The Most Important Person in your Outsourced Procurement Program

You have invested months of time, and many thousands of dollars in getting to this point.  Your scope is defined, you have selected the best service provider in the businesses, transition went smoothly, and now you are ready to go.  Now is the time to let those experts that your supplier lauded during the RFP process loose in your business and watch the savings roll in.

Not so fast.

Source-to-Contract outsourcing is unlike any other form of BPO.  The success of the program is contingent upon your ability to deliver spend to your service provider, and to drive change within your organization.  This is where your Program Manager comes in.  You can have the most finely crafted program, with a service provider that is the perfect match, yet if you are unable to deliver spend and drive change, the program will not meet your expectations.

And here is the problem.  Most companies assign a member of their retained procurement organization to act as the Program Manager, without considering whether their skill set meets the needs of the role.

Imagine for a moment the Program Manager that has great interpersonal skills, has the respect of spend owners and leaders across the company, is able to influence others, and builds a spirit of partnership with her counterpart at your service provider.  Stuff gets done, and it happens fast.  Your service provider becomes an extension of your internal team, and they continually go above and beyond to ensure the success of the program. The program exceeds all expectations.

Conversely, picture the Program Manager that hasn’t been involved in strategic procurement before.  He is not a good influencer, and manages the program passively.  He holds your service provider to every minutia of your contract to ensure they get “value for money”.  Things move slowly.  Getting stakeholder engagement is an uphill battle, and your service provider feels like they are fighting the battle alone.  However, they know that at least the contract protects them against any downside risk should the program fail.  The program does not meet the minimum expectations.

Your Program Manager is the most important person in your outsourced procurement program.  

Making sure she has the know-how needed to succeed will have a material impact on the success of your program.  Things to look out for include:

  • A strong understanding of the procurement value proposition.
  • Intimate knowledge of your service providers’ delivery model.
  • An ability to recognize, and manage to, the leading indicators of success. These may be different than contractual metrics.
  • The fundamental ability to build strong relationships and drive change.
  • Be able to effectively “sell” the benefits of the program to wary stakeholders and spend owners.
  • By proactive, not passive.
  • Addresses issues head on outside of governance, so that governance meetings become forward looking strategy sessions.
  • Be able to integrate your service provider into your organizational culture.

Without these skills, your Program Manager will be limited in her ability to extract the maximum value from your program.  You need to take great care in selecting the right person for the job, and invest in training your Program Manager so that she develops the skill set needed.  By doing so, you significantly increase your chances of success.

 

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