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Lean Banking Can Transform Your Institution. Don’t ignore it.

Let’s start with the great news – financial institutions that are leveraging Lean banking operations achieve up to 30% cost reduction within 2 years, and are maintaining cost-efficient operations better than the average in the industry.
Lean processes are being adopted globally by organizations prone to inefficiency that are negatively affecting their earnings.

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Podcast | The US Consulting Market

The Economy has a direct effect on the consulting market. And the same is true for the US market. What are the sectors driving growth? What is the impact on the US consuting industry?
On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte talks about the US Consulting Market.
Key Takeaway: The US market is by far the largest and represents close to 90% of the North American Market. Canada is about 6%, and Mexico completes the picture. Consulting usually follows the ups and downs of the Economy. North America is one of the largest Economy in the world and the cradle of modern consulting. And with no surprise, the US consulting market is strong and dynamic. Demand for consulting is driven by rapid growth and uncertainty.

Transcript
 
Hello and welcome to episode 47 of our podcast: Smart Consulting Sourcing, THE podcast about Consulting Procurement.
My name is Hélène, and I’ll be your host today.
Each week I’ll give you the keys to better use, manage and source consulting services.
This week, I’ll talk about the US Consulting Market
But last week, I talked about The Future of Consulting (Consulting 4.0)
We saw that the consulting industry is evolving, and many opportunities will arise for both consultants and clients. And we can ask ourselves the questions: are clients ready to change their ways of working with consultants?
If we merely follow the projections provided by economists, we should see a significant shift in the balance of power by 2025 in the global market.
Here are a few interesting facts:

Emerging Markets and Developing economies are growing 2.5 times faster than Advanced Economies like USA, the Euro Area, and Japan.
If we take a look back, in 1995, the E7 (China, India, Indonesia, Brazil, Russia, Mexico, Turkey) was half the size of the G7 (US, UK, France, Germany, Japan, Canada, and Italy) at GDP level.
By 2040, it could be double. Today the two groups are around the same size. Yet consulting in E7 is growing fast but is nowhere near its extent in the G7 countries.

But there are a few interesting questions: 

Is there a cultural tendency to rely more on Consultants in Advanced Economies?
As most decisions are made in central offices located often in Advanced Economies, is it safe to say more money is spent on Consultants there?
Are organizations in Advanced Economies spending more on Consulting to keep an edge over the competition?

So let us take you on a global tour and explore some regional market specificities along the way.
We are heading towards a shift in the balance of powers. Global economic growth is expected to dip closer to 3% in the coming years.
After overtaking the UK and France, India will be passing Germany and Japan successively. It seems to be only a matter of time before India and China take the top spots. Investors will soon see Emerging markets presenting the highest GDP growth as attractive opportunities for international businesses.
As they mature, they will become less attractive for offshore manufacturing but will present B2B opportunities. Next, walking in the steps of China, they will become investors themselves.
Meanwhile, mature economies will continue to experience lower growth as they are forced to deal with this new paradigm.
But how does that affect the Consulting market?

When mapping GDP vs. Consulting Growth, we can observe a moderate correlation (r= XX). According to Marc Baaji, the three factors the can help explain the differences across geographies are:

The economic development of the region that will drive the ability to invest.
The structure of the Economy that will show what sectors are the most likely to spend in consulting.
The local culture that will influence the willingness to work with outsiders.

The way major Consultancies define their set of megatrends shaping the future of society and the Economy – PWC, for instance, predicts that despite the volatility of the Economy, most of the additional growth will take place in medium-sized cities of developing countries.
The Digital revolution is impacting almost every industry and geography. As a result, regional regulators are now trying to place some limits to regain some form of control (think GDPR or internet access in China).
If we look at the Consulting market today on a global scale – North America and Europe combined represent close to 80% of the consulting market, followed by Asia Pacific, Middle East, Latam, and Africa.
Even though growth is twice as fast in Asia as in North America, the North American Market is roughly three times the size of the Asian one. It will probably take another 30 years for the Asian market to catch up at the current pace.
But while most of the clients are becoming a part of global corporations, the consulting sector remains scattered.
Clients tend to appreciate projects delivered by local consultants as they understand local culture better. A significant share of consulting projects is performed by teams of 2 to 5 consultants and does not require a global presence or a global footprint.

