Right-Size It

  • Published on: 17 November 2015
  • By: Eric Romerowski

Quantum Plus advisors serve a wide variety of clients, from large multi-national companies to smaller organisations, helping them source an extensive array of services from third-party service providers, ranging from traditional data centre or end-user support services, to niche skills that are more difficult to find. We were recently engaged by one such smaller client, which required very specialist skills and services, for an assignment that was limited in size (essentially a few external resources required for a short period of time).

One size does not fit all

To identify the service provider best placed to address our client’s needs, we approached a wide variety of suppliers, from very large, well-known organisations to smaller, boutique firms. Whilst many may like to be served by a service provider which has an established brand name, thereby bringing significant experience, respectable credentials, a vast pool of resources, etc., this may not, in reality, always be the best option.

The first hurdle to pass is of course the supplier’s own qualification process. Not all service providers will be interested in all sales opportunities. Submitting to an RFP process is a costly exercise for a supplier, and they will choose which RFP in which they want to invest the cost of sales, i.e. the ones they believe they have the best chances to win, and the ones that will be the most profitable. In the case of our smaller client, all large suppliers we approached actually qualified out from the process, and opted not to respond.

We believe this was actually a wise decision because the second issue clients will face is one that is known in advisor jargon as “tier-matching”. If, hypothetically, a large service provider had been selected to provide services to our smaller client, how strategically critical would they be in the supplier’s client portfolio? This project is likely to have added very little to their overall revenue. In this situation, the supplier is unlikely to assign their best team to the client and in case of any issues arising in service delivery, it is very difficult thereafter for a client to make their voice heard and to get their supplier’s attention.

Sourcing specialist skills

A further consideration in such a supplier selection process is commercial. Whilst larger supplier organisations will be able to provide just about any skills, their pricing structure is likely to be geared towards broader scale engagements. Whereas larger suppliers may not be able to present a very competitive offer to clients with niche requirements, boutique service providers tend to be able to mobilise a small team quickly, which they will charge for in a flexible manner.

The difficulty for potential clients of such engagements is then how to tap into the smaller tier service providers. This is one of the many roles that specialist sourcing advisors such as Quantum Plus can undertake and bring value to. Harnessing the collective knowledge of the service provider market from the entire team and drawing on existing relationships from prior engagements, Quantum Plus was promptly able to compile a short list of service providers to issue an RFP and subsequently select the best proposition. As the chosen provider is a specialist in the skills our client required and because they are still significantly smaller than the client, this is an important engagement for them. Service delivery is currently ongoing but promises to be successful for all parties.