Q&A from Procurement of Consulting Services Webinar  You can view the replay here  

Featuring:

  • Srini Varadarajan, Procurement Operations Manager at WellPoint Procurement
  • Endre Stogard, Category Manager, Ariba
  • Kevin Simurda, Manager, Global Spend Management Services, Ariba

 

Q: How much value do you place on 'rate card' programs?  If you see value, what approach works best (i.e. Not to Exceed, etc.)

 

A: At present, WellPoint does not do rate card programs for consulting. We are in midst of demand management project and have identified the opportunity to standardize the rates a few suppliers are quoting for certain job description, especially in the IT space. The sourcing process is not yet completed.

 

Our approach then is to utilize the Time and Materials functionality instead of Fixed Line in the purchase requisition. This also depends on SOW.  Our major goal is to educate buyers and business to match up the requisition lines with the SOW items. That's when we can get maximum compliance.

 

 

For Contingent labor, we use “Not to Exceed” rates with the collaboration functionality. This approach motivates the suppliers to reduce the cost with each transaction below the “Not to Exceed” rate while capping WellPoint’s rates.

 

Editor’s note: Some additional thoughts on a rate card approach:

Ariba will typically use a rate card if a specified SOW is not available, and our customer has an understanding of what type of resources they need, but not clearly defined projects/assignments yet.

A rate card approach can be an effective tool in obtaining current market rates as long as you have job descriptions, and identify the geographic location where the work will be conducted. Many of our customers will have a rate card in place which they can use for urgent needs, short term initiatives etc.

In general we have seen “Not to exceed” rates more commonly employed with temporary labor, and not as frequently for consulting work.

 

Q: Have you considered RFP'ing all consultant vendors versus project by project, to gain negotiated fees, daily rates, % expenses etc.?

 

A: WellPoint kicked of a governance team for management consulting over certain a certain threshold. The program has been a great success and has generated significant savings. This progam RFP's work to a preferred list of suppliers. Not all transactions can be RFPed out because of the cost for transition/ knowledge transfer.