Bill Huber is Managing Director: Digital Platforms & Solutions at sourcing advisors Alsbridge - and one of the best-known figures in the global sourcing advisory space. We met up with Bill at last month's SIG Summit in Orlando, Florida, to get his thoughts on recent developments in the advisory arena and their impact upon individual consultants; the tremendous pace of change in today's sourcing ecosystem; and who really "gets" digital - and (perhaps more importantly) who doesn't...
Outsource: Bill, it’s great to see you again here at the SIG Summit. Lots of interesting things have happened recently over at Alsbridge [see our interview with CEO Chip Wagner here]: how have these changes affected what you’ve been doing?
Bill Huber: It’s a new challenge for me. My previous role was focused on a number of key clients from an overall relationship, strategy and delivery perspective across all of our different offerings, and ensuring that we brought the highest level of engagement quality and innovation to those clients. In my new role, I’ve now become one of those service line leaders, responsible for a group of our offerings across all of our clients, as managing director of the digital platforms and solution service line.
O: So what does that mean for people who aren’t managing directors of digital platforms service lines…?
BH: Very simply it really is to help our clients with the acquisition of hardware and software. “Digital solutions” really come in two forms: there’s the technology they are already buying and for that for the most part our assistance is on a cost/take out basis. We basically assist clients in saving money quickly by knowing the right price points and contracting structures for ubiquitous products like Microsoft, Oracle, Salesforce.
The other piece of the business is the new technology being acquired to transform the business; it’s not something that the client has purchased before, and there isn’t a prior year cost comparison or an existing contract to improve. Instead these are capability acquisitions with the goal of maximising the value of what you’re buying. This value is derived from successfully executing the new functionality being acquired to drive a benefit to the business. This drives a completely different type of sourcing initiative focused on value maximisation rather than just focusing on the cost of the technology being purchased. We ensure that the client has the benefit of realism and pragmatism regarding the timeline and total cost of implementation and necessary change management. Companies are seeking to transform their businesses through technology, but significant time and money are wasted by sourcing strategic initiatives as though they were commodities. Our focus is on preventing that and giving clients predictability on their business cases, time to value and how to get there.
O: Presumably with the remarkable diversity that we now see in the sourcing and outsourcing landscape that must be a pretty rapidly growing area – both within Alsbridge and within sourcing advisory generally.
BH: It is, and companies are obviously trying very hard to transform very quickly – because there are disruptive forces in almost every industry. It’s almost now become over-used to give “Uberisation” as an example. The fact is that companies need to find a way to serve their customers with greater intimacy. In a lot of cases they need to find ways to be more responsive. They are getting competition in all sorts of ways in terms of improving quality, improving reliability, improving cost, gaining insight into why customers are leaving and how to preserve customer retention. And all of these things require different tools to achieve.
As an example, one vertical facing dramatic change is healthcare. There are new regulatory requirements to maintain certain types of patient records, to have interoperability among their different systems and so on. They need to at the same time protect the privacy of that data, and they have been given timelines to meet these various requirements or else face fines. So the only way to do that is to really make sure they’re selecting technology carefully, implementing it intelligently and doing it with a good knowledge going in. Those that don’t (and there are many of them) are facing painful do-overs, cost overruns and change management issues and so on.
This is not a case of rocket science but rather a lack of thoughtful, mature and agile sourcing and execution: it’s really about the application of pragmatic contracting experience, technology experience, change management experience and recognition of a total business case, and the total cost of the implementation of something. It sounds fairly simple but most companies struggle with it. And bringing in an external perspective that sees it, that sees all of the mistakes and the things done well across many companies, becomes valuable in helping to optimise those deals.
O: One of the biggest trends impacting the space over the past few years – certainly one that’s having a tremendous impact on sourcing advisory in particular – is the increasing maturity and capability of internal resources. How would an organisation build competence in that area?
BH: Let me give you an example – and I think this is something you would have seen prevalent here at SIG. Most procurement organisations are still principally talking about a cost savings metric as the primary indicator of success. When you are looking at the business value generated by selecting among different technologies, the cost becomes a lesser factor to the capability, to the reliability, the timeliness – all of these qualitative differences which have a real business value.
The struggle is that most procurement models don’t have any way of assigning value to qualitative differences. The most common thing that they will use is to simply say, “we have comparability and all these things meet our specifications; options B and C also have value-added capabilities.” But they don’t say what the value-add is: it’s just something that is above and beyond the minimum requirement, and it may be really great and really valuable, or it might just be incrementally valuable – and they don’t differentiate. And so with regards to having an approach or the discipline to model that: how are you actually going to put a financial value on that “value-add” in terms of the business utility of that capability? Is it just a nice bell and whistle and it really doesn’t have utility in your case but looks good? Or is it something that will really drive higher levels of productivity, higher customer satisfaction or whatever?
All those different metrics ultimately amount to improved profitability or reduced cost at some level, or reduced risk. So you need to have a metric and a model that is acceptable to finance, to estimate what that actually is (it’s usually a probability-times-impact type of equation). It does take discipline and it takes work to get alignment of all the key stakeholders to agree that: “Yes that is a reasonable model to evaluate this, and yes finance buys into it; we’ll accept that.” It’s an important component when doing these deals that tends to be overlooked during the sourcing process and during the negotiation process.
