Ronald Flockhart spoke to ITWeb Events about how he came to be head: group sourcing and category management at FirstRand.
Flockhart is involved in various procurement functions across the FirstRand Banking Group in which he identifies and leverages collaborative opportunities in sourcing and vendor management with a specific focus on ICT.
ITWeb Events asked Flockhart how he came be involved in IT sourcing and vendor management as a career path. Did his interest flourish early on in his career or was it something that he developed an awareness of over time?
Flockhart's involvement started by understanding the basics of procurement. "My first foray into procurement was in the late 90s and early 2000s, when there was a strong global trend propelling organisations towards e-procurement."
He explains that a number of software development companies had identified e-procurement as an opportunity and a myriad of procurement-related solutions were developed. The underlying goal behind e-procurement was to enable suppliers and customers to connect online and to reduce manual processes. A vast improvement from the EDI days, these solutions were groundbreaking and revolutionary at the time.
At the time Flockhart was employed by an innovation unit that was created within FNB and one of the solutions it was pursuing was developing an electronic market place for both FNB and its business banking clients.
His fascination with the subject of IT sourcing and vendor management originated out of trying to understand the world of procurement as a business analyst. He says: "The disciplines of sourcing and vendor management were still in their infancy at that time and it was clear even then, that the major benefits within a procurement ecosystem were to be found in sourcing and vendor management. It was also the most complex out of all the categories to manage."
After his time with FNB, he became involved in the IT community at Nedbank, helping to define and implement the full spectrum of IT processes, from software development life cycles through to managing IT operations. As with other organisations, there was a high dependency on third-party providers and third-party spend was a major cost contributor. It seemed inevitable that in order to optimise an IT environment, one would need to extract maximum value out of the full life cycle with a vendor partner. As a result, he found himself pursuing these interests once again.
As a result he was able to develop a business case to establish an IT vendor management office, which was embraced by some visionary leaders and he hasn't looked back. Flockhart describes this as a career-defining moment.
FirstRand has since given him the opportunity to work across categories in a large group with multiple companies and international experience in sourcing and vendor management.
We asked Flockhart: Since your focus seems to be on the procurement transformation journey, what specifically about this role interests you?
Flockhart is so passionate about the topic of procurement transformation as a result of the fundamental change that is taking place across organisations and the growing reliance on vendor partners for their long-term effective functioning. This is no longer specific to industry sectors, where the impact of the supply chain is carefully considered and continuous improvements initiated to extract value. Now across all industry verticals, vendors find themselves becoming integral parts of an organisation's ecosystem and ultimately co-dependently determine an organisation's profitability and sustainability.
Flockhart says: "If one breaks down procurement transformation to its core meaning, it implies getting an organisation to make significant strategic and long-term improvements to procurement and vendor management activities and relationships."
Over time substantial investment has been thrown into improving the maturity of financial, human resources and product, among other management disciplines, yet it is not unusual to find line managers in charge of ten times the quantum of vendor-related spend in their budgets compared to their staffing budgets. Unfortunately the same does not apply to vendor management and little to no training or awareness was created. However, with the focus changing, procurement as a discipline has enjoyed significant attention in the last decade although significant transformation initiatives are still required in order to realise the full potential and value that can be demonstrated within organisations.
A mutually beneficial strategic partnership could unlock many potential opportunities which organisations that remain in the transactional buyer versus supplier paradigm are missing out on.
Flockhart explains that: "Where both parties are working jointly together towards shared results. There is definite thrill, when this 'magic' is unlocked through a procurement transformation initiative."
He believes his role resonates with his passion and aspiration to develop people and at the same time he has the opportunity to contribute in terms of vendor management skills and experience.
Could you tell us a little more about what your role entails and what a person needs to have studied or be passionate about to do the job well?
As the head of group sourcing and category management Flockhart's primary role is to assist the various stakeholders across the FirstRand Banking Group with sourcing and vendor management activities, especially when a sourcing initiative or vendor has a group wide impact.
Although the focus is across multiple categories, IT still enjoys the dominant focus. Typically his key activities include dealing with the high value, complex group wide sourcing initiatives, through negotiations and contracting. And then ensuring continued value extraction through the latter stages of the vendor life-cycle in imbedding, testing and continuously improving various vendor management models and capabilities across the group. The key word is team, as these initiatives always involve cross functional teams.
Another point to note is that each respective 'franchise' has quite mature procurement functions with dedicated transactional procurement, contracting and sourcing teams and they all have strong leadership. Vendor management activities are typically conducted on a part-time basis by the various line managers across the community. Some are extremely proficient vendor managers, others demonstrate huge potential. Flockhart's role is to assist, depending on the requirement and augment where feasible towards these sourcing and vendor management capabilities with the ultimate goal to improve the overall maturity of these practices across the Group. Every day is different and every initiative is different, depending on the requirement.
