re looking for a business, which might be a [unclear 21:12], or it could be symmetrical. We’re looking at it internally. And then I think, there’s a growing realization that just having people work on a project that’s trying to deliver against that aim for a certain period of time typically leads to cost overrun and scope creep. Whereas, if we can nail down... What are the specific milestones we’re looking to achieve to drive towards those things that those stakeholders value most? Are those critical success factors? Are those [unclear 21:48] hours, whatever it is? That becomes a lot easier to manage. And I think that’s -for me is- one of the realizations I’ve had. I think, in a service context, procurements role is much more about bridging that gap, and realizing where and how we measure value from the supply market. Why aren’t we doing this in-house? Are we looking for specific expertise from the supply market, whatever it is, and trying to be able to bridge that gap? It goes a long way towards effectively marrying the internal objectives we’ve got. And what we’re expecting of the supplier. And that naturally evolves way beyond just measuring headcount, measuring by hours, by FTEs, or whatever the equivalent might be.
Jonny Dunning: 22:39 So, there is a quick question for you on that. In terms of managing the internal objectives, when you have labor-based situation, then do you think that requires the same clarity in what those internal objectives are, versus when you’re going to be outsourcing the problem?
Thomas Eveleigh: 23:03 Historically, I would have said, no! But I do think that it’s changing. I think we have seen more and more even in the last sort of 12 to 15 years. Even since, I’ve been working on some of this. I think, internally, we see a lot more delegation of responsibility to the employee from the manager in the traditional sense. And there’s a much greater expectation on the employee to take responsibility for achieving specific objectives. Whereas historically, I didn’t. I wasn’t working in the 1960s. But I can imagine that you wouldn’t have seen that to the same extent you do today. And I think that’s largely because there’s greater respect at least in the west, in quotes. There’s a much greater focus from an HR standpoint and creating a culture of autonomy where employees feel much more engaged. They can connect to the tasks that they’re doing, the work that they’re working on, the project they’re completing to specific outcomes to the organization. They feel a greater sense of engagement in connection with the organizations that they’re working with. So, I think that is changing and helping here as one. That doesn’t just stay within the walls of the firm, I think. I think, a lot of times suppliers realize that customer engagement... I think, whether that’s in a B2C context, or I think more importantly, what we’re talking about here in a B2B context, making sure that we’ve got real long-standing relationships with customers. It’s critical. Because organizations typically spend a lot more to find new customers than to maintain their existing ones. The same thing is true from a supplier management or a sourcing context as well. I think, when we realize that greater supplier engagement and having suppliers connected to the outcomes is what we’re trying to achieve, and that can be incentivized as well. Performance-based metrics and even performance-based payment in contracts that align incentives. I think, we’re seeing some of that same trend that I just described it internally start to translate into supplier relationship management as well.
Jonny Dunning: 25:19 So, I think it’s a really fascinating point. So, I would agree with you that companies do this far better now with their internal employees and whether they use contract workers and other types of materials workers. They’re better at connecting that to productivity. It’s still not the same as saying, get that job done. It’ll cost X. But it’s getting much closer. But I think, the point you made about it flows down to autonomy. People being, hopefully, in good companies, you would think this would have to have more and more for companies to survive in the modern age, is for individuals working with an organization to feel inherently connected to the overall strategy, in the sense that they can understand how what they’re doing, contributes towards the overall strategy, gives meaning to their work, adds so much to the employment or feeling like you’re part of something you’re delivering on objectives, you’re working on a journey with a group of other people aiming towards an objective. Where did that say? That lends itself very nicely to helping companies transition more to saying, what is it that we need to get done? Because I feel like that’s something that companies are getting better at, but I still think they need to get better at it. More so, in services specifically because, as you said, it’s very nebulous. It can be quite vague. It’s so varied. How do you tie down? What’s actually being done? What’s actually being delivered in a piece of consulting, for example. So, the fact that organizations and employees are moving more towards that mindset, I would imagine that’s only going to help with supplier relationships because you’re on the same page, the supplier knows that they need to do a good job. Because the internal buyers are savvy as what it is they actually want. And likewise, the internal buyers and procurement appreciate the actions of the services supplier because they’ve achieved an objective that they know is important. They’ve done what they need to do. And I still feel like that situation I’ve just described is a bit of a panacea that we haven’t quite reached yet. But it sounds like from your perspective, you’re seeing these 2 things coming together more.
Thomas Eveleigh: 27:39 Yeah! So I think, it’s funny. Because I’m trying to relate it to in a general sense to all professional services and outsource services, but typically a lot of the agreements and the relationships that I’ve managed are longer-term. And one thing that is really interesting, you said that internal buyers often know exactly what they want. That might be true for an individual buyer, but when we manage [unclear 28:17] trying to translate that into outcomes that we need a supplier to achieve. You’ve got multiple different stakeholders. You may have an outcome that the business or the stakeholders trying to achieve. But actually breaking that down and putting that into the actual KPIs that we need to have met over the next 12 months from the supplier, or key milestones that we need to have achieved by X date on this project that we’re going to put into the statement of work, that’s much more challenging. Actually, I don’t know if you’ve ever heard of this, but in IT, they’ve got this concept of the watermelon effect. You ever come across this?
