Extract Value From Consultants » Consulting Summit – Chicago

Consulting Partners have the tendency to regard themselves as 'masters of the universe'; irrespective of their core competencies, it is natural for them to believe that no client problem is out of bounds for them to solve ... Usually, you will have more face time with a partner during the sales process or during pro bono work- which is often the same thing - than at any other point in the engagement ... Organizations often hire high-priced consultants and then do not create an environment in which they can be effective ... It seems rather one-sided that the consulting firm is guaranteed its fees for simply supplying resources without any downside if the client does not achieve their business objectives ... The competency and bench strength of the relatively immature consulting profession in Asia, even among the global consulting firms, is significantly more variable than in Europe and North America so buyers must beware ... The economic models of the various consulting firms differ primarily in terms of which of the variables of rates, leverage, and utilization they emphasize to drive profits depending on their core service areas ... An RFP process requires expertise and management time for it to be undertaken in a fair and robust manner that will result in the selection of the best consulting firm at an appropriate price to support the realization of your business objectives ... Generally, the larger the team of consultants the more difficult it is for the organization and business sponsor to extract value from the consulting engagement ... In Asia, the foundation skills required by the Western models of management consulting are not necessarily consistent with the cultural norms of their Asian staff creating challenges for service delivery ... Successful outcomes are almost always determined not by the brand but by the capabilities of the specific individuals working on your project ... Very few of the global consulting firms have been able to build sustainable practices in Asia with the necessary breadth and depth of consultants to provide consistent value for their clients ... Even if Project Advisers actually do make their guest appearances, their contribution is often off-key and out-of-sync with the project because they are not focused on your problem; they just relay war stories and anecdotes from their own experience ... More than they may realize, managers are easily influenced by consulting partners whose interests might not always align with theirs ... Despite their preference not to have to submit a formal proposal, consultants early in their career become proposal writing machines ... Many different roles can be filled by consultants - you need to understand the importance of each role relative to the needs of your project ... Research and data gathering is a favorite activity for consulting firms to burn an inordinate number of billable hours, often using consultants with little experience - clients rarely raise an eyebrow ... In the final analysis, the person who hired the consultants remains accountable for the performance even if they have used consultants to support the effort ... As far as a consulting firm is concerned, the best RFP is the absence of one ... Luckily for consultants, as the careers of many internal stakeholders (project sponsor, project manager, project team members) are influenced by the perception of project success, there is a tendency in companies to gloss over underdelivery ... To effectively evaluate a consultants proposal requires you to decode consulting terminology and read between the lines to determine what exactly you can expect from the consultant ... Consulting firms prefer that the assignment of their resources be left to their discretion so that they can provide a mix of high-caliber and less experienced/capable consultants ... Western consulting partners, even those with some international travel under their belts, are usually unprepared for the differences in the business, educational, and cultural environments in a region like Asia ... You must be able to distinguish between proposals that are simply words on a page versus those in which the consultant has already put themselves in your shoes ... Too many buyers of consulting services are uninformed about what drives the consulting business, lack experience in executing a structured and disciplined RFP process, and are uninitiated when it comes to contracting ... Because the decision to hire a consultant is highly decentralized in most organizations, the managers involved usually have significantly less experience structuring the relationship than the consultants do ... Get this first step, problem definition, wrong and you will generate a stream of consulting work and fees that, in the end, despite much activity, will provide little or no business value ... The decision to buy consulting services is highlydecentralized - this means that most organizations do not comprehend the extent of their expenditure on consulting ... Partners in consulting firms have a natural tendency to view your issues through the prism of their own experiences, capabilities and internal pressures ... Using marriage as a metaphor, view your contract with your consultant as the marriage vows, which detail what each party is committing to do, rather than jus ta prenuptial agreement, which outlines what happens if the relationship dissolves ... Your purchasing function, which may be skilled at driving down the prices, may not promote the required business objectives because they do not fully understand the impacts to scope and consultant resource selection that arise from squeezing fees ... Extracting value from consultants has as much to do with the environment you create for the consultants as it does with the selection, management, and release of consultants ... Projects deliver value, not consulting engagements ... Publicly available information provides a much better indicator of the areas of interest and expertise of a prospective consultant than do their live sales pitches that are tuned to what they think you want to hear ... Sales approaches of consulting firms have become remarkably sophisticated as the scale of consulting projects sold has rapidly ratcheted up ... To overcome a Partner's individual revenue cap, the consulting profession discovered leverage, which next to utilization and realization has become the most significant management metric monitored in the consulting profession ... It is a mistake to allow a consulting firm to execute the engagement solely or predominately with their own personnel ... A consultant's 'fit for purpose' is usually not