In considering this, as well as experience from previous roles, there are some basic guidelines that he would recommend when it comes to skills, experience and behavioural characteristics to make one successful in this career.
"Firstly, I would recommend that one gets foundational procurement knowledge. Equally, a large component of both sourcing and vendor management is around commercials, so finance management understanding is always useful. Even more specific, understanding business case modelling and various underlying theories such as Total Cost of Ownership is incredibly important. I also recommend that you spend time sitting in a purchasing department as well as accounts payable. The observations that you make during this time will be invaluable.'
Secondly, you would need to learn about strategic sourcing and the basics of contract management with a particular focus on service level agreements. You would also need to understand vendor behaviour. He suggests that one should spend time understanding how things work in one's key vendor's organisations. What are their processes? How are targets set? What is there distribution strategy? How are their account teams structured? What are their product strategies and roadmaps?
Lastly, he strongly advocates negotiation skills, conflict management, presentation as well as facilitation training.
On the behavioural side, strong people orientation, resilience, innovativeness, detail orientation and self-awareness are useful.
He highlights that if you want to be successful, you need subject matter expertise. Knowledge of the domain within which you are working is vital. A strong candidate/employee cannot expect to be successful and add value to a sourcing initiative if one doesn't have any experience or knowledge of various software licensing models, support and maintenance, licence agreements etc.
Is the way we do 'sourcing and vendor management' in South Africa different to elsewhere in the world?
Says Flockhart: "The fundamentals of both sourcing and vendor management across the globe are typically the same. Then, there are unique South African contextual differentiators which make South Africa unique and different. The best way to describe this is by example.
The classic example is with ongoing support from large multi-national ICT vendors. Often the global sales people approach South African clients with their paradigm of ongoing support that one would find in their home country in the United States or Europe. In environments where they are familiar, there is high availability of suitably, highly experienced support staff that at the drop of a hat can be allocated onsite to support a client in time of issue or crises.
In South Africa it is different. Local presence is often limited to sales and they have no vested interest in establishing long-term local skill sets. When they do, they often enlist the services of partners, which extends the supply chain and changes the way in which a vendor manager needs to operate in this context. The same vendor manager if based in the US has a much less complex arrangement to manage for the same solution. Understandably, there are always mitigations and protections that can be built into these arrangements, up front. However, I am convinced that due to the complexity of multiple tiered supplier relationships in our geography, vendor management is often not easy."
Similarly, does sourcing and vendor management differ from one industry sector to the next or are the same principles applied?
Sourcing and vendor management differs across industries because they typically have different ratios of direct versus indirect procurement.
Flockhart has considerable respect for sourcing and vendor management performed in direct spend categories (where raw materials, components or goods are procured for production purposes). Any delay or disruption in this supply chain causes significant delays and losses across the entire operation. There are literally millions of wasted costs as a result of a poor sourcing initiative. The value and importance of procurement, sourcing and vendor management is really evident in such organisations and industries.
The way one would vendor manage a service provider in the travel industry is vastly different from managing ICT vendors in financial services. Going forward, he predicts that there will be greater specialisation even with sourcing and vendor management per category and per industry.
What have you had to learn the hard way?
"Procurement is not for sissies". In the procurement ecosystem, there are always stakeholders whose primary purpose is commercial. Mutually beneficial or sustainable arrangements are not a high priority. If you are perceived as the obstacle towards them meeting their commercial objectives you often become the candidate of some less-than-desirable behaviour. This was and still is learnt the hard way.
If you could give some advice to a budding sourcing and/or vendor manager, what would you tell them?
Identify mentors, shadow them and learn everything you can from them. Often the best examples of sourcing and vendor management that has already been refined and adapted for your context already exists somewhere in your organisation. Find out who these people are and ask them if you can tag along. The chances are that you will be given opportunities to observe, then to do yourself and this experiential learning is the quickest way to grow your capabilities.
Before closing we took some time to learn a little more about Flockhart behind the scenes.
We asked him if he had any 'hidden talents' and if he was a superhero who would he be any why.
Flockhart tells us that he is trying to master tennis, however, he says he still has a long way to go. Many don't know though that he plays the guitar and drums. As a superhero he has always liked Batman, because, he is able to efficiently use technology and other best practices to get things done. Of all the superhero's he doesn't really have a superpower as his disposal however he is fortunate to have access to some incredible tools and practices which can be used to help others. And typically he is able to make a huge difference in people's lives but from behind the scenes.
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