Jonny Dunning: 28:57 Describe that I was just about to I was just about to kind of kind of relating this to basically sprints within an Agile process where you’re effectively iteratively working out what you need to do by the time you get to the next point. What’s the watermelon effect?
Thomas Eveleigh: 29:12 So, the watermelon effect, if you slice a watermelon open, obviously it’s green on the outside and red on the inside. From a performance management standpoint, what that means in my experience in the past. We have dashboard of great looking metrics with a supplier. But we’ve still had internal dissatisfaction from stakeholders. This is going back a few years, but it is a perfect example of this. So, it’s effectively what I think it sounds like, which is you’ve got the supplier delivering on what they are contractually obliged to deliver on, but you haven’t got alignment with the outcomes that the business is trying to achieve. So, there’s effectively a gap between output from the supplier and the outcomes the business is trying to achieve. And there are many reasons for that. Partly, as I say, in longer-term engagements, the scope of work, and the service levels that we’re trying to maintain. It might evolve over time. You might have changing requirements within the business, especially nowadays with how quickly things change, financial priorities shift or etc. But actually, I think one of the... As you said, one of the main ways to counter that is to take a more agile approach, and try to break things down even in longer-term agreements to specific things which we’re trying to achieve in much smaller time periods. Yet, effectively, create a series of sprints that get you from stage to stage, rather than these multi-year agreements where -as I say- things change over time. And you can start getting a wider gulf between the supplier on one side, who thinks they’re delivering to spec and the stakeholder on the other side whose requirements need to be better translated into those into those agreements. And that’s part of -I think- the key value proposition for procurement in a service context. And that’s what I think we need to sort of wrap our head around because that’s going to get more and more complex as we start looking at outsourcing more and more output-based work. So, based on a statement of work, etc.
Jonny Dunning: 31:30 So, if you look at that scenario, we’re talking about the iterative process, would you agree that to buy performance or to have performance as the aim to buy performance? You need definition, capture, and delivery. And you need to be able to see all of those things. They need to match up, and you need to measure them. So that doesn’t matter whether that’s happening upfront, or that’s for the lifetime of the project, or whether it’s happening on iterative basis as long as there is clear definition of the objectives, there’s clear capture and acceptance and obviously contracting around that, whether it’s the original contract, whether it’s a variation, order change in the contract, whatever it might be. And then, there’s delivery against those objectives, then you can have this flexible moveable feast that both parties are in alignment on. And you can audit that alignment and make sure it’s happening in the way that it should do. If you can do those simple things, definition, capture, and delivery, then that feels like that’s at the core of solving this problem. Would you agree?
Thomas Eveleigh: 32:49 Absolutely, yeah! This is part of the beauty of... This won’t be a surprise to you, obviously, I’m a big fan of CBO in some of the things you guys are trying to achieve, and that. For me, it is fundamental. It’s like the old Peter Drucker quote, what gets measured gets managed. If you are speaking a different language between your stakeholders and your suppliers, there are ways other than technology where I think procurement can better engage with both of those groups and bring them together. But technology is fundamental here. Because you have to have clear and precise ways of communicating the value that we’re trying to drive for the business and translating that into actual performance targets for the supplier. And that could be performance in terms of actually doing something, or it could be performance in terms of actually achieving an aim, which is very complex and involves thousands of individual tasks. Or it could be just achieving performance on an asset that’s owned by the supplier. But yeah, going through, especially the definition part that is not [unclear 34:04] Is it? No. Because as well as the fact that things are quite often changing over the lifetime of the project, you’ve also got a situation where I think we’ve got value drivers for the business that you’re trying to translate into achievable outcomes for the supplier to put into a contract. But the more and more you shift those value drivers upstream, the more and more risk is shifting to the supplier, which typically comes at a higher cost. So, you’ve got... Yes, it’s a moveable feast. But yeah!
