Why are Companies Hesitant to Engage Outside Consultants?

Why is it that companies are sometimes resistant to engaging with a cost savings firm like The Negotiator Guru (TNG)?  ​

Furthermore, why is it that a company refuses to engage with an advisory firm (like TNG) after they know there is a guaranteed ROI? Is there any rational reason for this or is it purely an emotional response?

We at TNG find ourselves asking these questions far too often… 

We know humans can be complicated (😊), but we wanted to dig deeper into what sometimes appears to be irrational behavior that negates shareholder value creation opportunities.  

As a result, we conducted ethnographic research on the cause of this behavior with the intent of identifying key trends, by persona. Here are a few of the key insights we discovered: 

• IT Leadership (CIO, VP of IT, etc.) fears they will hurt the relationship with the software publisher/service provider leading to service degradation.  
• ​Purchasing/Procurement/Sourcing representatives have huge egos and thrive on taking credit internally. Furthermore, they are worried about their job security if someone else can achieve a greater result.  
• CFOs think they only way to achieve such savings is by changing vendors (ex: Salesforce to Microsoft) or by cutting products/services.  
• Business leadership think it will take too much time to achieve the prospective savings which will negate the realized ROI. 
• Executives at publicly traded companies are generally risk adverse and think it’s safer to use a big 4 consulting firm (that’s already “in the system”) even though they will likely cost more and achieve much less (since they’re a generalist vs. specialist). 

We’ve heard different variations of these key objections for years. What makes us most proud is that some of this feedback came from a few of our past clientele who decided to overcome their natural resistance as they knew what was best for their organization.  

Per the recommendation of these past customer respondents, we've outlined what they experienced (vs. initial perceived resistance):

• Vendor Relationship – While it may be slightly uncomfortable at the beginning (depending on how much Right Sizing and/or Right Pricing opportunities TNG identifies), the vendor relationship and service quality improves at the conclusion of the TNG engagement. The vendor is engaged with the customer in a strategic manner and the customer can now feel confident they are only paying for what they need at a fair price.  
• Procurement Job Security – TNG acts like a force multiplier for existing Procurement teams. As such, TNG simply seeks to enable high impact results vs. seek credit.  
• Vendor/Product Change – Vendor changes are extremely rare. TNG simply identifies how internal stakeholders use the respective software platform (via their proprietary persona analysis) and identifies cost savings opportunities without sacrificing functionality/service quality.  
• Time/Cost to Achieve – Internal business stakeholders are rarely involved in the process after the Discovery phase is complete.  
• Niche vs. Generalist – The speed and consistency in which TNG can delivery results is a direct result of their focus and dedication focusing on their core competency, such as Salesforce.

 
Interestingly, our analysis identified the following key insights regarding business leaders' intention for engaging an outside advisory firm (summarized for brevity): 

• IT Leadership sometimes feel uncomfortable being the “tough voice,” so they hire a 3rd party who brings the credentials to speak from an authoritative position.  
• C-Suite Executives simply want to motivate (prove to) their Procurement/Business Teams that the “great deal on the table” is not so great after all.  
• Procurement leadership wants to be armed with accurate price benchmarking or contract term knowledge. They recognize they can’t be experts in everything and value niche expertise from specialists vs. generalists.  
• Board members want to do anything possible to reinforce their fiduciary duty to their shareholders…this includes identifying, and executing on, every available cost savings opportunity.  
• Contract negotiators want to understand the software publisher’s sales playbook and internal incentive process…not just general market intelligence.   

We hope that you find these key insights helpful as you contemplate and reflect on your own personal resistance to engaging an outside advisory firm. TNG prides itself to make every engagement as risk-free as possible for our clients. Furthermore, TNG will only accept a client if we know there is a major impact opportunity…if not, we will simply give you some free advice.  

Ready to explore joining the TNG family?  

Contact us today to set-up a client intake assessment where we identify your cost savings opportunity for free! 

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