The world of technology buying is constantly evolving, and the recent COVID-19 pandemic has accelerated the changes. This has led to more complexity and unpredictability in markets, making it challenging for organizations to make informed decisions. In such a scenario, third-party advisors are crucial in providing valuable insights and guidance to organizations. The lastest SageAdvisors trend report shows that the role of sourcing advisors is also changing, and it is essential to understand these changes to utilize their services effectively.
The Analyst Relations Forum hosted a webinar in April 2024 to discuss these trends (recording here). Traditionally, sourcing advisors were seen as experts in procurement, helping organizations with vendor selection and contract negotiations. However, their role has expanded beyond procurement, in line with the increasing complexity of technology buying. They are now involved in strategic transformations and post-purchase assistance, making them more relevant to new and discontinuous problems than industry analysts.
Indeed, the most significant changes accelerate, and are accelerated by, how sourcing advisors is expanding their services. They are now offering more of what was traditionally done by analyst firms, such as market research and insights. This has led to a blurring of lines between the two, with some many players in the industry, including ISG and the leading analyst firms, offering similar services. This expansion of services has also been driven by the need to adapt to technological advancements, such as AI, to provide valuable insights to clients.
However, with these changes, sourcing advisors also face several challenges. One of the main challenges is the shift in the industry’s focus towards broader solutions and value creation. This has led to some uncertainty about demonstrating measurable outcomes, making it challenging to prove their value to clients. Additionally, buyers are becoming more demanding, expecting tailored approaches, collaboration, and value for money, which can blur the lines between traditional sourcing advisory firms and other consultancies.
Trust and fair treatment from service providers are also crucial for sourcing advisors. Advisors seek a balance between collaboration and respecting their independence, which can be challenging. Moreover, geographical differences exist in the industry, with challenges for global advisory firms to expand into smaller markets due to shrinking deal sizes. This can limit the opportunities for sourcing advisors to provide services in these markets.
To effectively manage advisor relations, deeper internal cooperation between advisor relations teams and sales teams is crucial. This can help create value for buyers and align expectations. However, managing expectations is also essential as sourcing advisors often engage with multiple providers, and their recommendations do not always guarantee business. Misalignment in expectations between sales teams and advisor relations teams can hinder cooperation and impact the success of advisor relations programs.
In growth markets, sourcing advisory firms are often overlooked, while those in legacy markets receive more attention. This creates an arbitrage effect, where organizations may miss out on valuable insights and recommendations from these firms. The complexity of navigating large markets, such as the US, can also be challenging for service providers, as they struggle to allocate resources effectively between legacy businesses and growth platforms. This allows major providers to explore growth markets and technology sectors where they may not have a strong presence.
As the role of sourcing advisors continues to expand, they are becoming more competitive with other advisory firms in the tech buyer market. They are delivering insights to a larger part of the buyer’s center, which is becoming more diverse. Sourcing advisors seek more partnerships and collaboration with service providers to improve service and provide recommendations with greater confidence. However, providers must provide more support to sourcing advisors as their roles become more complex to mitigate reputational risks.
In a nutshell, the changing world of third-party advisors results from the evolving technology buying landscape. Sourcing advisors are expanding their business models, delivering insights to more people in the buying centres within the client organizations, and seeking more partnerships and collaboration. Servive providers need to be aware of these changes and support sourcing advisors to effectively utilize their services. With the growing influence on sourcing advisors of dynamic, well-resourced, hyper scale leaders, aligning sourcing advisory work with their expanding remit, and growing influence in the mid-market, is crucial.
To find out more about SageAdvisors, get in touch and request SageCircle’s factsheet.