Jonny Dunning: 34:50 So, I mean 100% in agreement... And I think, this is one of the fascinating things for me from a technology point of view if you look at the difference between goods versus services, breaking it down very simply. I think, procurement of goods is a solved problem to a large extent, where you’ve got to a certain extent to this binary transaction. You can engage in things like catalog buying and guided buying. There’s a lot of complexity in the supply chain which has to be considered. But I feel like that’s very much from a technology point of view. I feel like, you can’t apply the same approach to buying goods from a technology perspective, just map that straight on to services because you don’t usually have so much complexity in the supply chain on the services side. But you have far more complexity and nuance in buying this nebulous thing, which is quite hard to tie down, therefore quite hard to measure. It could change along the way. It’s just a lot more work involved. But that’s why, from my point of view, I’m very passionate about a specific problem to solve. But just going back to what you were talking about definitions and stuff there. So, let’s have a quick look at who the key buyers are here. But also, how they can interact with their suppliers because one of the things that I believe happens a lot is, suppliers can be instrumental in helping buyers define their requirement. Now, it depends on how you do that if you’re just going out to one supplier... If it’s just the supplier that you use all the time, then there’s a chance that they might lead you down the garden path a little bit. If they hold the expertise, you might end up paying for buying something that’s much bigger than you need and paying something much more for something than you actually need. But if you’re actively engaging with your supplier population in a meaningful way, and you’re trying to define something that the buyer is not the subject matter expert here, maybe that company doesn’t hold that subject matter expertise. They’re going to experts to say, how should we solve this problem? And I’ve seen that work through the artifacts process where that is very well supported. Let’s talk to me about who you think the key buyers are. Because you’ve made some points on that in the past. And I think, they’re really interesting ones that sometimes get missed. But when it comes to services, where should the focus be on who the key buyers are?
Thomas Eveleigh: 37:13 Right! So, I think it’s worth distinguishing between -I talk a lot about- internal buyers and stakeholders. And I think, they’re not always same thing. So, in a physical supply chain... I get what you’re saying about the technology piece around physical supply chains being a problem solving piece. I think there is a huge amount of complexity on a whole range of topics that I’m not even tangentially involved in, typically. But certainly from experience, if you work with a piece of ERP software or procure to pay suite, often a lot of the work around measuring supply performance cannot be encapsulated into a couple of lines in a purchase order. There’s a lot of work that has gone on behind the scenes. But anyway, let’s get back to the point. I think, oftentimes, in a physical supply chain, what you have is effectively a series of dyadic relationships... dyadic means 2 parties. So, you effectively got raw materials to manufacture, manufacture to distributor, distributor to wholesaler, wholesaler to retailer, retailer to the end-customer, for example. And, of course, actually, it’s not that simple. Because the actual physical supply chain is made up of 1000 different service supply chains as well. But to break it down really simply, in a service supply chain, especially in a business-to business context, you’ll typically have a supplier, a buyer, but the buyer will not often be the one who’s experiencing service delivery. Because, typically, if you’re buying a good, you got a physical product where you... Let’s say, in a consumer context or something, if Amazon delivers it to my house. I know exactly what to expect. It turns up, and as long as it’s not damaged or late, I’m probably going to be relatively happy. In a service contact, you’ve gotta buyer and a supplier, but you’ve also got supplier to a third party. So, let’s say, for example, you outsource a catering agreement. I am as the buyer maybe responsible for sourcing that supplier, selecting them, managing the contract, managing performance, developing a relationship, managing any contractual disputes, etc. But, I may be one of 5000 people who actually go into the cafeteria and buy lunch. So, the experience of service performance is usually experienced by a third party as well. So that becomes quite challenging enough in itself. So, how do you make sure you capture the requirements both of the internal buyer and also that third party stakeholder? There are lots of good ideas around this, but figuring out how to capture that and put that into a dashboard so that you really have a comprehensive 360 views of how well suppliers are performing is easier said than done. So, make sure, you’ve got... It could be a net promoter score, customer satisfaction, it could be sales levels, there’s all different metrics you can look at. But there’s got to be a way to make sure that you’re capturing the key value drivers for the people who are experiencing service, as well as the internal buyer. And that’s a massive oversimplification because there are external stakeholders. There are probably 10 other stakeholders within the organization who are concerned about the performance of the contract. So, it gets messy very quickly. And figuring out how to distill that down and get all those requirements into a dashboard is a part of the third part that goes into the book, and figuring out how to distill that and break that down on time in full delivery is not the key metric that drives performance? Yeah!
Jonny Dunning: 41:13 I think -what you described- it can be frighteningly complex. But that’s why I believe the problems haven’t been solved effectively thus far. Because they are complex problems to solve. They are difficult problems to solve. So, when you look at that scenario where who is the buyer, so quite often, procurement might be seen to a certain extent as a buyer. But, as you’ve said before, the buyers are often in more of an operational role. So, you could have that triadic type relationship just in that context. But also, when you look at, for example, outsourced catering service, then you’ve got the end customer as well. But, ultimately, it’s all about working out. It is still the same thing of defining what it is that you want. And then, capturing it and making sure that delivery is consistent between the two. And if you work out what you want to measure, there will be a way to measure it. Where I think, the industry is right now being so immature in terms of measuring this that there are massive gains to be made without having to boil the ocean and completely solve everything all at once. Because when you’re in a situation where it’s such a difficult problem to solve, what we certainly typically see in a lot of cases is that there might be some organization and compliance around the point of contracting. But after that point, there’s almost nothing. And if its tailspin, then it falls below procurement threshold. There’s very little knowledge of what’s going on. So, this is a black hole, basically. And so even just upping the standards to understanding a bit more definition in the first place, and actually holding suppliers to account can make a huge difference. But in a lot of cases, there is very little competitive supplier activity going on. And I feel like these are the various areas that procurement can really help those buyers. But culturally, sometimes you get the feedback that operational people within organizations see procurement as a blocker. But if people are being empowered by their organization to contribute to the overall strategy, and they understand how and what they’re doing is meaningful in the company’s goals, then surely there’s the right relationship with procurement. You should motivate them to try and get the value out of procurement that they can around helping them define it effectively, helping them make sure they’re getting the best price for the company, helping make sure they’re getting the best service delivered for the company. It feels like, there’s some good things that can happen because of these changes.
