Use of Subject Matter Expert in Procurement Processes

What are the benefits and risks associated with having a Subject Matter Expert involved in a procurement process and what role they can play. A Subject Matter Expert can position a project to achieve the very best outcomes, or they can choke the project into mediocrity, even potential failure. Let’s take a look at how to get the very best value from these highly skilled, but specialised, advisors.

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What is a Subject Matter Expert

Often when organisations are approaching the market to buy goods or services, it is because they don’t have the skills and knowledge internally to deliver the requirements, and here in lay the quandary. How can we buy something that we don’t know how to describe? How will we ever know if we are getting a good solution or a dud?

This is where many organisations will either search internally or go to market to source a Subject Matter Expert in the requirement that they are about to source. People who have experience or exposure to the types of requirements or solutions the organisation wants to implement. These experts will become pivotal members of the project and provide valuable insight into the market, the details of the requirement and help to develop an approach to market, invitation framework and go on to support the evaluation panel to decipher the responses from the market to select the preferred solution.

Sounds great doesn’t it…

What can go wrong

The downsides of Subject Matter Expert may be many fold:

Expert in yesterday

There a many types of expert in the market ranging from those who have seen it all and done it all before, through to those who are setting the direction and defining the new paradigms. By far, the most common is the former. Most Subject Matter Experts will come from a position of having seen, designed, bought or built the requirements before, in some cases many times over. So the question then becomes, do we want to buy what was bought yesterday? Sure, sometimes you do, maybe you are just after a safe and stable solution to your requirements, but if you are spending a lot of money on a new solution, the answer may not be a resounding yes as you are probably looking to increase the capabilities of your organisation.

If we are going to market, we are either replacing something with a better version, maybe even position the solution to allow future advances to be integrated as they develop, or we are trying to establish something that will give us a market advantage today. So buying yesterday might give us some comfort in knowing it’ll work tomorrow, but will it work the day after that when the world changes? Will the project be a success if the solution equals what we already do or allows us to match the competition?

Known market and known by the market

More often than not, Subject Matter Experts are expert in a fairly narrow market space. There are exceptions, but generally, their historic knowledge will be in the space of buying the same thing from the same narrow market. Is this bad? Not necessarily. It can certainly improve cycle times in procurement’s as you can ensure the scope will quickly identify the desired providers and remove the noise caused by providers who are just testing the market themselves.

Another challenge is that the market will often know the Subject Matter Expert and this can be particularly interesting in a public sector procurement. A recent example of this was experienced by the GC2018 Commonwealth Games statutory authority, GOLDOC. In the process to select a service provider to design and deliver the opening and closing ceremonies. The unsuccessful bidders where quick to cite the use of Subject Matter Expert providers who had connections to the successful bidder. Though the claims were unfounded and GOLDOC had run a fair and equitable process, the incident becomes a great reminder to make sure Subject Matter Expert resources are selected and managed carefully.

Insanity

Einsteins definition of insanity is doing the same thing over and over and expecting a different outcome. If you are happy to buy what the other guy bought, then this is great. If however you are buying a product or service that has a long history of difficult deliveries and failed projects, then maybe buying what they bought may not be the best approach. A Subject Matter Expert will generally fall into their comfort zone, which is their area of expertise. In fact, business cultures are very much focused on developing efficient, repeatable, tested approaches to everything, but sometimes this mantra of process efficiency is the core issue causing the ineffectiveness of businesses and their processes. Before doing it the same way again, consider if it worked last time.

What shouldn’t a subject matter expert do

Writing the requirements

One really risky use of an Subject Matter Expert is to have them write the requirements. The danger here is that they will, usually unintentionally, collude with the market. I don’t mean they ring up their mates in the industry and ask them what needs to go into the requirements, but they have been working with the same suppliers for a long time, and sometimes as an employee with those suppliers, and they “know what works in a set of requirements”. Hearing and Subject Matter Expert say something along the lines of “We got great feedback from the market on our last tender documents” could genuinely be a good thing, but there is a significant risk that the market loves it because it plays to their strengths and helps to keep new competition out.

Another risk is that Subject Matter Experts will often focus on inputs rather than outcomes, they feel they know the solution already, so their requirements will often describe the solution rather than the outcomes the business wants to achieve. While it is arguable that this approach can reduce risk, cycle time and market confusion, it does so at the increased probability of limiting the market, skewing risk allocation and miss-aligning the solution with the requirements of the business.

By all means, have the Subject Matter Experts write up requirements, but be very careful about publishing them without careful consideration. The specification they write can often be useful to the evaluation team to use as a yardstick in assessing the proposed solutions.

