Why deep expertise can benefit you and your client

By Melissa Finley Neal

With most contingent workforce programmes, benchmarking is a great place to start in order to identify savings opportunities. It makes sense. You know a job category in your location averages a certain amount per hour, and you can compare that with your own spend.

But that method does not work at Cisco. Why? Ninety percent of our contingent workforce is on statement of work. Statement-of-work contracts are entirely different from standard temp worker categories. The contracts are project-based and dependent on deliverables. We had to be creative in our efforts to identify savings opportunities.

The SOW paradigm. At the start, when we engaged with a managed service provider, we promised our stakeholders a saving of 7 percent. That seemed a conservative and reachable target. From our research, we knew companies saved between 6 percent and 15 percent in general when engaging an MSP.

But identifying those savings opportunities when you process 6,000 SOWs and 1,500 job postings quarterly is a completely different paradigm. We tried different things.

Initially, we worked with our MSP to do a backward engineering, saying what rate various job categories should be, and set out to negotiate to that. That was only marginally successful. There were other detours as well. However, what finally worked was adopting a supplier consolidation and optimization strategy — having our suppliers specialise in specific ways, enabling them to own and manage the process and resources necessary to deliver results.

Empowering suppliers. When we started this process, our supply base was very fragmented and huge — we had 2,500 suppliers. We were looking for a more efficient and cost-effective way to get our work done as well as to pare down our vendor pool. The result was optimization or supplier specialisation.

For example, take an information technology project. You might see product development, quality assurance and then its release to production. SOWs could be engaged at each step of this process with a different vendor. With vendor specialisation, the vendor takes on the entire product development. We focus solely on the servicelevel agreements and key performance indicators as outlined in the contract, while the vendor has the day-to-day management of its resources.

This isn’t for all suppliers. To be successful, you’d need to have a management structure in place in order to take accountability for the process. We as a client are vendor agnostic. The only resources of importance to us are the top-level ones, or key resources. The remaining resources we are agnostic to, as long as the job is getting done, that’s what matters.

More than savings. But the benefits are clear. Because the vendor is specialised, it has all the resources at hand to get the job done. Should the vendor have attrition, it can replace the worker easily. There is a system in place for knowledge transfer and one for documentation. The vendor has the opportunity to dig deeper into the project and communicate that data to our knowledge group, in turn providing better value to us.

In fact, we actually have found that this system has reduced attrition among our suppliers’ resources, the resulting structure provides a clear view of how careers can progress. These workers gain in breadth of expertise, are accountable and own the project. That benefits the vendor and reduces recruiting costs. And Cisco benefits, of course, with this retained knowledge and the fact that it triggers innovation that profits the entire ecosystem.

Specialisation also means the suppliers see less competition in their niches. They own that space. This expertise helps us and of course, is of value to the vendor.

This strategy isn’t for everyone, but Cisco has found it useful for more than just IT work. We’ve got specialist suppliers for finance, marketing — you name it. We do still have a handful of traditional agency temps, but this may be the way of the future for the larger corporations. With the world of work becoming more global in nature, specialising is sure to gain traction. Take a look at your clients. See what processes you can own, and pitch it. But you — along with the help of the client programme office — have to deliver.

Melissa Finley Neal is director, category and supplier management, at Cisco Systems Inc.