Thomas Eveleigh: 44:02 Yeah! There’s a lot of things there that I can touch on. Because some of that is really important. So going back to what you started saying there, which was around the solutions here. So, the thing that I cannot quite wrap my head around is that you’ve got a huge number of services spent and growing. We’re looking to outsource more. And we’ve got more opportunities to get access to niche skills that we really need in an environment where technology is everything. We need to get access to specialist, as you mentioned cybersecurity earlier on. That’s all the stuff that’s being developed around web 3.0. How that’s going to impact the way that we interact with technology. There’s that. I think, in the next 10 years, we’re going to be blown away by how quickly that grows. But the question for me is, is there low hanging fruit around performance management there? I think there’s got to be some hesitancy from organizations who maybe haven’t seen traditional ERP solutions as this panacea that they thought it once was. Actually, we’re probably going to have to look at a multitude of different smaller options. SAS solutions probably being the most logical because of the scale. I mean, everything’s based on... Even in an enterprise context, it’s very easy to scale that from a small team, run pilot programs to roll it out all over the world if you’re a global organization. But I think, it is really surprising to me that, not from just from a technology standpoint but also from a research standpoint, a lot of the thinking around supply chain management today is focused on the physical side. And that’s why, I think this is just such a huge opportunity. I think, as I say, I think, I don’t think these trends stop in 2022. We need to be prepared to be able to tackle these problems for the foreseeable future. During the second point, it’s really interesting that we do a lot of the stuff during the sourcing process, pre-contract award. I think, procurement tends to do quite well. But on the services side, we don’t necessarily have the remit to tackle as much as we do on the good physical side. So, there’s a research from the mid-90s, fear and [unclear 46:49] a couple of academics who looked at the S&P 500. And then, they basically found that America’s largest firms spend about 60% of their third party spend with service providers, for procurement manage less than a third of that under management. So, you’ve got a huge gap in terms of where procurement may be able to add value by greater governance, implementing process, or whatever it might be. But I think the challenge is twofold. Historically, as you say, procurements have been at best as a gatekeeper in some of these categories. At worst, maybe a bottleneck. I don’t want to be uncharitable. I think that in some cases it was seen to slow things down with stakeholders wanting to get projects launched as quickly as possible. And I think, we need to communicate procurements value proposition and to me, what that means is we need to... I think, first we need to act and realize that our first sale is within the organization, rather than with the supply market. We need to act much more as internal consultants than as a transactional function that we are trying to force stakeholders to use, I don’t think that’s a winner. It might work in a commodity setting where we know we’ve got the best price; we can quite easily manage the supply performance. We’ve got fantastic agreements that we can easily demonstrate value on -But that’s much more difficult in- a service context. I think we need to realize that we need to be a trusted partner to the business, rather than just saying we’ve got... We might have a fantastic agreement on paper, but service relationships are much more personal in that. We can’t mandate and force compliance in a service context. Another thing you mentioned which was really interesting is, post-contract. I think this is another thing. I am going back to the watermelon effect. Post contract, there was some study that I’ve seen from Shelby group PWC. They’ve got similar data that anywhere from 16 to 20% of long-term outsourcing agreements leak value over the long term. So if you can imagine, if you bought... If you thought you were paying 40,000 pounds for a car, and you actually got to the dealership may charge you 50, then you would not be very happy. But the exact same thing is happening here in long-term outsourcing agreements. And, being able to, to close that gap, I think, we will go a long way to demonstrating procurements value proposition as delivering long-term value not just in terms of savings that we can demonstrate on day one but in terms of actually driving value into the P&L, which has been a bit of a challenging. Try to translate what we see in a savings report into what the CFO sees at the end of the year when they reconcile their accounts.
