The market for buying and selling professional services between large organizations, what I will refer to as ‘branded’ professional services, is imperfect. Really imperfect. Opaque pricing and availability, difficult to find and compare offerings, limited competition, little or no buying-data. By and large, the market is almost entirely relationship-driven. Who do I know, and who do I trust?
Not surprisingly, that’s the way branded professional service firms want to keep. And why not. Partners in those firms across legal, accounting, consulting etc. earn millions of dollars a year in take home partnership profits. Nice work if you can get it (which I used to – sad face). No burning platform here.
But it doesn’t really make sense. How is it that organizations that spend tens if not hundreds of millions of dollars a year on branded professional services are less equipped to make buying decisions in relation to those services than those at the consumer and retail end? Online market places are giving those latter buyers choice, competition, market pricing and ratings for the professional services they need, in much the same way that online market places for goods have been doing so for many years. What’s available, how do the offerings compare, what’s the best price, what has the market said about each offering, what else have people like me chosen that I might also like? There is simply no place to go to find the answers to those questions in the context of branded professional services.
Now let’s project out 2, 5, 10 and 20 years into the future. What will the market for the buying and selling of branded professional services look like? In my view, there is one certainty. The market will move from a supplier-led purely relationship based one to an availability-led buyer-centric and data-driven one. Buyers will be able to send their requirements out to the online market place and receive back tailored, competitive, market priced proposals in response. The marketplace will tell the buyer what the true market price for the services in question is, the difference between the various offerings, alternative services that the buyer had not thought about but which might also be suitable to get the job done, what other ‘buyers like me’ have said about the various offerings. And so on.
Now none of that is revolutionary or rocket science. It’s just a natural extension of what we’ve seen in the market place for goods and consumer/retail level services. By being able to show what’s available on the supply side, and what other customers think of that supply, online marketplaces have been able to create competition and pricing transparency. Shame on you if you bought an overpriced TV because you didn’t check what it was going for on Amazon.
