E-Procurement: Purchasing power
The growth of B2B e-commerce means that people with e-procurement skills are at a premium. Mary Huntington looks at the options open to them and how consultancies are dealing with the shortage
In the brave new e-world, procurement is no longer the Cinderella among corporate functions. In fact, says Damon Jones, e-business director of IT consultancy Origin, e-procurement fever seems to have set in. “People are starting to see it as their toe in the water for e-business,” he says.
This is good news for those with experience in the area. Colin Macklin, MD of e-procurement and supply chain specialist QPEC, says: “It is a time of very great change, processes are being re-evaluated and new courses plotted. For those who are e-literate it is a fantastic time. People in the know can make very fast progress on their personal agendas and, if they are clever, within company agendas.”
Most large companies, he says, know they are going to have to effect strategy in this area and recognise that they need key personnel with understanding and proficiency within this new skill set. But, he says, there is a very limited resource pool of such people.
Chris Sale of recruitment consultancy Prism agrees. “There is a very high level of interest in e-procurement but there aren’t vast numbers of people with the skills required. The demand is for people with hands-on experience of defining and, vitally, implementing e-business based solutions with clients. And that applies in spades to e-procurement.”
Jason La Bastide of recruitment consultancy Aaron Millar says: “A lot of consultancies are looking for knowledge of the core e-procurement products, from the likes of Ariba and Commerce1. If you have implementation experience you are in a very good position if you want a career in consultancy or in software houses like Ariba, Oracle or SAP.” A lot of consultants are joining dotcom start-ups, he adds. “They are viewed as much more flexible alternatives than staid consultancies.”
But Sale warns: “A dotcom can be a very attractive option but it is not right for everyone. In addition to recent share volatility, we have seen evidence that people who have moved into that from glittering careers in consultancy are finding that life is not so exciting as they had hoped.
People look at it and think: exciting, new business, lots of money. But what if it doesn’t take off?”
Within mainstream blue chip consultancies like the Big Five and PA, he says, there is a consistently strong demand for people with an “e” on their CV, provided it is backed up by the classic, good quality background.
“Everyone is looking for e-skills but not at all costs. You need to have a blue-chip profile, be the right sort of age, have experience of project-based issues, with no job hopping. Options for someone with that profile are superb within these large firms and, in e-procurement and supply chain particularly, there are opportunities for people from corporates or other consultancies.”
The universal demand for e-skills also represents an increasingly good opportunity for quality people to make a jump into strategy-based firms which might not have been open to them a couple of years ago, says Sale.
“Firms like AT Kearney, McKinsey and BCG are not lowering their standards but they are looking more broadly,” he says.
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Systems integration firms like Cap Gemini, Syntegra and Sema are also receptive, says Sale. “They are recruiting people with technical expertise but will also take procurement people who have moved into the e-space.”
Other options are the specialist e-commerce firms, such as Sapient and Scient, and supply chain firms such as Logistics Consulting Partnership, which is doing a lot in the e-business space, concludes Sale.
Not surprisingly, given the demand, anyone with credible e-skills and a good background is at a premium in terms of marketability, and can earn an extremely high salary.
Lots of people are trying to get in on the act as a result. Mike Hagan, associate director responsible for e-business at CMG, says: “I have noticed that applicants are putting an ‘e-‘ in front of everything. And at interview you realise that there is very little substance behind it.”
While CMG is always looking for experienced consultants, he says, it is becoming very difficult to get them. Like many others, the company is looking more towards training. Says Ian Taylor, CMG’s UK chairman: “Our policy for some time has been to make our own and supplement them with experienced people from the market.”
The training side is taken very seriously, says Hagan. He cites the recent setting up of an advanced, five-week executive class in e-commerce for senior consultants at Berkeley College in California.
More generally, CMG operates a competency led approach, recruiting people with experience of procurement processes in industry and giving them IT skills. Says Taylor: “It is better to get people to understand the problems to be solved and then train them in technology than the other way around.
Otherwise you end up with techno people solving techno problems rather than business ones.”
This emphasis on business over technology is something many IT consultancies are trying to develop, says Origin’s Jones. “As the Big Five are trying to develop technology skills, IT consultancies are moving into their arena.
Origin, for example, has helped Royal & Sun-Alliance on e-business strategies.” And, he claims, the IT consultancies are taking people from the Big Five.
One reason for this, he says, is money. “Unless very senior, Big Five consultants don’t get stock options, whereas players like us are encouraging people in with them. They are becoming the remuneration currency of the e-business market.”
La Bastide of Aaron Millar says the Big Five are trying to make themselves more appealing to counter the lure of the dotcoms. “And some of the smaller consultancies are using stock options as golden handcuffs, to be realised at the end of three or five years,” he adds.
Prism’s Sale adds: “For many medium and large firms bonus schemes are potentially attractive – and this is one area where the Big Five does fall down.”
Mike Okninski, PricewaterhouseCoopers’ HR director for management consultancy in the UK, says that the consultancy has lost a few people from its e-procurement area, but not enough to suggest a trend. Some staff have joined dotcom startups, he adds, and these tend to be young people with no commitments who are prepared to take a chance on getting rich quickly.
“We’re building alumni arrangements to keep in touch with such people, he says. “Those who become eminently successful we hope will be clients and those who don’t we would offer their jobs back.” In addition, he says, the firm has set up an incubator to help people with dotcom ideas to nurture them.
Of the people who do leave PwC, he says, as many go into blue chip corporates as join rival firms. And, while he says that stock options have to be supported by other factors, such as career development opportunities, the firm is planning to give its people a share in the business. “The nature of our restructuring will determine whether it is a stock option or something else, but we are committed to doing that and the challenge is to deliver in this calendar year.”
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For Erik Settinger, the purchasing manager of IT consultancy Origin in the Netherlands, the most difficult aspect of an e-procurement project is getting it onto the corporate agenda. “Many top managers don’t realise how important purchasing control is,” he says. “They see it as a waste of time and money.”
He did not encounter this problem when his company decided to implement Ariba’s e-procurement solution, however. Buy-in to the project was total, says Ariba’s Ben Wright, director of marketing EMEAI, from Origin’s chief executive Joop Sistermans downwards.
Origin wanted to do the project for a number of reasons: to reduce its cost base, to centralise control of the ordering process, and last but not least, to practise what it preached to its clients.
What followed was the fastest commercial e-procurement project in Europe so far, says Wright. It was completed in just 14 days, during which time the user interface and business rules were configured, integration with ERP, financial and HR systems carried out and content brought on board from suppliers.
Settinger is a happy man and has already seen benefits. “Ordering remains local for the Netherlands but we have gained central control. And we have rationalised the number of suppliers we deal with – they have to be able to link up with the system.” He adds: “We are getting greater use out of contracts with suppliers and can negotiate better deals.”
The solution is being deployed globally.