Jonny Dunning: 50:02 And I sometimes wonder how much did the CFO see. If they’re looking back at supplier performance with the current information that most organizations have. Are they even going to know that there have been those costs overruns? Or are they just going to know that how much they’ve spent with particular suppliers. They’re completely hamstrung without any of that information. Because where are these cost overruns? Maybe there’s very good reasons for it. But if it comes as a shock, there’s going to be a negative feeling towards the supplier. So, the company looks at consultancies and says, Okay, over the last year, how much we spent with them and how much did the contracts originally cost? And how much did it end up being? Oh, they’re under bidding, and they’re always over. It was always over running. But there might be very good reasons why the organization might have been ineffective internally and supporting what they were doing. If that information is captured, post contracts in an iterative manner, where it’s all being agreed as we go, we’ve agreed we’re going to do this, it’s going to cost that. This has changed, and you guys have taken longer on that. There’s a situation that’s arisen, you put this on the backburner for a while, resource constraints, or whatever it might be. So actually, now it’s going to be slightly changed. But it’s going to cost this. Everyone’s happy. We agree and move on, or actually, the scope has expanded. We’ve now realized from the pilot phase that this new product conversation we’re having is looking really exciting. So, we want to double its scope. If all of those things are actually captured along the way, then theoretically, everyone should be informed and be happy. As long as at every stage, both parties are agreeing to what’s being contracted. And the delivery is happening in a manner that’s consistent with that. And I just think people have just no visibility at all on that at the moment. There’s so much ground to go. I think that these improvements can be just absolutely transformative for organizations. Just go back to another thing you were saying, talking about, the proportion of spending that is on services in... Yeah, I’m sure the report you were saying was in the mid to late 90s. I would imagine it would have grown significantly since then. But when you look at developing countries as well, and the growth that’s going to happen in developing nations, that’s a factor that needs to be considered as well, in the sense that this problem isn’t going to go away. It’s going to get big. Actually, organizations are in the way that we buy services, and it just needs to be more sophisticated. Because the services that you’re buying are sophisticated. The world that we’re operating in is sophisticated. There’s huge complexity in effective supply chain management of goods, logistics, distribution, and all of that stuff. But there’s also real sophistication in what you’re buying from a services point of view. So, it can feel incredibly. It can feel like a problem. It’s so difficult to address. But it has to be addressed because there’s so much money involved in it. And it’s just getting bigger and bigger. But actually, there are quite simple logical steps that can be taken. That even if your definitions are improved by 50% or 20%, or 10%, you’re potentially going to make a big gain. If your measurement of objectives, measurement of contract changes is improved by 10% or 20% or you’re only capturing incremental levels of additional spend under management. There’s just massive gains to be made. Because all of this stuff just feels like it’s really sloppy in a lot of organizations at the moment. There’s very little competitive process around services in some cases. And procurement can’t really keep control of it. Because it’s just all over the place. And they don’t have the right systems or the right process, or the right mandate internally, or maybe their relationship isn’t seen in that way. People are just trying to get around them the whole time. But it can’t go on like that forever. Because another thing COVID-19 did is, it put cost pressures on organizations where they have to say, how much are we spending on all of these different things? Are we spending a massive amount on consulting and professional services? What are we getting for that? It is pretty difficult to answer. So, do you just cut costs or do you actually look at the value? Is that driving our bottom line? Is that driving growth? In which case should we invest more and work with the best suppliers? But I think it’s just such a massive opportunity.
Thomas Eveleigh: 52:01 Yeah. I couldn’t agree more. When you talk about cost pressures during COVID-19 and not just not just reducing total cost, but also how quickly, especially the hospitality sector just had to effectively switch off and back on again. So, I think there’s going to be even more pressure to realize that translating fixed costs into variable costs.
Jonny Dunning: 54:51 Yeah.
Thomas Eveleigh: 54:51 It is one way to manage risk and some of these industries. As you say, are we just going to continue to drive down costs or are we going to... This is something that’s talked about in every procurement supply chain publication. Every single week pretty much is moving beyond cost, even beyond total cost of ownership to overall enterprise value. And even if we can measure that, and even if we can figure out that, yes, cost overruns here. Scope creep here. We manage all these changes, and we have great collaboration with the account managers and project managers on the supplier side. Even if we do a fantastic job with all of that... the question is still on a single project. As you know, unless you’re in a single-source situation, or you’re dealing with a monopoly supply market, presumably you’ve got more than one supplier in this category. So, if you can standardize the metrics there, can you start to benchmark performance between suppliers? Because that then becomes stage 2. As you said earlier, how much visibility does the CFO have over an individual case, supplier category or etc. When it actually gets to the P&L, in my experience in smaller organizations, actually, in some cases, quite a lot, the larger it gets... I don’t know. I would be skeptical. I think that step 1 is getting transparency around that. But then, step 2 is what do we do with that information? What do we... Now, we’re able to capture and clarify metrics, we’re able to define performance better, what do we do around that? Can we then compare value to cost ratio from different suppliers? Can we start to... This is much more sophisticated than we’ve historically done, and perhaps we were ready for it. Perhaps we need a new set, a new framework, a new set of assumptions around how procurement has to relate to the organization and to service suppliers in order to get there. And that’s why I’m trying to build a model around how we might get there and the first. The acronym I’m using is ramp. The first one, “R” is around the role of procurement. So, as I was saying earlier on, evolving from a gatekeeper mindset to more of a consultative selling mindset and working more as an internal partner. And that’s the reason I’ve got that started that process. Because it is fundamental. We need to have greater trust and engagement with those internal stakeholders so that we can gain the trust and start to break down their value drivers into those metrics. But, yeah! I couldn’t agree more, I think. This is just the amount of value to be captured, no matter what direction we take to get there. It’s just enormous, whether that’s on increasing compliance, spend under management or the performance of existing supplier agreements. We’re only seeing the tip of the iceberg, I think.
