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Services, Value & The Future of Commercial Professionals

March 28, 2011

Are we getting value?

That is increasingly a question being asked within business and across the public sector. It is especially applicable in the field of service delivery, where comparisons of cost, quality and effectiveness can be especially difficult to measure.

Last week, I had the chance to interview Mike Maiden, Chief Executive of the West Midlands and Staffordshire Probation Trust, a UK public sector body charged with managing a wide variety of offenders within the justice system.

At first glance, Mike might not be an obvious candidate for an interview on the topic of contracts and commercial management. But the harsh realities of public spending cuts, combined with the new rigors of performance management, have driven dramatic changes to accountability and governance standards throughout the public sector – and Mike has been among the first to grasp the critical nature of commercial competence in this new world. Indeed, as one listener commented: “it is people like Mike who truly understand commissioning and recognise that whilst contracts, procurement and commercials are integral, they are an output of the demand analysis and needs assessment.  For so long it’s been the (procurement) tail wagging the (commissioner) dog, and now that is changing”.

Mike  explained the increased focus on the delivery of successful outcomes and how that demands a far more structured approach to the design and management of relationships. He described an environment where direct, contracted and (non-contracted) collaborative resources must be aligned and their interdependencies understood and managed. He also outlined the critical role that the right software can play in supporting management of this increasingly complex environment, highlighting the role that the ‘PAM‘ platform has played.

To be effective, all these resource options require discipline and definition; they also demand high levels of visibility and communication on a one-to-one and one-to-many basis. This can be achieved only if there is a commercial strategy that offers the right frameworks and systems. These include steps such as determining when to use formal contracts; how to introduce greater discipline to traditional collaborative relationships with partner organizations; the creation of commercial models to enable concepts such as payment by results, or to incorporate teaming arrangements that enable non-traditional sources of funding; and the introduction of web-based tools and systems that support performance oversight, ensure transparency and assist communication across the service delivery ecosystem, or supply network.

Such a dramatic shift in direction and needs should represent an exciting opportunity for commercial and contracts experts. Yet will they step forward and assist in the design of these new capabilities, or sit back and await instructions? How many have grasped the potential that such a change represents? The indications thus far are not especially encouraging. Those trained in traditional Procurement have rarely experienced the broader aspects of commercial management; and those on the provider side, who could be  assisting in the design of solutions, are frequently far too focused on individual transactions to contribute at this more strategic level.

No one is immune from the fundamental changes going on around us. To remain relevant and of value, contracts and commercial experts must take the opportunity to provide the strategic and operational framework for the interdependent relationships on which today’s businesses and society rely. As a community, we provide a service. We must answer the question that I asked in the opening to this article – are we giving value? How will we compare when our management starts to assess our cost, quality and effectiveness relative to alternative sources or solutions?

Make sure you can answer that question; and a good start would be to listen to the recording of the webcast with Mike Maiden, which will be available shortly in the IACCM library.

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