The workflows, data structures and reporting requirements for professional services procurement are fundamentally different to those involved in the procurement of goods. But to provide value, the procurement team needs to manage both effectively, whilst remaining lean.
Of course, the solution is to leverage the benefits of a smart, automated, software solution.
However, when provisioning the right software solution, an important choice needs to be made: Do you look for an all-in-one generic tool that can cover the basics, or do you go for a modular solution that combines the best-in-class capabilities of specialist platforms?
We believe the smart organisations will choose the modular approach. Not only because it reduces the cost, risk and disruption of replacing existing systems entirely, but because it also increases flexibility and agility in the long-term as supply chains and stakeholders' needs evolve.
Professional services procurement cannot sit in isolation
Depending on sector, professional services can represent a very different sized slice of the business' overall spend. For example, in banking and finance, professional services spend represents the vast majority with very little being spent on goods. But in other sectors like retail, manufacturing, pharmaceuticals, the balance of goods versus services swings the other way.
Irrespective of sector, the management of services spend must sit alongside the management of goods for procurement to maximise their value. But trouble creeps in when the two are managed in a system primarily designed for just one.
As discussed earlier, the workflows and data requirements for managing the purchase of a consultancy service are very different to those for managing the purchase of 1000 red widgets. The supplier attributes, statement of work details, milestone
and reporting requirements are all very different.
The majority of all-in-one generic solutions are designed, understandably, for the short-head of use-cases. In other words, to avoid become extremely expensive to develop, they focus on getting it right for the big spend categories and managing the biggest suppliers. For everything else, the procurement process has to be bent or shoe-horned to fit in with the software.
Of course, this creates slow, cumbersome, complicated processes for anyone wanting to manage a purchase or supplier outside of that short-head sweet spot. And because most business spend more on goods
, this means the needs of professional services procurement – especially those in the long-tail – are often neglected and results in business units, frustrated by the complex or lengthy procurement processes, going rogue
By adopting and integrating the dedicated, built-for-purpose features of best-in-class modular solutions, the procurement team can effectively manage very different business stakeholders and supplier management processes without the need for additional admin overhead or headcount.
Delivering real performance with integrated, specialist procurement tools
The choice for integrating specialist tools to cater for the specific needs of services procurement, as well as those for goods, is founded on one core belief: To reap the benefits of any software solution, you need people to actually want to use the tools because they make their jobs easier.
As soon as a software solution imposes friction on a procurement process, it stops procurement delivering cost-savings and value-add. Slow processes lead stakeholders to look for short-cuts. Complicated processes force businesses to look for simpler choices. And once those short-cuts and simpler choices are discovered, they create rogue behaviour, inconsistent supplier performance and uncontrolled spend.
Providing an integrated solution using best-in-class procurement tools, creates an intuitive, timesaving, process for the procurement team, their stakeholders as well as the supplier. Once people are actively choosing to use the software because it makes their jobs easier and more enjoyable, it unlocks the potential for delivering real performance:
All spend is visible and actionable
- Rogue can be traced & eliminated
- Tailspend can be optimised
- Better visibility of cost-saving opportunities
All suppliers' performance can be managed
- Easier to manage the PSL and control the number of suppliers
- Clearer measurement against relevant KPIs
- Better control over commercial terms and framework agreements
- Improved governance including individual SoWs
Procurement teams can be more valuable whilst remaining lean
- Automation increases scope to add value for more stakeholders
- AI powered insights increase cost-saving performance
- Procurement cost can be managed by offloading additional workload to software
For procurement teams to effectively deliver real cost savings as well as support their business's growth and innovation through value-add services, the right software solution is a critical choice.
Creating a scalable foundation by integrating best-in-class solutions is the only way to create a true end-to-end procurement process for managing professional services spend as well as goods.
To find out how to integrate Zivio with your existing ERP and finance systems for better management of your professional services spend, contact us to book a demo