Procurement as a Gatekeeper for Professional Services

For many professional service providers, there is a clearly visible trend toward the ascendance of procurement: sourcing and procurement organizations are becoming more powerful and the breadth of the indirect spend under their domain, including professional services procurement, is continuing to increase.

For many sales teams, it may be extremely frustrating to have procurement interposed between you and your end client.While your end client values your professionalism, your in depth knowledge, your industry expertise, your relationship, and your history with the organization, procurement tends to ignore all that value, commoditizing your offerings wherever possible. They will seek to issue RFPs where you used to be sole-sourced as the incumbent, pit you in a bidding war against other ”vendors”, and, most importantly, try to keep you from too much contact with the end users with whom you have prior working relationships or to whom you wish to sell your services.

It’s easy to understand why sourcing and procurement professionals will try this. Much of your leverage and ability to distinguish yourself from other providers comes from your nuanced understanding of, and relationship with, your end users. Procurement people will feel they can shift the lever-age a bit in their favor by insulating the organization from your use of these relationships. This places many sales teams and procurement teams in an adversarial relationship, where sales teams see procurement as “the enemy” that needs to be vanquished.

In many cases this is a losing strategy. Even if you are able to go around procurement to your end users and win an engagement in the short term, your relationship with procurement is likely to worsen as a result, creating an increasingly powerful enemy within the client’s organization. Assuming that procurement is “the enemy” is likely to be a self fulfilling assumption—treating them like the enemy is the best way to ensure that they become one.

A more successful strategy is to build relationships with procurement and turn them from gatekeepers into allies. Given our work on both the procurement and sales sides of the world, we know that while sales teams usually feel that procurement has more leverage, procurement teams usually feel that sales has more leverage (see: Customer Supplier Negotiation Study, Vantage Partners, 2009). What often looks like aggressive behavior in procurement organizations may actually be a defensive reaction when they feel insecure, uncertain, lacking in detailed knowledge about the commodities they’re buying, and under enormous pressure from their internal stakeholders to “not screw up.” So, what often comes across as aggressive nasty behavior is actually procurement people trying to do the best they can in an environment where they feel uncomfortable and out of their depth.

Make an ally out of procurement

One possible strategy to win procurement over is trying to establish a relationship where you can demonstrate how you can help them be more successful at doing their job. For example, this could mean becoming a trusted advisor by helping them understand the marketplace for your services and which of your offerings add the most value to their internal clients, and by assisting them in being able to articulate the unique value you can bring to end users. Arming them with this information will allow them to demonstrate to their own internal stakeholders that they understand their own end users, helping procurement make the case that they are a value-generating organization, not just a team that beats up vendors on price and issues purchase orders.

You should also consider having conversations with procurement without having an “ask”. Too often sales people train procurement people to say “no” to us. We only go to them when we want something, and they think their job is to prevent us from getting it. By having conversations with them without having an ask (especially during times where there is no outstanding RFP and you’re not bidding/competing for work), it may make sense to have a conversation with your  procurement counterparts about thoughts regarding what’s happening in the industry. This way, you are enhancing their knowledge of the industry, which enables them to better meet their role in bringing value to their own internal stakeholders beyond just discounts.

Ultimately, procurement people are people too (notwithstanding some sales teams’ inclination to demonize them and imagine horns and a tail as we look at them). If they have been trained to do apples-to-apples price comparisons in buying widgets and/or if they have not purchased complex professional services before, they may default to simple hourly rate comparisons. As procurement organizations evolve and mature, their mission focuses more on how to add value to their own internal stakeholders and how to be a part of the business, rather than how much of a rate discount they can squeeze out of their sales counterparts. By arming them with the ability to articulate the value your services can bring (and how other providers may not be able to offer the same value), you are enabling them to get better at doing their jobs, getting you closer to becoming their trusted advisor.

Fix a broken relationship

Building a relationship is hard. Fixing a broken relationship is even harder. Sometimes procurement people act as gate keepers because they believe that we have overcharged or underserved their organization in the past, and that their role is to protect their company from predatory sales teams who will take advantage of their company. Sometimes procurement people erect even higher barricades to keep us from their end users because they feel we have disrespected procurement by going around them or excluding them in the past. Sometimes the best first step on the road to repairing a damaged relationship is an appropriate apology.

Apologizing for the negative relationship impact you may have caused may allow you to have a conversation about the relationship you’d like to have. If there is something in particular that prompted the rift, consider apologizing for it in a way that rings true and feels genuine. Ask them “what happened” so that you can hear their partisan point of view, give them a forum to express their thoughts and their side of the story, listen and demonstrate empathy, and acknowledge your good intentions don’t necessarily mitigate the negative impact they may have felt. 

Please note that “I’m sorry we had such a big battle over limits on liability in the last contract cycle” is very different from “I’m sorry we have a really stupid one-sided policy and never give fair indemnification representations”. You can apologize for the detrimental relationship impact without apologizing for corporate policy or the substance for what you believe and feel is fair.

Clarify what it means to have a relationship with procurement Having a clear sense of what you want out of your relationship with procurement and what that relationship looks like may help you set goals for how to interact with procurement and guidelines for your interactions.

There is an ill-conceived notion that having a relationship with procurement means that they pay every penny you ask for, don’t question you about scope, single-source to you without checking the competition, or pay your invoices faster than any other bill. While these would be nice to have, this is Fantasyland, not a reality that you can really hope to achieve.

One way to think about a relationship with procurement might be: a good relationship is one where both parties share appropriate amounts of information and are as transparent as they can be while still meeting their own interests well. They may allow you to talk to your end users if it is useful for crafting value-added components to your proposal that will help procurement be successful and look good. You let each other know about opportunities so that procurement can get the best pricing and terms, and you have the ability to submit timely proposals and suggestions that will both add value to your end users and allow you to make a reasonable margin on your services. They may seek your advice on crafting RFPs if your expertise can be helpful in getting better fit-for-purpose responses. They may also give you the benefit of the doubt if there is a minor incident or a misunderstanding. All these things point to a good professional working relationship. 

The process of building a positive working relationship with procurement may be a long one. Sales people like immediate results and turning procurement from gatekeepers into allies is not likely to be a quick process. However, if you stick with it, over time you may find yourself as more of a trusted advisor for a procurement team, and may find that your gatekeepers become the ushers that bring you in to appropriate conversations with appropriate stakeholders. 

Download The Article

Categories:

Sales, Account Management & Customer-Centricity