Lead function: “Intelligent Client”, or, “Strategic Sourcing”?

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My old friend, and one time line manager, Dr Barry Varcoe, posted an interesting challenge on his blog. It was one of those blogs which, after reading a couple of times, you just have to respond. Or at least, I do.

The article was titled “The (Un)Intelligent Client” – not in any way disrespecting the ‘intelligence’ of his Corporate Real Estate (CRE) & Facilities Management (FM) peers, but posing a question. That was, essentially, how much knowledge of CRE/FM does the ‘client-side’ team actually need? And the related question, where should the line be drawn between client and supplier responsibility? Barry mentioned that suppliers want to get into, “the ‘smart’ high value work such as portfolio strategy and performance management”, and suppliers also wish to, “deploy their information systems so that they control all of the data of the extended operational chain and can provide ‘seamless’ and comprehensive reporting”. This is all a matter of policy and strategy – does it matter?

I would argue that some parts matter far more than others – and I have seen why, after it has gone wrong. These are the elements that do need an intelligent client, as they are essential.

  1. Management information
  2. Performance Management (including ‘benchmarking’ and performance improvement)
  3. Key internal customer relationship management
  4. Contract management (including financial control, and quality audit compliance)

Management information: the client can push this out to suppliers, to some extent, but only in terms of creating management information. I would always insist that the MI system, that holds and displays the information, at least at the ‘top level’ where the client uses it (and customers, where applicable), should be in-house. When a supplier is changed, the MI system then simply starts being populated by a new supplier. The alternative? – the supplier holds all the MI, and gives the client team access. When the supplier changes, will the client get all this historic trend data? Personally, I doubt it.

Performance Management (including ‘benchmarking’ and performance improvement): the client simply cannot outsource this. There is no client-supplier relationship, no matter how close to being a ‘beautiful partnership’, where it is sensible to ask the supplier to manage it’s own performance. If the intelligent client team is reduced to its absolute minimum, someone is always needed in that team to be the ‘performance manager’. The role is there to research leading practice across the market, to analyse MI and trends, and to challenge the supplier to constantly improve. Looking at Barry’s blog, and the question posed, could this role be performed by a “strategic sourcing” function? I know, from personal experience, that the answer is absolutely, no, it cannot. The performance manager needs deep industry/professional sector knowledge with which to challenge and perhaps ‘coach’ the supplier.

Key internal customer relationship management: this is a role which could potentially go either way, but I would advocate keeping at least the ‘top end’ of this function in-house. For example, the relationship between CRE/FM and the ‘Head of XYZ’ business unit – in a large organisation, potentially responsible for thousands of staff – needs someone ‘in-house’ to be the focal point. At least, to meet every 3-6 months, and to set out plans for a rolling year ahead. The test, as in any relationship, is what happens when things go wrong or get difficult. This is where the in-house role is really needed; of course, if everything is going well, the role is less important. But, if it is not, then to whom does the ‘Head of Business Unit’ complain? And chase for action? The other issue is sensitivity and confidentiality, especially with future planning of business units. In my experience, most internal customers feel more comfortable talking to a fellow member of staff. Probably someone that they have known for some time, and built up a trust and rapport. This could potentially be a supplier senior manager, but “strategic sourcing” will usually screw that up every few years by insisting on ‘market testing’ and losing a perfectly good Account Director.

Contract management (including financial control, and quality audit compliance): this is very simple – of course, a supplier cannot manage its own contract! However, the in-house client role can be limited to change controls, financial and quality audits, etc. The remainder is essentially part of the ‘performance management’ and MI roles above.

So, in summary, and to answer Barry’s question, “Which of the two routes therefore leads to the best sustained performance from the enterprise’s perspective?”, I can say that a small “Intelligent Client” (of “Informed Client” as we used to call it) team is always needed. After all, like in any area of management, you can delegate duties but you cannot delegate responsibility. The employer of any supplier needs to be able to hold the MI it needs, to manage and challenge performance, and to take care of key internal customer relationships. That is not a “sourcing” role – it is the role of the Corporate Real Estate & Facilities Management professional. In my view…..

If you disagree, tell me why – I would genuinely very much welcome all views: [email protected]

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