Purchase department is becoming the strategic stakeholder

Procurement departments of clients are becoming an increasingly strategic stakeholder for management consulting firms. Research from the research unit Source shows that 69% of procurement managers are now strongly influencing the purchasing decisions of large consulting projects (>€500,000). Despite their influence at the start of the project, procurement basically disappears after the deal has been struck.

Procurement disappears after deal

The report finds that 69% of procurement managers are now key stakeholders in the selection and negotiation phase. However, despite all the talk in recent years about procurement widening their mandate, the report found that procurement basically disappears after deal. Whilst procurement managers are heavily involved in negotiating on contracts and fees, they disappear completely as soon as the project starts. 80% of procurement managers are rarely involved with assessing the performance of consultants during a project, a number that jumps to 86% in respect of post-project involvement.

Edward Haigh, Director from Source Information Services says: “Despite the assertions of procurement managers that value, rather than price, is of paramount importance in consulting projects, it seems that once a consultant starts work, that’s the last most procurement departments will see of them. That may not be the fault of procurement managers but it certainly represents a failed ambition.”

Preferred supplier lists (PSLs)

The research also shows that purchase departments are increasingly using preferred supplier lists (PSL). From the viewpoint of consultancy firms pitching for large projects, being on a PSL is fundamental - 78% of the total value of all consulting work in a client organization is won by consulting firms on a PSL.