Resourcing - the alternatives and why you should care
by MARK DAVID CommitMentor
IACCM regularly researches the issues exercising the minds of our global community. This research has identified managing workload as the top functional issue and work/life balance as the top personal issue. The combination of the two is not surprising as they are effectively two sides of the same coin.
Since the IACCM published its research on the state of commercial management earlier in 2008, the economic impact of the credit crunch is becoming clearer. All the signs are that the drive to ‘do more with less’ is intensifying, putting the workload and work/life balance issues into sharper relief. Working harder, maybe a bit smarter, seems to be the immediate reaction, but it will have a negative impact not only on the individuals involved but also on the results of the organisations within which they work.
This article examines alternative resourcing approaches that have the ability to provide a route to both meeting the operational and cost challenges that we all face and mapping the path to functional excellence and leadership. Commercial leaders need to consider whether they will take up this challenge, or find that it is something that is done to them due to pressures external to their organisation.
There may be a temptation for commercial professionals to view this as solely a consideration for those at a functional or departmental level. It does, however, have as much significance for the future role of individual practitioners by providing opportunities for different types of role and highlighting the real, often latent, challenge to traditional areas of expertise.
So, what are the trends, options, experiences and factors that need consideration in deciding which option, or options, are appropriate for your circumstances or provide you with the opportunity to develop your professional expertise? There is, of course, no unique formula that guarantees success in all situations. It is evident, however, that keeping the status quo is only a short-term option and moving towards a model that blends traditional and alternative resourcing is essential.
I have interviewed a number of leading exponents in the field of alternative resourcing (a full name check and acknowledgements are detailed at the end of this article). These interviews, combined with my operational and consulting experiences introducing alternative resourcing, provide a snapshot of the current leading edge thinking.
What options are there?
The concept of using temporary resources is the oldest form of alternative resourcing. This has created an image in many places that ‘bringing in a temp’ should be limited to specific instances, such as maternity leave cover.
Organisations, however, have the option to use temporary resourcing as part of their overall resourcing plan. This requires them to look at supplementing their resourcing, not only for the traditional reasons but also to anticipate their need for specific skills or additional people to address times of peak operational activity.
This requires the commercial function to have a more detailed understanding of the overall business plans of their company, be able to translate that into a dynamic view of resourcing needs and demonstrate the value of so doing.
In turn, the temporary resourcing service provider needs to be able to provide the right type of resource and with a cost/benefit profile that allows commercial organisations to use this form of alternative resourcing. In my experience, many of the service providers that have offerings of this nature do so as almost as a sideline to their core business of permanent recruitment and, therefore, fail to address the differences, sometimes subtle, in providing resources on a short-term basis.
To avoid the likely disappointing results, using a specialist service provider can provide the ability to appreciate the specific operational needs, identify suitable supplementary resources and be supportive to all parties through what can sometimes be a very short term assignment — Bob Kelly of Advanced Contracting Strategies mentioned, for instance, a high impact three-hour project.
Non-permanent resourcing works most effectively when it is used with precision to supplement core commercial capability, either with the development of the permanent resource as a key by-product of the engagement or to manage a short-term peak of activity.
Third-party expert advisor
The increasing complexity of commercial relationships combined with high levels of contracting failure, most publicly seen in, but not limited to, outsourcing and IT contracts, demands an alternative approach. Whereas there is a strong tendency to look internally and attempt to refine or fix a previous approach, a more astute approach would be to explore whether there are expertise gaps that a third-party advisor could address, fulfilling a specific requirement in a more effective manner and transferring skills and capability into the organisation.
The challenge here is not only finding the right third-party advisor, but also aligning their interests with the needs of the particular project or deal. The method by which a third party is engaged, and how they are rewarded, has a direct effect on their behaviour and the business results. This, combined with more mature offerings from the service providers, such as the governance offerings led by Claude Marais at TPI , provides the organisation with the ability to better accelerate business effectiveness and utilise internal resource.
Aggregators provide a buy-side service that offers significant benefits by leveraging an increased level of spend in specific indirect spend categories. This can provide appreciable cost benefits. Possibly more importantly, it enables the purchasing organisation to focus on the areas that are critical to the success of their company.
Whereas there are regulatory or legal issues associated with the participation in or use of such services these primarily affect public sector organisations, there is significant benefit for most other medium to large companies in using aggregators. The biggest barrier for these companies is the challenge to a purchasing organisation to ‘let go’ and trust a third party to work in their best interests on what Ian Cook of Supply Clusters calls the ‘unimportant many’. Leading edge aggregators like Supply Clusters and Corporate United provide a route to optimising expenditure while focusing resources on the ‘important few’.
Alternative resourcing approaches can include creative methods to achieve operational and cost flexibility while keeping the approach in-house. This provides the organisation with the ability to test and refine the methodology based on experience or changing circumstances without needing to unpick or modify contracts with third-party providers.