And what is the impact of Covid on the Economy?

The outbreak of Coronavirus disease (COVID-19) has decreased the need for consulting services in 2020 as governments globally imposed lockdowns and restricted trade & travel.
The global economic activity has declined while countries entered’ lock downs’, and the negative impact on businesses lasted throughout 2020 and into 2021.
However, the management consulting market is expected to recover from the shock. The crisis is not structural and does not relate to fundamental weaknesses in the market or the global Economy.

North America remains strong and resilient economically
Even though Emerging Economies are catching up, North America remains the largest Economy in the world. Spearheaded by the US, the region represents close to 25% of the global Economy. States in the US, such as California, Texas, or New York, have equivalent output to the UK, France, Italy, or Brazil.
The Economy is at the same time enjoying a robust services sector and an abundant supply of natural resources. We can expect a slight slowdown in the years to come.
Two major trends are impacting the Economy durably for the years to come. Unconventional Oil has opened access to low-cost energy. Subsequently, consumers are experiencing cheaper products and lower transportation costs. Digital is transforming almost all industries. New technologies such as Artificial Intelligence and automation are opening endless possibilities.
But what are the Economic Sectors driving the growth?

Number 1: Financial Services far ahead with close to 20% of GDP output.
Then, Government-related activities, including military as well as federal and local expenses.
Followed by Health Care, impacted by an aging population and regulatory evolution. There has been a 20% growth in health care sector jobs since 2008, while the average rate for the Economy was only 3%. Health care jobs are expected to grow at a rate of 18% from 2016 to 2026.
Meanwhile, Technology is reaping the benefits of the Digital wave to go forth. Employment in computer and IT is projected to grow 13% from 2016 to 2026, faster than the average for all occupations. Demand for additional workers stems from cloud computing, collecting and storing big data, and information security.
Construction, unexpected fifth, sees a projected growth of 11% from 2016 to 2026. The growth stems from overall economic and population growth, increasing demand for new buildings, roads, and other structures.
Finally Retail, remaining the largest employer of the US since it includes both online and brick-and-mortar stores.

Given the strength of its Economy, it is not a surprise that North America is the largest market for consulting.
According to most market research firms, the market is estimated at around $100 billion with a CAGR of 4%, slightly higher than GDP. The market has seen a significant drop with the Covid crisis, but 2021 should see a recovery.
It is by far the largest and represents close to 90% of the North American Market. Canada is about 6%, and Mexico completes the picture. The main activity is concentrated on both coasts, with sizeable pockets in the Mid-West and Texas.

From an industry perspective, we can find the sectors leading the GDP as major spenders in Consulting:
Financial Services, facing the same new regulations and Fintech disruption
Healthcare with an energetic Pharma sector and the aftermaths of the healthcare reform
Energy with the consolidation of Energy providers and the Shale Gas opportunities
Media & Technology facing consolidation and high-speed innovation and,
Government.

Consulting usually follows the ups and downs of the Economy. North America is one of the largest Economy in the world and the cradle of modern consulting. And with no surprise, the Us consulting market is strong and dynamic. Demand for consulting is driven by rapid growth and uncertainty.
That’s it for today. Next time, I’ll explain how Understanding the consulting market will help you source the right consultants
In the meantime, if you have any questions, or want to learn more about what we do at consulting quest, just send me an email at helene.laffitte@consultingquest.com
You can also have a look at our website smartconsultingsourcing.com to know more about our book and download free templates & guides to improve your consulting sourcing.
Bye and see you next week! Au revoir!