Jonny Dunning: 58:17 Yeah. So, one of the things he talked about there was organizations having to have like flexible costing models and flexible resourcing models to a certain extent to deal with market fluctuations. But that also naturally lends itself towards a real solid core of employees, and then flexible options around that in terms of getting work done and having service delivered. And one of the things that we’ve touched on... And I guess this is really the watermelon is the perception gap, where you might think you’re measuring something and getting a good result from it. But somebody somewhere else might be indirectly unhappy with that. So, I think that’s a good one that we’ve covered off. But when you talk about measuring supplier performance, and then getting into the really exciting stuff. So, from my point of view, from a technology perspective, what I’m really passionate about is being able to measure return on investment and work out who your best suppliers are. And ultimately, for organizations say, what’s the most effective use of our resources? You can do it. I believe, you can do it. Because you can capture relatively simple quantitative metrics and flexible qualitative metrics around the delivery of every service that you procure. So, if you are genuinely capturing what it is supposed to be delivered, any changes that happened to that along the way, then you being able to say, on a milestone basis, for example, was that milestone delivered on time, on budget, how much scope creep was there? Those are quantitative metrics that can be captured against the project taking into account changes. If you then layer on qualitative feedback from the buying stakeholders, so that could be the operational business stakeholder who’s buying those catering services. It could also be feedback, you know, in terms of quality scoring, or hos how that satisfaction levels from customers that are using that canteen. There are ways to capture that. And there are ways to pull that together to score companies in terms of how you weight the qualitative versus the quantitative. We’re doing some cool stuff with AI around that. We have this SPX metric, which is exactly that supply performance management. So, ultimately, you can then compare suppliers against each other. If you look at it in services, it’s very complicated. Because every project is different. Every service is slightly different. So, it’s very difficult to say, these guys are more expensive than those guys. Because they’re doing different things. But you can say, how did you perform against what you said you were going to do? And did you do what you said you were going to do? And did you do a good job? if you can capture those things, then you can do comparative supply performance. You can categorize it. You can break it down in that case, organizations have this giant opportunity where they can look across their supply base and actually be more open-minded about it, and not just necessarily go with the big guys that they always use. Because they might say, well, we’ve got the supplier over here. He’s doing a great job in that category, say marketing services. Why are we using these people over here that we normally use in finance, in marketing services, because these people have a higher score. They’re actually giving us better value for money. I think, there’s this huge opportunity around that. Once you get into that side of things, then you can start. You obviously have retrospective information. And you can start making predictive insights for a particular type of requirement that comes up, which suppliers are likely to be the ones you want to bring into a bidding process around that. So, I’m leaping ahead into the perfect future there a little bit. But as long as you can start capturing data, quantitative and qualitative information, then you can get a fix on, did they do what they said they were going to do? And do we feel that they did a good job?
Thomas Eveleigh: 1:02:13 Yeah. I think it’s funny. If I’ve got a problem with my... Good example, I got a problem with my computer. I call a call center. They might answer the phone on time. They might diagnose the problem quickly. And they might send me a replacement on time. So, they could hit all the targets from a quantitative standpoint. But if they’re rude on the phone, so I might be unhappy. So that, it is more... Unfortunately, there are a lot of gray areas around how we manage that performance. But we do have to have an agreement with the business and the supplier on how we do that. Otherwise, we’ll never have an... If it’s not purely a mostly objective standard around how we’re evaluating supplier performance. And, if you go back a few years, there was the same thing happening in the FMCG space and B2C space around. But how do you measure customer satisfaction on a broad scale when sales growth and revenue aren’t giving you enough information? And Bain & CO basically broke it down to one simple metric which is, would you be the Net Promoter Score? How likely would you be to recommend using us again? They literally broke it down on a scale of 1 to 10. And then, they collect millions of millions of responses. They start to produce an indicator of a company’s growth over the next 18 months. So, I’m not saying we need anything quite that simplistic, but it does show that you can start to adopt very simple universal measures that might be the start of what could be a very long process towards standardizing some of the performance in this area.
