The evolution of service procurement

Strategy
21 Jul 2019
 

Why finding a service provider is easier than ever, but finding the right service provider is harder than ever.

If 20 years ago you wanted someone to create a website for your business, you would go to the Yellow Pages and comb through to find one of the handful of web developers in your city. Or, if you were lucky, you went to college with someone who could code and they owed you favor. Or, if you were even luckier, your cousin made websites in their spare time. Who to ultimately choose would have been a fairly easy decision for your web project; you would select one of the three people/companies you knew who could make websites and hope for the best.

Move forward to today, your cousin-made website is no longer getting your business the traction it deserves. What do you do? With three clicks of a mouse, you have freelancer sites like Fiverr and Upwork vying for your website project. Additionally, you now seem to know a network of freelancers who are all too happy to make you a website. Plus, there are small, large, and even global agencies in your city only a few clicks away. Now you have the difficult decision of choosing whether to go with a friend, freelancer, small sized agency, larger agency or a global agency and have hundreds of potential options for each segment you are “lucky” to choose from.

 

The globalization of our economy has expanded our access to service providers exponentially. Indeed, globalization has made it possible for these service providers to survive and thrive. Your coding cousin does not now have to rely on their local/familial network to get work. They can simultaneously be a local, regional, and international provider, providing (in theory) the same service to clients anywhere.

The infinite number of options we now have does not mean there is an infinite amount of right options. In fact, while there may now be an unlimited amount of options, there are still the same amount of right options as before. When choosing a service provider it is now more important than ever to understand your organization’s needs and how that service provider meets those needs.

Returning to my website example, to distinguish between the multitude of options you now face ask yourself the following questions:

How do the majority of your sales take place?
Is digital an important part of your business model?
Does your online conversion rate drastically affect your profit margin?
Does your organization have the expertise to understand what makes an effective or ineffective website?
Could your service offerings, branding, or communications strategy drastically change in the near future?

 
 

Before you begin your search for a service provider you need to have a strong understanding of these questions. Having a clear idea of what your needs are will go a long way in indicating who can solve them.

Along with understanding these questions, you have to have the budget to answer them. Instead of arbitrarily picking a number as your budget, understand the quality of the solution you need and whether or not the budget you have can achieve that desired state. There is no point opting for one of the many bargain solutions out there if that is going to undermine all of your work so far and there is also no need to spend top dollar when a makeshift solution will suffice.

The effects of these rapid changes is that as the world becomes increasingly more digitally, borderless networks like Fiverr and Upwork will actually become less useable for important projects. Service users will become more critical as they reflect on their own needs rather than be awed by the multitude of providers available. Closed networks such as Toptal, Gun.io, and Advisable are now becoming increasingly more valuable than traditional open freelancer networks, as users recognize the value of vetted freelancers. We’ve come full circle – whereas before a small pool of options was a barrier to getting the best service provider, a limited number of (qualified) choices is now a prized asset.

 

This is also going to lead to the service of vendor procurement becoming more and more in demand within organizations as this trend increases. Firms whose sole purpose is to help organizations find service providers will become more popular, especially with making decisions where a SaaS product could be the optimal provider.

Overall, working with agencies, consultants, and freelancers is an ever-shifting process, and understanding these changes will allow any organization to make smarter and more efficient decisions when navigating the service provider selection process.