Podcast | The Future of Consulting (Consulting 4.0)

Understanding disruptions can help you take advantage of the powerful new trends and position your company to optimize for the trends that will shape the future.
On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte talks about the future of consulting.
Key Takeaway: Both Clients and Consultants need to understand the new dynamics and utilize the latest developments, while building their relationship on transparency and mutual interest. The consulting industry is evolving and many opportunities will arise for both consultants and clients. But the real question remains: are clients ready to change their ways of working with consultants?

Transcript
 
Hello and welcome to episode 46 of our podcast: Smart Consulting Sourcing, THE podcast about Consulting Procurement.
My name is Hélène, and I’ll be you host today.
Each week I’ll give you the keys to better use, manage and source consulting services.
This week, I’ll talk about The Future of Consulting (Consulting 4.0)
Last week, I explained How to Get the Best Performances from Your Consultants
We saw that many executives blame the consultants when things go wrong. But sometimes, there are the guilty ones. The trick is to keep your eyes on the prize. Be ambitious, clarify your expectations, demand impeccable performance and put the consulting firm in the right conditions to deliver.
The disruption in the Consulting value chain can benefit clients in many ways. Due to the digital transformation affecting modern industries, we see disruption unfolding in major areas such as Marketing & Sales; Knowledge; Data Analysis; Methodologies & Solutions; Services and Resources. Clients today have an abundance of opportunities to source talent, expertise, and to use offerings tailored to their specific needs.
Understanding disruptions can help you take advantage of the powerful new trends and position your company to optimize for the trends that will shape the future.
If we take a quick look back, we will see that the Consulting industry is pretty resilient and adaptable. It started with a value proposition around work optimization, and then shifted swiftly to more value and a focus on strategy.
Since then, consulting firms have shown a high capacity in embracing the top trends in management. They developed specific offerings to help their clients to implement new management concepts such as: total quality, globalization, voice of the customer, design to X, value pricing, lean six sigma, and succession planning.
Today is all about digital –
Pretty much every Consulting firm today has incorporated a digital layer in its offering.
The recipe for success until now was rather simple. Consultants had to accumulate experience, gather knowledge and data, organize information, process information at light speed, and organize findings into superior looking reports. Sounds simple, right? Let’s see how digital seems to be reshuffling the cards.
The Consulting Value chain is constantly evolving, in all its sectors, from Marketing & Sales, to Knowledge and expertise, Data and Data analytics capability, Management tools & Methodology, Proliferated Talent pools, and much more.
It’s important to mention that Clients are evolving simultaneously as well, expanding their knowledge and expertise, access to Data, and are relying on in-house Consultants more than before.
In that line of thought, the Consultants’ role is shifting too.
The Consultant added value becomes their capacity to frame the problem and analyze the data provided by the expert.
 
Companies such as Evalueserve are offering outsourced knowledge services to management consultancies such as knowledge management, business intelligence, market-specific or clients insights to support business development. Until recently most companies had none or very scarce resources dedicated to data analytics.
With all the hype around Artificial Intelligence, Big data and Machine learning, that situation is about to change. Major companies are building teams of data scientists to take advantage of their data and even for some of them to create new business models.
Now let’s take a look at the future of Consulting –
We are now entering the era of Consulting 4.0 – a term borrowed from the industrial revolutions’ stages – industry 1.0 to industry 4.0.
New technological developments, or digitalization to be more exact, have affected the Consulting category as well.
The fundamental business model based on solving problems, whether developing a new strategy, cost-cutting solutions, or implementation of new technologies, guaranteed the Consulting industry’s success.
But in the aftermath of the 2008 economic downturn, things have dramatically changed.
Declining revenues, growing competition, and market consolidation are among the main factors that make Consulting firms worry.
However, a better perspective to look at this, is to frame it as the beginning of a new era – Consulting 4.0
The consulting industry has to reshape itself with new business models, new growth areas, and innovative products and services to be created. We can confidently say that Digital transformation is at the core of Consulting 4.0
Main Characteristics:
– Consulting 4.0 is more than the digitalization of the industry. It includes a fundamental change in almost all sectors.
– Some of the factors behind it include volatility and uncertainty, as the global economic environment is constantly changing, and to a big extend has created to the disruptive forces we are witnessing.
– Clients-Consultants relationship has changed – a complex and uncertain global economic environment created many new challenges for Client organizations.
– Clients today have more information – with the launch of many new platforms and information services in the past ten years, clients have access to quality and quantity of information, giving them a strong preference for which consultants they want to hire.
– The demand for Consulting services has changed as well- and Clients today are less dependent on Consultants. They are either doing in-house consulting or prefer very niche and specific services rather than general management Consulting services.
– Low cost and high-end expertise services – as Client perceptions evolve, they are reshaping the consulting industry, driving it into two distinct directions – One one hand, Low-cost consulting fixing problems and discovering solutions. And on the other end of the spectrum – high-end, specific consulting solutions to problems that Clients don’t have the confidence or expertise for.
 