Craig Guarente’s innovative deployment of a centre of excellence and shared service centre approach for Oracle’s global contract services organisation started with the expectation that a facility in Romania would provide global 24x7 support. This developed into an approach utilising centres in Romania, Costa Rica, Malaysia, the Philippines and Australia that better manage time zones and business cultural issues, while still delivering on the efficiency objectives contained within the original vision. It is clear that Oracle’s measured approach has strengthened its resourcing strategy implementation and the overall performance of their contract services organisation.
The outsourcing industry in legal and contract management services is relatively young compared with other sectors like IT, finance and HR. There are, however, substantial service offerings that may have at their roots in labour cost arbitrage, but which have developed into more strategic offerings reflecting the overall evolution of the outsourcing marketplace.
Legal services providers like Pontus Global, Pangea3 and UnitedLex, who also provide contract management offerings, apply technology and processes to enable commercial organisations to deliver in ways they otherwise could not, and certainly not within the cost envelope achievable through traditional outsourcing.
There are also interesting developments building on process outsourcing to providing end-to-end solutions. Steve Sopko of UnitedLex has done some notable work in this space utilising IACCM’s Contracting Capability Maturity Model. By looking at the entire contracting life-cycle, understanding how the various functions involved connect, overlap or duplicate, provides the best way to achieve substantial opportunities to improve performance and, in Steve’s experience, has made the funding easier for the necessary automation and services.
The ultimate in alternative resourcing is establishing systems and processes that dramatically change the nature and level of a commercial organisation’s involvement in certain types of transaction. Moving away from an insistence that every transaction should have some form of manual review and involvement regardless of the strategic value or purpose of the transaction can re-orientate the commercial function both to use its resources more effectively and to positively change its perspective and image within a company.
A guide to using these options
These possible solutions are, of course, not mutually exclusive. The ideal solution for any given organisation is likely to involve a combination of approaches. Following are a number of fundamental questions to guide you through the application of these options to best effect:
Why are you doing this?
To date, cost is the number 1 reason for commercial functions to establish alternative resourcing. This is, on one hand, understandable. Cost pressures focus the mind and non-traditional solutions that can maintain or even improve service levels that need to be assessed. On the other hand, reacting to a cost trigger and only considering the cost dimension risks disempowering whoever is driving the future of the commercial function by leading to an immediate solution of doing the same thing, but less expensively, rather than re-assessing an re-inventing to produce an optimal operational solution with a clear path forward.
The most successful approaches happily embrace cost benefits and frequently use cost drivers as the ‘burning platform’ for change. At their core, however, they have a clear strategic vision of the commercial function and its service delivery model. This vision employs alternative resourcing as an essential ingredient rather than the answer to a challenging financial situation.
Are you ready to do this?
There are three dimensions of readiness that need to be achieved. Failure on any of these dimensions will either greatly limit the benefits of alternative resourcing or nullify them completely. Consulting People Ltd., experts in culture change and team dynamics, describe these dimensions as Technical/Professional, Managerial/Rational and Systemic/Cultural.
At the Technical/Professional dimension, considerations include the status of processes and tools. My observation is that commercial professionals still occupy a space where their personal toolkit, mostly contained on their notebook’s hard drive, is still highly valued. Thorough processes underpinned by automation are still the exception. (Think about the negotiation process that you use. Is it one that is used by cross-functional teams consistently from deal to deal or your personal approach that you have developed and has served you well in your career?) They are, however, on the critical path to leveraging the benefit of alternative resourcing.
At the Managerial/Rational dimension, considerations include the management approach to the functional role, the commercial professionals within the organisation, and the day-to-day operations. Strategic alignment and a clear vision of how the commercial function is a positive differentiator in the marketplace are indicators of success.
At the Systemic/Cultural dimension, considerations include individual and organisational flexibility and a willingness to embrace new delivery methods, to develop and learn from new approaches.
Organisations face challenges in all three dimensions. This does not automatically mean that alternative resourcing should not be attempted. Entering the process fully aware of the difficulties involved provides the best opportunity for success. A usual reaction is to try and resolve all issues by focusing simplistically on one dimension to the exclusion of the other two — ‘If we get the processes right, everything else will follow’. Addressing all three dimensions, which is far more challenging, enables positive change in the medium- to long-term.
How do you do this?
The starting point is the realisation that the commercial and resourcing models that have served us well historically are coming to the end of their life and we need to establish an alternative model to serve us beyond the short-term. Successful implementations, like Oracle’s in-house captive global resourcing model, started with a vision of a better way to deliver commercial service aligned with, and in support of, the company’s overall strategic objectives.