Jonny Dunning: 1:04:16 Also, I think just to throw this into the mix, what if you didn’t need to standardize it? So, the certain things that are going to be standard anyway, and they’re the quantitative metrics that are, what was the milestone delivered on time on budget? And was there any scope creep? How much was the scope creep? So, those are things that are data points and can be captured automatically when you’re putting this stuff through technology. But let’s say for example, the other side of it is the qualitative criteria. But they could be different for each project. So for one project, it might be the buyer is very interested in the supplier being a diverse and sustainable supplier, and having a sustainable second tier supply chain, even in services. But in another project, it might be about communications and the speed of delivery or something like that. But for the buyer, those are still the qualitative factors that they are saying at the beginning of the process, these are important to me. So, if those are defined at the beginning of the process, the way that we work is, you define the quality criteria during the requirements phase effectively. So, you can define what you want to measure that can be very much freeform, where you’re still capturing a measure of quality. So let’s say, for example, you pick 5 criteria, you weight them, and then you score each 1 to 5. You have an aggregate quality score, and you have an aggregate quantitative score. You can still combine that. So, it allows that sort of flexibility because that’s the way to do it. Maybe it isn’t in some circumstances and in some organizations. You’re right! There will be a need for standardization. But I think, if you can engage in this definition, capture, process, it can be more fluid. Because at least you’re saying, this is what I want, and did I get it or not. So, I think, it’s a fascinating area. One of the things, I wanted to mention was that there’s a great opportunity for procurement here as well. And we’ve talked about how the perception of procurement and how they fit into the organization from a buyer’s perspective, and supplier’s perspective. I think, there’s a real opportunity because procurement is in this luxurious position where they see both sides of the process. So in a supplier engagement, they might be looking at the internal stakeholders thinking, Oh, my God, these guys are making a total mess of it. The supplier is trying to do this. They’re always late. They’re, they’re getting it all wrong. They’re saying, they’re going to deliver stuff so that the supplier can do the next step. And they’re not doing it. These things procurement has oversight of the very few parts of the organization will have oversight of. So, I think that they can really play a critical role in acting as the intermediary between the buyer and supplier. And it’s more than just beating the supplier on price. Everyone being honest and upfront in the sense. The company wants to achieve its objectives with the best possible value for money, but everyone’s got to be playing their part. Otherwise, that can give you skewed view. You might be ditching a really good supplier, or they might be getting fed up with working with you. Nobody wants to engage with you as a buyer. So, I feel like there’s an opportunity for procurement itself. If you capture this data, whoever owns this data will be in a pretty important position.
Thomas Eveleigh: 1:07:53 Yeah! Well, that’s definitely true. And I think, going back to your first point, I think, you’re right. If you are in a position where you’re effectively interface between 2 different firms... I think, as you said, it’s not just about looking to penalize and punish suppliers that are not meeting expectations. It’s about looking at the relationship more holistically and saying, well, okay, if we’ve got an agreement with a supplier where we are relying on their expertise, then to use a buzzword that seems to be all over the place but very rarely defined is we may be relying on them for specific innovation. So, we might be looking to improve an internal process, especially for consultants. We might be looking to embed might be a systems integrator, looking to embed different technologies. And this may give us a competitive advantage. If you take a very transactional and arm’s length relationship with that supplier, you haven’t got incentives aligned well enough that they would want to provide that innovation that you haven’t got. Basically, you are setting them up to minimize risk. You’re not setting them up to maximize enterprise value, to maximize innovation, which might lead to revenue growth or entering new market spaces, whatever it might be. So, I think that’s another crucial part here. I don’t think, we’ve really thought enough about procurement not as a gatekeeper to the external market, but as an interface, intermediary, and a relationship manager on both sides to the external market. We’ve got to really think about managing that relationship to use a buzzword “holistically.” Think about it from the supplier’s perspective, how can we incentivize the supplier to do the right thing so that they want to meet all the objectives that we set out in the statement of work and meet all those key milestones? So they really are driven to produce the results that the organization wants to achieve. I think, that’s another area where post contracts when it comes to supply management. That’s an area where I think there’s again, massive value to be added. But again, this is a nuance between service supply chains and good supply chains. If you think about the way it flows in a physical supply chain, historically, you would think about the flow of physical materials. Boxes of stuff being transferred from a manufacturer downstream to a customer, the flow of money... So usually, that’s payments transferring upstream in the supply chain, or downstream if there is a return or something like that, but then also information. And so what we’ve seen the typical terms, the bullwhip effect, which you’ve never heard of that, but, basically, information distortion amplifies as it gets upstream. And that means that there is typically a small shift in demand at the customer level which leads to wild swings in inventory levels for the manufacturer, which is a very expensive problem. We typically invest a lot of time and attention to resolving. But in service or an information supply chain, those flows... If goods and funds are primary in a physical supply chain and in a services supply chain, I think, the reverse is almost true. And this is going to be even more like, blockchain technology becomes more widely adopted. And we start seeing just the prevalence of data availability everywhere. It’s going to be information that becomes primary. It’s going to become data. If you go back to the start of the conversation around, Rolls Royce is power by the hour, data there is... If you don’t have access to data in real time, they cannot predict a potential fault, which could be a massively expensive problem. The data is absolutely crucial there. Everything else can be the managed. We can access supplier financing. There’s all sorts of stuff you can do around the funds and the financial piece and in a service supply chain. The physical flow of materials is becoming less relevant, but it’s information that becomes absolutely critical. So, there’s good reason that Google’s worth nearly $2 trillion.