So how to be a winner in this new Consulting Industry domain?
Both Clients and Consultants need to understand the new dynamics and utilize the latest developments, while building their relationship on transparency and mutual interest.
The consulting industry’s market leaders – strategy consultants, IT consultants and system integrators or the Big Four – have the chance to position themselves as multi-specialists, sometimes by eagerly acquiring smaller specialist consulting firms.
Smaller consulting boutiques, with their deep specialist know-how and innovative business models, could be well-positioned to make a remarkable amount of work in nearly all sectors as clients realize the possibilities for wide-ranging change, major transformation, and are rethinking their business models.
So we see, the consulting industry is evolving and many opportunities will arise for both consultants and clients. But the real question remains: are clients ready to change their ways of working with consultants?
That’s it for today. Next time, I’ll talk about the US Consulting Market.
In the meantime, if you have any questions, or want to learn more about what we do at consulting quest, just send me an email at helene.laffitte@consultingquest.com
You can also have a look at our website smartconsultingsourcing.com to know more about our book and download free templates & guides to improve your consulting sourcing.
Bye and see you next week! Au revoir!

What compensation fee structure best fits your consulting project?

What compensation fee structure best fits your consulting project?

Consultants are selling their time, or more precisely, the access to expert knowledge and execution workforce during a certain period. The potential of production of a Consulting is the amount of time available for billing. 

What compensation fee structure best fits your consulting project?
Every day not billed is lost, just like an empty airplane seat. So the fee structure is usually geared to optimize the utilization rates.

“Sell the results, not the nuts and the bolts.” – Richie Norton, a marketing strategist

As for products or services you might be more familiar with, this ranges from Cost Plus to Value-Based.

READ ALSO
Many executives have the feeling that the consulting spend should more or less remain the same for one year to the next.