O: We talk a lot about the changing environment of sourcing advisory, but maybe we don’t talk enough about how that manifests for the sourcing advisor as an individual – because clearly you’ve had to adapt as well in terms of the way you work, and maybe the skills you’ve had to develop. So I’d be really interested to get your take on what that means for you as an individual professional over the past few years. What are you doing differently now, not as an organisation, but as Bill Huber?
BH: I’m honestly not doing anything differently: I’ve always been trying to track what is a unique situation, a unique new set of problems that is arising and what are some possible solutions. If you recall from John Sculley’s [former Apple and PepsiCo CEO who gave the keynote speech at the SIG Summit – ed] discussion this morning, he talks about how it’s OK to borrow ideas, but it’s the ability to put them into a relevant context which is where the meaning is. So I’ve always tried to do that. It’s always interested me. I don’t always do it perfectly, but it is a passion for me.
There are a lot of sourcing advisors who have a similar set of passions. There are unfortunately some sourcing advisors who are a bit more mechanical in their approach; they learn a process and try to apply that process and when the business situation changes, it’s a “Who moved my cheese?” situation and they can be caught flat-footed – and the discerning buyer will be able to tell the difference between that person and the one who can really understand the uniqueness of their situation, but makes sure they’re bringing the right tools, the right processes to really drive value as quickly and reliably as possible and do it in a way that’s going to continue to preserve the client’s options in future, because everything is changing quickly and you can’t plan on a ten-year plan.
O: Do you feel that the clients that you work with generally “get” digital?
BH: I don’t know that anyone actually “gets” digital right now, because it means different things to different people. For a lot of people, digital only means consumer-facing, mobile apps or social types of context. For me it’s much broader. For me it reflects a different way of doing business. It’s faster, with greater agility and it’s certainly focused on improving the customer intimacy or the process intimacy but having more feedback built in, which enables you to be more resilient – and doing all this through the technology.
O: Outsource first met you five years ago, at a SIG event: how are you feeling about this SIG Summit so far? How do you think the content has evolved in the time since we met? What is standing out for you this time?
BH: I’ve always believed that the tone for a SIG event is actually set by the two keynotes on the first two days; everything else that follows can use those keynotes as points of reference and that makes it a tremendous difference. This time we’ve had two very good ones in John Sculley and Chris Wasden. Here is a big thing that is changing in front of us. What are we doing? How are we reacting? I think this conference has been great so far. I think that the level of engagement has been exceptionally high, and one of the best ones I’ve been to in recent years.
O: What is your take on how the content of these keynotes relates to the sourcing profession specifically?
BH: Well we’ve been through several disruptive times in the procurement world. If we go back to the mid-‘90s, it was all of a sudden the dawn of strategic sourcing, and that changed everything – because all of a sudden there was a consultative analytical element added to what we were doing. We weren’t just using smart people who could negotiate strongly. There were some basic analytics applied; even if it was done on spreadsheets – in some cases even on paper – it was analytics-based. It did drive improvements and insights and things like that.
The second big one was not that long after that when the first e-procurement and e-technology started appearing. There were some earlier green-screen-based technologies, but all of a sudden here was Ariba and everything else followed, including very good analytics and contract lifecycle management things. That again was a game-changer, but the technology has incrementally improved since then. You did have things that were focused on greater ease of adoption. But that was also disruptive because it changed how people were doing the work – and how they were thinking about the work.
The third thing, which is now maturing – and I do a lot of business around this – is procurement outsourcing. The services providers who are doing good jobs are mastering the technology and really building in a technology/services hybrid model better than a lot of companies that are doing it internally, because they are built around the different types of work. But again that’s disruptive. And now – as you’ll know if you’ve read any of my papers recently – I think RPA is going to be another factor, and to some degree AI, because a lot of the work we do in spend analytics – and even identifying suppliers, creating RFPs – can be automated.
So disruption continues and people need to be thinking about it; we should be used to it after 20 years of it, but it is happening more quickly, and a lot of what we’ve done – cost mitigation based on running spend analytics and then running an RFP and then aggressively negotiating strategic – that’s just operational hygiene. Yes you can affect potentially a large amount of savings, but it’s still not a strategic activity.
O: It seems like disruption is really part of the zeitgeist right now. If we feel we are being disrupted at a greater pace we’re going to be more urgently responsive to that. Do we feel we might be at risk, because of that, of taking the wrong decisions?
BH: Yes I do and it shocks me sometimes, that such a high percentage of sourcing and procurement professionals, still talk about wanting a seat at the table, talk about wanting to be considered strategic – but have never even read Michael Porter on strategy, to understand that part of strategy is to come up with a sustainable differentiator.
Instead they are focused on short-term, very tactical things. What’s really strategic to your company? Look around. What’s going to make your company more competitive? Is it going to be that you’ve taken out another 2% of your cost? That’s very good and that’s very helpful, but have you done that and not considered whether you’re actually causing inefficiencies in your company in other ways that could magnify that? Or understand that you are putting all of your energy into trying to optimise something that is becoming irrelevant and totally ignoring something that’s going to change the very fabric of your company where some really strong sourcing and contracting expertise teamed up in a close alliance with the business innovators who are trying to build these capabilities – where should you put your top talent in an organisation and your focus in terms of really making a difference?
Most procurement organisations tend to go with what’s comfortable and what’s known. I think there still needs to be a wake-up call, or the stuff will get done – but it will be another group of people outside of procurement that will do the meaningful work and they will bring procurement in right at the last minute potentially to have some say. Potentially a lot of procurement influence in the company will erode if it is perceived that they are trying to sit at the grown-up table but aren’t acting like grown ups.