Last week, I discussed the impact of the supplier-funded model on suppliers and overall spend coverage. What’s really interesting, though, is how the supplier-funded model actually affects customers.
Without skin in the game, customers seem less inclined to be as involved as they should be in pushing the program forward. Without any (obvious) cash outlay, there’s no target Return to achieve because there wasn’t any Investment. For companies to achieve the potential savings and efficiencies of managing services spend, they need to commit the necessary resources and executive support to drive compliance.
They also need to ensure that both internal and supplier users are adequately supported throughout the process, especially one as potentially complex as services. And it is very important to put in place the necessary feedback mechanisms, such as reporting and analytics that will drive continuous improvement.
None of these requirements are earth-shattering – they are the usual building blocks of a successful spend management initiative. The bottom line: Don’t let a “cost-free” solution blind you to what you need to put in place to make your program successful.
-Henry Hwong
