Taking a streamlined approach
A conversation with Raj Sharma
- By David Hubler
- Jul 20, 2007
"We think there have been a lot of poor implementations of strategic sourcing, and they've given the practice a bad name." Raj Sharma
Raj Sharma left Booz Allen Hamilton Inc. after seven years because he was disillusioned over inefficiencies in the consulting industry. He felt a sharper focus on acquisition processes and specialized expertise was a better way to deliver such services. Four years ago, he founded Censeo Consulting Group, a minority-owned, 8(a) small business that specializes in supply chain management and strategic-sourcing consulting.
Censeo has about 50 employees, who use complex business analyses and metrics to get agencies and contractors to adopt what Sharma believes is a better approach to strategic sourcing. But Sharma insists he won't let success spoil his vision.
"We're not going to be one of those Beltway firms that you'll see go from 50 people to 400 people next year because we took on a $100 million contract," he said. "That's not going to happen at Censeo."
Sharma recently spoke with Associate Editor David Hubler about critical issues in government strategic sourcing.Q: What is the essence of strategic sourcing, and how can the government do it better?Sharma:
I won't dispute there is a lot of value in pooling resources, especially when you're dealing with large government agencies. But strategic sourcing is more about understanding why we buy things. What are the policies involved to manage that buying? For example, why do we buy cell phones or BlackBerrys? Strategic sourcing is not about getting the best price for BlackBerrys, it's about determining whether they're needed or not. If they are, how many? And how will they best support what the agency does?Q: Are there similar benefits for the vendors?Sharma:
Yes. For example, collaborative billing can reduce costs for both vendors and agencies. But we've seen people in government push back a little when we suggest collaborating more with industry. Before you ever get to an acquisition strategy, you need to do your homework, understand the industry and then bring in that industry's vendors to really work with them. There's no federal regulation that says you can't talk to industry.Q: Can you cite examples where such innovations are working?Sharma:
Look what's happening in defense contracting. We're seeing a lot of proactive work going on in interservice acquisitions. And senior executives have been appointed to lead strategic sourcing initiatives. That automatically raises the importance of strategic sourcing. So we're starting to see more leadership support, which is crucial to the acquisition community.Q: You are openly critical of how some government agencies approach strategic sourcing. Why?Sharma:
Strategic sourcing in itself is a complex discipline. One of the misunderstandings of strategic sourcing in the government ? and it's a very dangerous misunderstanding ? is that it's about leveraging, buying in volume and pooling contracts, and consolidating spending. That's a very simplistic notion.
We think there have been a lot of poor implementations of strategic sourcing, and they've given the practice a bad name. If we do it right, strategic sourcing can benefit government, contractors ? especially small business ?and ultimately the taxpayers.Q: If strategic sourcing is all you say it is, why haven't government agencies embraced it?Sharma:
A lot of our customers want to do more, but frankly, they haven't the money. The amount of money going toward this is ridiculously low ? in the million-dollar range ? and most departments don't even have that much. We're funding hundred-million-dollar programs to do a lot of other things, but we're putting little money into strategic sourcing, which has an immediate impact. The Office of Management and Budget is pushing the process, but the lack of funding is one of its big challenges.Q: What matters need to be addressed? Sharma:
How do you train your workforce to be more sophisticated and understand this? We need more training dollars for the acquisition workforce because strategic sourcing requires a different skill set. To do strategic sourcing properly demands complex spending analytics. Moreover, the Federal Procurement Data System doesn't address the types of data needed to do that.Q: What else is needed for greater agency acceptance?Sharma:
We need greater support from program executives, the people who initiate the purchasing cycle.? It's hard enough to get one agency to come together to do something. How do you get many agencies to work together? It's really a challenge.Q: How will this get accomplished? Sharma:
You do it by demonstrating the broader application ?that there are savings for both sides when each side knows how the other does business. We shouldn't be thinking about how we can write better contracts at lower costs. We need to understand the value of what we buy. The immediate impact of such understanding is better pricing for the government.