A cautious approach to contracts/suppliers the post-GFC norm

ContractTNA new study by global sales consultancy rogenSi has found Australian businesses are erring heavily on the side of caution when making decisions about major contracts and suppliers.

A new study by global sales consultancy rogenSi has found Australian businesses are erring heavily on the side of caution when making decisions about major contracts and suppliers.

According to rogenSi’s research report into commercial buying decisions, titled Major Commercial Buying Decisions – What’s changed since the Global Financial Crisis, 92 per cent of the 3,000 organisations surveyed agree the financial crunch has led to a far more rigorous approach to selecting suppliers.

Well over half (58%) of respondents to the survey agreed the GFC has radically altered the decision-making process.  Key impacts to the bidding process include:ContractLG

  • Lower budgets (56%);
  • Heightened risk avoidance (23%);
  • Less volume and frequency (14%); and
  • Longer processes (7%).

rogenSi said long-gone are the days of handshakes, old school networks and wowing clients with dazzling presentations and that Aussie businesses are now stricter, more meticulous and increasingly cautious when it comes to procurement. Critically, rogenSi found the fear of appointing the wrong supplier has markedly increased, with a corresponding reliance on procurement.

“Fear of wasting money by making a bad decision has become an overwhelming driver in the decision making process, which means we’re seeing creativity being compromised in favour of reliability and rigor,” says Neil Flett, Director of rogenSi, who was also an integral member of Sydney’s successful Olympics bid. “Not only is a more rigorous process being applied, but control is getting tighter, criteria are getting tougher and processes more arduous. The challenge is no longer winning the business, it’s getting on the shortlist.

“The rules of engagement have changed.  These figures signal the emergence of a more sophisticated pitching process, with the emphasis now placed on the ‘right solution’ rather than relationships and politics. Gone are the days when a game of golf might on its own be enough to seal a multi-million dollar deal.”

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