How to procure consultancy services – the YPO way

3 years ago, Consultancy+ began a working in partnership with YPO to look to develop a solution to help clients manage and deliver this category of spend more effectively.  In that time we have been on a journey with a number of clients and we have all learned some valuable lessons. We thought we would take the time out to share some of these learns and experiences.

Starting with the solution is not the answer

Procuring consultancy and outsourcing projects is not like procuring other providers. It isn’t transactional. It’s often very specialist. The contract and risk transfer can be complicated. There aren’t many ‘repeat buys’. And the projects themselves are often linked to key strategic goals – so they matter. Therefore, a one size-fits-all delivery model and transactional system led approach is only going to drive non-compliance within organisations and ultimately reduce the ability to manage a good procurement process and deliver real value. 

And we have seen numerous examples of this across both the Private and Public Sector. From examples of high priced traditional consultancy organisations being used just because “it’s what we have always done”, through to body shopping contractors in at extortionate margins where the contracts weren’t reviewed and understood. That’s why any solution must start with understanding the problem and having all options on the table.

Don’t say no

Telling senior leaders that they can’t utilise certain models and solutions is a sure fire way to encourage them to do it without involving you in the process. That is why our service is run through our programme management office to provide a triaging solution to our clients. Looking to understand some key things about the project – what outcomes are required? What internal governance process do you have in place? What is your budget and timeline? What resources are available within the organisation? From here we can then outline the different delivery models and what value can be delivered through each in delivering the desired outcome. We can then ensure that the preferred delivery model is included in the project scope and that providers can be compared like-for-like and are building their commercial models to reflect the correct level of risk transfer and expertise.

One of our clients was looking to engage an outsourced provider to deliver their transformation project. Our proposed solution of delivery via Work Package model, coupled with the introduction of a competitive market exercise, has saved them over £1million on the project to date.

Keeping all options on the table is the key to delivering real value

A key challenge we have seen organisations wrestle with is getting visibility and control of this area of spend – and critically getting procurement in the room to influence and support the process, not just at the end to “sort out the contracts”. Therefore, it’s not enough to support different types of delivery models with our suppliers. It is also important to offer flexible approaches to working with organisations and the stakeholders within them. This allows you to ensure that whatever the need, whatever the approach and whatever the solution, you can add value and drive towards greater levels of compliance and visibility. 

Therefore, we offer a number of different services to support in this area. 

Compliance and invoice management

Compliance and invoice management can be a standalone service or part of a core delivery model. Whether our client knows the supplier that they want to use, or they are engaging one of our pre-approved suppliers, then our team will ensure they are on-boarded effectively and paid quickly in-line with the project schedule. 

This ensures they have fill visibility and control over all of their consultancy spend and a robust solution that can support engagements that are Outside of IR35.

Through utilising a blend of internal, known and supplied resource, we were able to deliver a project to a client that has saved them over 40% of the cost of engaging an external consultancy.

Supplier identification and management

Our unique Gig Economy style marketplace is designed to provide clients with a compliant and specialist pool of suppliers that can deliver on a range of different project areas. This delivers a competitive process and gives them fast access to suppliers so as to ensure they don’t need to research the market, test potential providers and delay their project going live.

Working with a Local Authority, we engaged a specialist consultant via our marketplace that delivered a piece of advisory support that saved them over £7million.

Project scoping & delivery

For clients that simply don’t know their challenge, or know where they want to be, but don’t know how to get there. We offer a fully managed project solution that includes the deployment of a specialist consultant, or team of consultants, to first work with them to scope the delivery process. We can then resource and manage that project on their behalf to drive and deliver the outcomes either through a team of consultants, or through a consultancy partner. 

Our SoW project delivery solution to a central government agency allowed us to report savings of over £600k across a 6month project. In addition, the delivery of the project was rated as the best project they had ever run, by the senior sponsor. 

Savings are only good if the outcome is achieved

Often Procurement find themselves in the position where they are targeted on cashable savings and this is forced on them by the organisation. The outcome of this is that all too often cost savings are the driver – and whilst this is good, it is only suitable if you are comparing like for like. 

So to deliver real value, it is key to understand things such as levels of risk transfer, project and governance approach and the quality of resources and skills available. Only then can cost savings match-up with value, to ensure that it is a true cost saving and not “kicking the can down the road”.

Through our strategic sourcing team, we target a like-for-like savings on consultancy procurement of between 20% and 40% when procuring projects of over £1million. Through this process we also target an upward drive in terms of the risk transfer and management of the service. 

So our top tips . .  .

When it comes to engaging and procuring consultancy projects, our top tips are:
1. Understand the problem. Only through understanding the problem can you discuss the solution and ensure value is being achieved
2. Don’t say no. Whether it’s engaging known resources, or even managing already procured projects, the first step is to get visibility of what’s happening and then look to add value from there. Saying no will only increase organisational non-compliance
3. One size does not fit all. Whether the solution is a time and materials engagement or fixed outcome work package, keep all options on the table
4. Savings are only good if the outcome is achieved. With consultancy services you are buying outcomes and it is the value of those outcomes that should be assessed. Margin savings are only good if the outcome is not compromised

Hopefully this has been helpful. If there is anything more that you need to know or anything else that we can help with then feel free to call the team on 0203 640 7132 or email us at [email protected].