Work independently

The Subject Matter Expert should be there to advise the project and the evaluation team, they should not be left to operate on their own and most definitely should not have access to the proponents unchecked and unsupervised. This can lead to a whole new set of issues, they are not a representative of the organisation and their views and objectives may not align with the company that has engaged them. For the same reason, requirements can also take a surprising turn if the Subject Matter Expert is permitted to run free for too long.

So we shouldn’t get a subject matter expert….

Definitely not the answer, while there are some strategies that can be used to help get a great outcome despite not knowing what you are buying in detail, it is risky. The answer is to consider the requirements, assess the objectives of the procurement from the perspective of long term outcomes and then ensure the Subject Matter Expert resources are sitting in the right role in the project and able to provide the right kind of advice in the right way.

“What does that mean?” I hear you cry.

What should an subject matter expert do

Having a Subject Matter Expert on the team is a powerful position to be in where internal knowledge of the requirements and the market are limited. So make the best use of them.

Reviewing Requirements

The best practice is for the business to write their requirements, have an independent Subject Matter Expert review them and make changes where required, then have the requirements reviewed again by the business. But wait, aren’t we getting an Subject Matter Expert because we don’t understand the requirements or the market? Yes and no, remember that requirements should be outcome based, the business must understand in great detail the outcomes they are expecting to achieve with the new solution. The Subject Matter Expert is there to help understand if the outcomes are possible, the market segment that can support the outcomes and the technicalities and risks associated with the requirements.

Having the Subject Matter Expert review the requirements will allow you to understand if what you are asking for is possible, the likely cost and identify areas that need to be specified in more detail to mitigate risk and variability in the solutions. For example, you don’t need the Subject Matter Expert to specify a Model 92 Caterpillar digger with a type 3 hole drilling attachment. The business needs to specify that they need to install a flag pole capable of holding a 50 square metre flag at a hieght visible from the highway. In their review of the requirements, the Subject Matter Expert needs to identify that due to the position you want the flag pole, the digger must be less than 2.5 meters wide to fit down the driveway, which will restrict the market. The Subject Matter Expert would go on to identify that we should specify that the vendor must take care of sourcing all permits and contacting dial-before-you-dig as they are best placed to organise those reuqirements. The business might then review the requirements that include notes and recommendations from the Subject Matter Expert and decide that they can drop the limitation on the digger size by moving the flagpole to the other side of the building. The business has identified the outcomes, the Subject Matter Expert has identified and addressed risk and missing technicalities and the business, on further review and advice of the Subject Matter Expert, further adjusted the outcomes they were seeking to get a good competitive process that will provide a good outcome.

What about more complex requirements

Sometimes requirements are more complex than can be addressed even by very experienced Subject Matter Expert resources. What can we do in this situation? Let’s work an example through.

You need to replace an existing call centre solution as the current one is coming to its end of life. It has been in place for 10 years and really isn’t meeting current demands, let alone positioning the business for future technologies and communication channels. You have some internal Subject Matter Expert resources who are highly experienced in dealing with the current incumbent and the type of solution they provide. You may also source a guru in call centres who has worked with a number of organisations just like yours to set up call centres just like you had. This is great, we now have extensive knowledge of what is possible in our current environment. But what if we want to look at shifting our call centre to a virtual contact centre, where customers can contact us via many channels outside of telecommunications? And what if we are the first in our industry to ever consider taking this step? Now we are into the tricky question of; do we hire a Subject Matter Expert in the new communications technologies who has no idea about our industry?

Here’s the thing, where the requirements are so complex or unique that general expertise is going to be difficult to source, we may be better placed to have the market provide the expertise for free. Ooh, that sounds too good to be true, why would they do that? The trick is in the approach we take to market and the power of competitive tension. If we have a set of requirements that are desirable in the market, then the market will compete for it; and the more the market competes for work, the more willing they are to help us make the right decision (that being to choose them). Selecting the right approach to market will allow you to leverage the market knowledge to more completely understand what is possible, what are the risks and what the market is actually capable of. It also places the the subject matter expertise in the right place, with the organisation that is required to ensure the solution is fit for purpose, the seller.

Conclusion

Subject Matter Experts are a powerful and necessary part of any complex procurement process. They will provide information and insights that are usually hard earned over many years and generally they are worth every cent you expend on them. However, if the project misuses the Subject Matter Expert, the damage that can be done to the competitive tension, opportunity for innovation and delivery of the desired outcomes is significant.

Get a Subject Matter Expert and use them wisely, or consider how you could have the market provide the expertise for “free”.

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