Enough with the noise about the ‘Big’ 4, and the parallel Defence MSPs. Few would disagree that ‘Big’ has a stranglehold on the professional services government spend.
Even with a greater in-house capability in our public service they can’t and shouldn’t replace all professional service engagements. The ‘Big’ companies have scale and process, which can be valuable. Great brands, reach and marketing – perhaps even better than their value in delivery.
Anecdotally, at least, many public servants would like to foster the development of a competitive, potentially international, Australian industry.
Too often ‘Big’ is associated with good, but smaller companies often have specialist and tailored expertise, and are less reliant on scale, a methodology and a slide deck. Small also tend to be more focussed on their client than their bottom line. Founders want to build businesses because they feel they can deliver better outcomes at a better price, and because they are invested in the client outcomes.
It’s a distribution curve, of course. Some SMEs are extraordinary and some appalling, but most small businesses lie somewhere between good to great.
Buying Australian, and building an Australian industry, needs a different approach if small is not to be marginalised.
While we would all love a leg up, most of us would be grateful for just the opportunity to compete. Here are four things that you, the buyer, can do.
Invite them to compete
Most requests for professional services are selective, they go out through a panel. Even if two or three quotes are sought, the RFTs go to the companies that the buyer knows. Size begets size. ‘Big’ companies are in the corridors, meeting the buyers every day. They are front of mind.
It’s not just brand, it’s reach, and presence.
Small companies have good relationships where they are known, but the gap is too wide. They can’t afford a lot of marketing; they can’t walk corridors. Their reach is limited to those with whom they are in direct contact.
If you want to give them a chance, they must be given a chance. That task lies with the buyer. You must be consciously uncomfortable, reach out to those with whom you are unfamiliar.
Have a look at their web sites, give them a call, invite them in for a conversation. Then invite them to compete.
Invite them to a conversation
Tendering for work where you don’t know the client is almost always a waste of money. It’s about intimacy, understanding the intent behind what is written in an RFT. You want the companies that are bidding to have that deep understanding of your needs and context.
‘Big’ companies can afford a plethora of business development and account managers whose job it is to find out what you are thinking. SMEs don’t have that luxury. Nearly everyone is working!
In Federal Government, agencies provide a forecast of procurement plans on AusTender, a process I’m sure is followed diligently. The intent is clear: to provide warning for the market to prepare. That obligation doesn’t reach down to Panels and selective tendering, the majority of professional service procurements.
It’s in your interest to plan ahead, to advertise what you are doing. While there is no formal mechanism, be active and invite participation – before you release an RFT. You will then attract the competent and capable, not just the usual.
If a company is already engaged by your organisation, or nearby, they have that knowledge. This levels the playing field – and gives you more options. Not a leg up, just a conscious effort at inclusion.
Time matters
Time, the one thing of which there is no more. The answer to limited time is to add resources. SMEs can’t. Every compressed time frame for a tender response, or delivery, is a gift to a ‘Big’ company.
‘Big’ have the resources. They have a “bench”, the unassigned consultants, nationally and internationally. They can rob other clients of staff to meet your needs – without creating major upsets in existing clients. Size gives them flexibility to deal with the urgent or to accommodate a lack of planning.
‘Big’ shouldn’t be the response to a failure to act proactively and with anticipation. That’s just poor planning and failing to plan is simply an own goal.
The RFT we received this week, with a week to respond and mobilisation in a fortnight, for a piece of work that will contribute to a program that has decades to run, can only be responded to by those with scale, subterfuge, or those just lucky to have someone with the skills available. You limit yourself to the ‘Big’ companies, paying for the privilege of poor preparation.
That’s not a good outcome for anyone, except the ‘Big’ company. If you want a balanced playing field, to your benefit, give the SMEs warning of your needs, and time.
This time is money
Time is money, but for an SME without deep pockets, cash flow is everything. It’s not just about paying invoices on time, at which governments are actually pretty good, or not rejecting a $100,000 invoice over a $2 travel discrepancy – at which governments are actually very bad.
The issue is the decision time. The interlude between contracts or the exercising of their extensions. Even the smallest RFT can be delayed for weeks and months. What are those staff supposed to be doing while waiting for a decision?
If an SME makes 20% margin, they only make money on Fridays. If someone is not working for a day, it takes a week of their billing to recover the cost. Spread that over thousands of staff, it is an absorbable cost. Spread it over 50 people, it has a much bigger impact.
That’s why you see nervousness at the end of the financial year and when extensions are late. Why you are bothered incessantly. It’s a litany that SMEs should charge less than ‘Big’ companies, but I’m not sure why. The costs of doing business with government are less absorbable for the small than the ‘Big’.
When you take months to decide, don’t be surprised if the offered person is no longer available. It’s not that some interlude isn’t needed for decision and staffing, just allow the SME to plan by sticking with your plan.
Just four things to get better value?
There are more insights on how to get better value – for small and large. Like how to engage professional services so that they are not surrogate resources, avoiding the low value and prolific body shop, how to get an outcome when you can’t define a deliverable, how to manage value for money delivery when there are high levels of ambiguity.
Happy to talk to all those issues, but the price will be a phone call!
In the meantime, if you want an option to the ‘Big’ companies, if you want to support the development of a competitive Australian industry you, the buyer, needs to make a choice to allow them to compete.
