Is Procurement Killing Innovation and Destroying Value?
April 20, 2012

Matthew Burrows

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The typical procurement approach, reducing everything down to a common level so they can compare "apples with apples", is very understandable because it makes selection easier.

Often the customer tells the suppliers what the solution is, and the exercise becomes little more than adding a price and confirming certain capabilities.

This approach runs the risk of killing any opportunity for innovation, or for the service provider to share their experience and knowledge, and help build a fit-for-purpose solution to meet the business needs and objectives of their customer.

The standards, best practices, frameworks, tools, technologies are often dictated - which drives a behaviour which can lead to forgetting the purpose of the exercise - to achieve some defined business outcomes

If I want a new bathroom, do I phone up the Plumber and ask how many different types of spanner? Or am I more interested in the outcomes, whether they have achieved similar results before for other customers, and whether I trust them to select the most appropriate tools to complete the task?

I know lots of very good organizations who now refuse to respond to any Requests for Proposals, or take part in any of this type of procurement. Is the object of the exercise to get the lowest price, or is it to achieve the best value for money? If the people who would deliver the best value are unwilling to take part, is this approach fit-for-purpose? The very high project failure rate, and the number of high-profile outsourcing relationship disputes, suggest to me that it's not working.

Matthew Burrows is the Managing Director at BSMimpact.

Related Links:


SFIA Foundation

The priSM Institute


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