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Sourcing Advisor Relations – best practice

Sourcing Advisor Relations – best practice
February 05, 2015

Sourcing Advisors represent a growing industry of market influencers that are transforming the outsourcing markets across the world. These firms (and independent individuals) are involved in the majority of large and complex ITO and BPO deals, providing a range of services to clients from developing sourcing strategies and target operating models, to running provider selection processes and contract negotiations through to managing transformation, governance programs and deal restructuring. Without Sourcing Advisors, many deals would never have got off the ground, or would have broken down mid-term, and many existing engagements would be far less effective in generating value for the client and margins for the service providers.

Today, service providers recognise Sourcing Advisors as essential components of their clients’ outsourcing journey, and most providers are now investing in their relationship with this community. HCL is one of the pioneers in this space, with the largest dedicated team in the industry. Over the past 6 years, HCL has seen significant growth in its advised deal pipeline and much of this success has been derived from its unique approach to Sourcing Advisor relations.

Historically, Sourcing Advisors spent much of their time running the service provider selection processes for their clients, and their influence in determining which provider should be invited to the bid process was evident. Providers were keen to ensure the Advisor community was well mapped and most relationships with Advisors begin with sharing capability content.

Content Marketing is well understood and there is an underlying assumption that if Advisors understand a provider’s capabilities in detail, this should translate into more deal invitations. There is some truth in this – Advisors clearly need to be well informed on the various propositions in the market and they absolutely need to understand the relative differentiators of the established service providers. However, pushing unsolicited content into the Advisor domain is quite ineffective and sometimes unhelpful. Identifying the right Advisors, at the right time, with the right content is the key. And to do this with any level of effectiveness, you need to have a suite of healthy relationships with a wide network of influential advisors.

The concept of Relationship Management in Sales and Marketing circles is often misunderstood and poorly defined. Relationships necessarily take time; they cannot be forged after a few good meetings. Regular and mutually beneficial interaction is a minimum criteria. A desired outcome of a healthy relationship is trust.

Trust allows you to share intelligence that will benefit both parties. Trust between Sourcing Advisors and Service Providers enables the flow of market and industry intelligence. Advisors need this to identify new projects and to provide the most appropriate guidance to their clients. Service providers need market intelligence to mobilise their sales teams and to minimise opportunity costs of poorly qualified bid pursuits. Good industry intelligence, such as innovative pricing, engagement and delivery models, allows service providers to generate more value for their clients and to differentiate.

Today, the most forward-thinking service providers are leveraging their trusted relationships to promote collaboration with Sourcing Advisors. Because Advisors need to be strictly independent, there are some sensitivities here, but there are many examples of collaborative engagements between Sourcing Advisors and service providers, such as industry review workshops, market development events and service proposition programs.

The reason why Collaboration with Advisors is now so important for service providers stems from the evolution of advisory services over the past few years. Many Advisors today spend much less of their time in the selection process and they are less influential in deciding which providers should be invited to bid. Often the role of the Advisor is to generate a long list of possible providers while the decision on who to include in the formal RFP process is determined by the client. Advisors are spending comparatively more of their time earlier in the process – developing a strategic roadmap for the client’s sourcing journey and creating a compelling business case – rather than running transactions.

What this means is that providers can no longer rely on their great relationships with Advisors to ensure inclusion in RFP processes. The Advisors can only do so much. It is now essential that providers are also engaged with the client long before a selection process begins. If a client has no relationship with a provider at RFP stage, then it’s unlikely that provider will be asked to bid, regardless of what the Advisor is recommending.

Collaboration between Advisors and Providers overcomes this problem by enabling both parties to engage with clients well in advance of a selection process. If both sides are able to identify prospective outsourcing clients early on, there will be benefits for everyone:

  • The Advisor – which typically has no Sales and Marketing engine – is able to access a pipeline of potential clients that they can choose to pursue with greater understanding and conviction;
  • The Provider – which has established Sales and Marketing functions but may have less exposure to specific clients – is able to qualify opportunities better and direct their demand generation efforts with greater acuity and success. The ability to engage with prospective clients earlier on and in more appropriate ways should generate more invitations to winnable RFPs;
  • The Client – who may not be so familiar with industry trends and what other organisations with similar challenges are doing - is able to access expertise and independent guidance at early stages, and therefore follow an accelerated sourcing journey with much greater chances of success and derived value.

Getting into the position where Providers are collaborating with a balanced network of Sourcing Advisors is now the primary objective of mature Advisor Relations programs. As a pre-requisite, there needs to be trust, which itself can only come after regular and mutual interaction with the Advisor community.

Done correctly, the benefits for our industry are compelling: an Advisor community that can offer more comprehensive and up-to-date guidance, a Servicer Provider industry that can develop bespoke solutions before an RFP is published, and a Client market that is better informed on how to manage outsourcing engagements.

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