Jonny Dunning: 1:12:49 Exactly! And, that’s where I talk about the panacea of this. What can be done in the world of services and procurement where organizations can really be looking at return on investment and focused on getting brilliant value and working with the best suppliers? It comes down to very simply being able to capture what it is you want, and what is it you got, which... As we said, at the beginning, it’s a fundamentally simpler exercise within the area of goods. Although there’s clearly other complexities there. You made a point about innovation as well, is a very good one. It’s that classic thing of really harsh QBR with a supplier, and then it beat them up for half an hour. And then say, so what innovation have you got for us? Let’s sit down and think of some innovation for it. It’s not the right context. So, I think, this idea of procurement working in partnership with suppliers is really important and it does work. It made me think of a situation we’re in right now, as an organization, we’re engaging with a large end client, and their procurement team are amazing. They’re absolutely brilliant. They want to get the absolute best that they possibly can out of us. And that’s really obvious in terms of the way that they’re engaging in the process. It’s not just, we’re going to beat you up and push the price down and then never speak to you again. They are partly engaging because we’re in a procurement relevant product. But the way that they’ve engaged has been fantastic in the sense that they were encouraging us and working with us to get the best they possibly could. And when our organizations are working with specialist suppliers, they are wise to take that approach. It’s going to work well for them, particularly when it’s in areas of rare subject matter expertise, etc. Because they need to get the best out of that supplier. And they need to make sure they’re doing the right things. Of course, they need to make sure the supplier is doing the right things. But it can work. As a supplier organization, it’s a great feeling when that happens. It doesn’t mean the supplier feels off the hook, or they don’t really need to try very hard. I’d say, they are motivated to try even harder. But when you look at things like, the alignment of social values, or ESG type concerns between buyers and suppliers as well, all of these things need to be a greater alignment. And also, then it comes down to your reliance on those suppliers and needing to have a resilient services supply chain of organizations that you can really work closely with, and having a diversity within that. But anyway, I’m not going to go on to a completely new different tangent now.
Thomas Eveleigh: 1:15:46 I am going into what you said, like, presumably, that customer could be a fantastic case study, that could be a huge success story, your incentives are aligned. You both want to achieve success. And again, you said, you’re a specialist supplier. So, clearly, they have a vested interest in making sure this is successful. Your incentives are aligned. To me, it sounds like a dream client.
Jonny Dunning: 1:16:10 Yeah, absolutely! Okay! So, I really enjoyed that. Let’s wrap things up for now. I’ve got so many more questions for you. And there’s so many more things that I would like to discuss. I think, we can build some additional conversations. I’d definitely like to do that if you’re up for it. So, in terms of what you’re doing around the book? You mentioned to me previously that you might be developing particular segments and putting them out there to a certain extent, what’s your plan for that?
Thomas Eveleigh: 1:16:42 Well, I mean, up until now, it’s been the mad workings of like Frankenstein here in my home office. So, I’m cognizant. It’s probably longer than it needs to be, do the tidying up. And so my plan is, I’ll put a series of blog posts together, publish them on LinkedIn, try to get some feedback from the wider procurement community, and steer my thinking in the right direction. Possibly, I will get some feedback from people who are in similar circumstances because service procurement is... As we mentioned, it’s a big and very quickly growing world. And I think, there’s a lot of people with a lot of shared experiences that haven’t quite had the opportunity to come together and share best practice. So, that’s what I’m looking to do.
Jonny Dunning: 1:17:30 I think that sounds fantastic. Maybe, we can delve into some more specific topics. For example, if you capture a particular error in a blog post, I know there’s so much detail we could go into some of these areas. You’ve got so much knowledge. And I’m really glad that you’re doing the work on this and looking into it. I think, it’s really an important piece of work that you’re doing. And it’s certainly very interesting. So, I think, there’s going to be lots of opportunity for us to regroup on this as we move forward. But I just really appreciate your time. I found that conversation absolutely fascinating. Hopefully, as you say, it opens up. It’s not necessarily there are the answers. It’s a discussion. Isn’t it? Hopefully, that opens it up for other people who are interested and have some of these questions and want to debate some of these stuff. But I think, you’ve put really interesting points. Certainly, I feel like, I’ve learned some good stuff on it as well. I’ll be looking up that book you mentioned. So, it was: “The World is Flat,” by Tom Friedman.
Thomas Eveleigh: 1:18:34 Yes. Excellent. Good!
Jonny Dunning: 1:18:37 Listen! Thank you so much for your time. I really appreciate it, Tom. Hopefully, we can catch up again soon.
Thomas Eveleigh: 1:18:43 Yeah, absolutely. It’s been fun.
Jonny Dunning: 1:18:45 Brilliant! Best of luck with everything in the meantime. I’ll see you soon. All right.
Thomas Eveleigh: 1:18:49 Thanks, Jonny. Cheers.