properly assessed during most selection processes ... Do not assume that because you are the buyer you have the advantage in the proposal process - you are dealing with people more skilled at writing proposals than you are at assessing them ... Simply following a methodology will not guarantee the end result; it could in fact waste a lot of time, effort, and money if unnecessary steps are executed or circumstances arise that are not anticipated by the methodology ... It is common for organizations to hire the same consulting firm over and over again even when many in the organization are dissatisfied with the consultant�s previous work ... Unless there is a management framework in place, the sequence in which problems are addressed will be influenced by the subjective considerations of internal management, ad hoc events, and potentially external consultants ... Consulting firms and clients often do not fully appreciate or acknowledge that it is the structure of the project -- not the objectives nor the work itself, particularly on large-scale projects - that is a key contributor to organizational resistence ... If you leave it up to the consulting firm, they will assign their billable resources to both high- and low-value roles ... Most large consulting firms will resist providing you with only partner/senior manager�level resources without the addition of junior resources that they can leverage - it is just not compatible with their business model ... Buyers of consulting services should look at the economic model of the consulting firm and consider whether the services being offered are appropriate to it from both a capability and a cost perspective ... Giving work to the consulting firm that happens to be on-site potentially results in misalignment between problem and consultant capabilities and is a major reason why the value of consulting services delivered to your organization declines over time ... The fault for realizing poor value from consultants often lies not with the consulting firm, but with the organization that hired them in the first place ... Senior executives always underestimate the time and effort required with any initiative that changes internal organization structures, processes, or systems - the result is an underachievement of business objectives ... Few change control processes are designed to reject changes; they almost always assume the change will be approved - this should not be the case ... In the case of troubled projects, management rarely decides that they should take an immediate, certain loss rather than waiting for a future, probable failure ... Although most client organizations have well-defined expense guidelines for their own personnel, they often allow the consultants they are hiring to get away with extravagances ... You do not want to inadvertently end up selecting a consultant who excels at sales tactics over one who can provide the better solution ... Consultants are proficient at packaging their services, influencing decision makers in organizations, making a compelling sales pitch, and contracting to their advantage - they do it every day ... When the appropriate type of consultant is engaged for sound reasons and at a cost-justifiable fee, and if they are managed effectively, they will enable your organization to achieve benefits that would not have been achieved without them ... The consulting industry, once a client-focused profession, has increasingly become a revenue-obsessed business ... The tendency of buyers to resort to the familiar brand has been a key motivator behind the significant investment in brand advertising that global management consulting firms started to make in the 1990s ... Most consulting firms start with the advantage by issuing their standard contract, which means that all terms are negotiated against wording that is initially biased in the favor of the consultant ... Consultants are masters at identifying and justifying scope changes, which is often where the project margin is created ... Some consulting firms charge extra for Quality Assurance under the perverse logic that quality is an option that you should pay extra for rather than quality being embedded in the product the firm is delivering and for which you are already paying ... Organizations often fail to appreciate that protracted inquiry and analysis may undermine the ability to eventually realize expected business outcomes within acceptable time and risk parameters due to the ongoing delay in the start of the project ... When relationships break down and the parties go to court or arbitration, nobody wins - regardless of the legal outcome, your company will have failed to realize its business objectives, potentially falling behind competitively in the market ... You are often made to believe that the combined worldwide resources of the consulting firm will be brought to bear on your problem - the reality is that the actual members of the proposed project team will determine its success ... Organizations should ensure that their consultants never lose sight of the fact that they are working at the behest of the client ... The reality for global consulting firms is that depth in capable resources exists in North America; capability is strong but sometimes fragmented in Europe and capability across Asia ranges from adequate to weak and cyclical ... The structure of a consulting firm is designed to maximize the margin on rates, the billable hours (particularly of the least experienced resources), and partner leverage through a pyramid of consultants ... Many organizations run a well-defined transparent selection process complete with a hefty RFP, but a closer look reveals that the focus is much more on process than content resulting in the selection of a firm for all the wrong reasons ... Don't be a consultant junkie - if there is no reference point by which to judge the value of the consulting services being delivered, there will inevitably come a time when some board member will ask about the true value being realized ... Do not be taken in by the positive atmosphere prior to project kickoff - in a long, challenging project many things can change ...

Consulting Summit – Chicago – 5 May 2011

April 17th, 2011 | Author: Jenny Sutton

In May we will be speaking at Consulting Magazine’s Consulting Summit on the topic of What Clients Want. This event should be an interesting opportunity to discuss the status and future of the consulting industry with some of the leaders of the big consulting firms.

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How To Hire, Control, And Fire Them

Consulting Summit – Chicago – 5 May 2011

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