Having established a vision, it is then necessary to blueprint the organisation. The IACCM’s generic blueprint is shown in Table 1:
Understanding each aspect of this blueprint will lead to a resourcing approach that defines the:
• type of individuals who are required; • locations of these individuals; • processes that are needed; • tools that are needed; • third-party relationships that need to be established; • organisational and operational interfaces; and • processes for maintaining corporate alignment and support.
Culture change is the most challenging aspect in implementing such a blueprint. This is best illustrated by a few examples:
• automation-enabling performance metrics on dimensions like time and variations from standard provisions; • non-commercial functions being empowered to execute agreements within specified parameters; • resources being located in a different geography and time zone; and • certain functions no longer being performed in-house.
These may not necessarily appear to be radical or novel, but the reaction to them within an organisation can be intense and strongly negative, both from the commercial function and from those functions that are supported by commercial.
Many of the alternative resourcing service providers note an irony: many commercial functions that resist considering different resource models are, at the same time, experts in the buying or selling of outsourcing services, such as HR, IT and telecommunication operational services. Such expertise, of course, requires a keen understanding of organisational needs and options to ensure an effective purchase or sale. It is, however, exceptional for the same perspective to be self-applied by the commercial function.
What does this mean to a commercial function?
The options available mean that alternative resourcing can provide some exciting and beneficial solutions as part of a journey to excellence. Commercial organisations that understand the value they can deliver by focusing on key commercial contributions, rather than an ability to hand-craft a detailed multi-page compliance statement, will put in place a resourcing model that focuses the in-house commercial expertise on these key commercial contributions and supplement them with technology and third-party providers to cover all other areas.
Commercial functions that do not take the steps themselves will find others will do it for them. This can take many forms, ranging from a CFO or COO deciding that whole-scale outsourcing is appropriate, other functions absorbing commercial responsibilities, to the commercial function being reduced to a compliance, box ticking role providing little added value.
What does this mean to a commercial professional?
The development of alternative resourcing provides commercial professionals with two major considerations.
First, an understanding of where their value lies: staying within a comfort zone of contract drafting and detailed compliance work is unlikely to provide a career path beyond the medium term.
Second, the possibility of working as part of an alternative resourcing solution: for instance the prevalence of interim managers who work on a contract for a defined period, say three to six months to address a particular business issue. This, combined with the possibility of part-time working, is providing a new generation of professionals with the ability to create a new work/life balance dynamic.
Where is this going?
The unanimous view among the service providers is that the die has been cast. Alternative resourcing is not a temporary phenomenon after which we’ll go back to more traditional organisational structures. Their sense is that there will be refinements and improvements to the various service offerings, new technological underpinnings and better methods of implementation that ensure that services are seamless and improved. This may not be a surprising viewpoint given that it is in their interests that their vision of the future happens.
This perspective is not, however, simply self-serving. Operational leaders are realising that the intersection of technology and global resourcing provides the capability to support a more effective commercial function. The experience from other functions — like HR and IT — that have been involved in alternative delivery models for many years, teaches us that this is a long-term approach that will need to be refined and re-invented over time rather than being discarded because it may currently have some shortcomings or uncertainties, and that waiting for everything to be clear carries greater dangers than taking action now.
I close by expressing my appreciation of the wide range of experts who kindly agreed to be interviewed and contribute their expert perspective and experience. During one of my interviews, the discussion triggered a memory of the opening passage of a book that I had recently read:
‘Here is Edward Bear coming downstairs now, bump, bump, bump, on the back of his head, behind Christopher Robin. It is, as far as he knows, the only way of coming downstairs, but sometimes he feels that there really is another way, if only he could stop bumping for a moment and think of it.’
This quote from A A Milne’s Winnie The Pooh, beloved by my daughter (and me, I freely admit), captures the feeling of many professionals as they go about their day-to-day activities.
The good news is that whereas specific experiences and some service offerings demonstrate a high level of maturity, overall we are at the early stages of commercial and legal functions embracing and utilising alternative resourcing. The opportunity here is huge.
This article was written following a series of interviews with commercial function leaders and key service providers. Whereas all the views expressed in the article are mine, I greatly appreciate the insights of the following thought leaders:
David Clevenger, Corporate United
Kevin Colangelo, Pangea3
Ian Cook, Supply Clusters
Craig Guarente, Oracle
Bill Huber, TPI
Bob Kelly, Advanced Contracting Strategies
Claude Marais, TPI
David Munn, Pontus Global
Dan Reed, United Lex
Marc Rosen, Corporate United
ABOUT THE AUTHOR
Mark David is the founder and principal of CommitMentor, a consultancy providing innovative commitment management coaching, training and operational services. Mark has over 25-years’ commercial experience living and working in multiple cultures in 31 countries. Mark has been involved with IACCM since its inception, was a board member from 2000 to 2007, the association’s chairman in 2003 and 2004, and is an honorary vice chairman of the IACCM.