1. Deliverable-based fees or flat fee –
Most Consulting firms use the flat fee structure for their projects. The Consultant will evaluate the work to be done and staff a little team. The total fee will reflect the total cost of the team to provide the work.
Pros:
The Consulting team will do the work even if the workload is higher than expected. The risk for the Client is limited.
Incentives for the Consultants are through repeat business and resource optimization.
It is particularly efficient with projects with clear requirements, fixed duration, and little to no interdependencies with the rest of your organization.
Cons:
The Client pays the amount agreed, even if the consulting team does the work faster than expected. The Consultant can be tempted to “supercharge” their resources to mitigate the risks. The Consultant can allocate resources to the proposal that will never work on the project to create a buffer.
2. Time-based fees or daily rates –
This system is very common, in particular with small projects and independent consultants. It can also apply to interim management assignments. The Consultant will define a daily rate and invoice the Client based on the number of days actually worked for the Client.
Time-based fees will be perfect for projects where you mostly need extra arms and legs, such as interim management or spot team reinforcement.
Pros:
The Client will only pay for the work done and time spent.
The fee structure is particularly transparent and adapted to projects with a finite duration. It also applies well when the requirements are not clear.
Cons:
A low-performing consultant will charge more days. Besides, the incentives for the Consultants are to stay longer to charge more. And what happens if you are not available and the work cannot progress as planned? The Client has little control over the total cost of the project. The risk is mostly on the Client’s side.
3. Retainer-based fees –
When a client needs continuous part-time support, s/he can opt for retainer-based fees. The Consultant and the Client agree on several days per week/month/quarter where the Consultant will be on “stand-by.” The retainer can be paid in a lump sum or monthly, independently of the work done by the Consultant.
Pros:
The Consultant has to stay on top of the Client’s organization and priorities. The Client is sure to have access to the Consultant for the agreed period. This type of model works particularly well when deliverables are unclear and can change during the assignment.
Cons:
The consultants can have several projects at the same time.
The “retainer” client is not always their #1 priority as that project is secured. Some consultants tend to consider retainers as paid commercial time.
4. Value-based Pricing –
More and more consultancies are exploring ways to share the value with their clients. The movement started with Bain & Company when they moved from pure strategy work to more operational support.
Value-based pricing is a pricing strategy where the prices are set not on time and materials or cost + margin, but rather on the perceived value for the Client of the service delivered. For Consulting services, it could be a share of the savings realized in a cost-cutting project.
Pros:
The clients and the consultants share the same interests: the more value created, the more value for each party. The risk for the Client is very limited. The Client only has to commit to a small flat fee.
Value-sharing fees make sense when the stakes are high, and you expect the consultants to go above and beyond their normal delivery by aligning their interests with yours and giving them, beyond the sole repeat business, the perspective of a substantial upside in case of success. Typical projects will include cost-saving programs, pricing optimization, and a new business launch.
Cons:
The baseline and the conditions of success have to be defined very precisely so the Client doesn’t end up paying more than the value really created. The model is more difficult to apply for intangible deliverables with no direct, measurable impact on P&L. Traditional consultancies are reluctant to use this fee structure that does not fit their pricing and risk management models (you cannot reserve a team of four consultants from the pool when the payment for only two can be secured).
To mitigate the risk, you will have to implement governance to ensure the activities (and how they are performed) align with your overall strategy and culture. Indeed, the consultants will take a very active role in the execution of the project, but you stay at the helm. And what are the expectations beyond their normal job that would justify a special bonus?
In conclusion, you can identify the fee structures that will yield more value for your company for each project. It will depend on the type of project, the nature of the deliverables, the context of the project, the flexibility you have on fees, and the level of commitment you expect from the Consultant
 

Author detailsAuthor Bio

Hélène Laffitte

Co-founder & CEO at Consulting Quest

Hélène is the author of Smart Consulting Sourcing, a step by step guide to getting the best ROI from your Consuting. You can follow @helenelaffitte on Twitter.

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Hélène Laffitte is the CEO of Consulting Quest, a Global Performance-Driven Consulting Platform and author of “Smart Consulting Sourcing”, a step by step guide to getting the best ROI from your consulting. With a blend of experience in Procurement and Consulting, Hélène is passionate about helping Companies create more value through Consulting.

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Podcast | The US Consulting Market

Make-or-buy for consulting services 101

Podcast | The Future of Consulting (Consulting 4.0)

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Podcast | How to Get the Best Performances from Your Consultants?

Competition inspires people to go for peak performance, and lack of it creates opportunities for subpar results.
On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte explains how to Get the Best Performances from Your Consultants.
Key Takeaway: Many executives blame the consultants when things go wrong. But sometimes, there are the guilty ones. The trick is to keep your eyes on the prize. Be ambitious, clarify your expectations, demand impeccable performance and put the consulting firm in the right conditions to deliver. Get the star Consultants, and watch the benefits multiply as you successfully complete your projects.

Transcript
 
Hello and welcome to episode 45 of our podcast: Smart Consulting Sourcing, THE podcast about Consulting Procurement.
My name is Hélène, and I’ll be you host today.
Each week I’ll give you the keys to better use, manage and source consulting services.
This week, I’ll explain How to Get the Best Performances from Your Consultants
Last week, I explained how to select the right consulting partner for your project
We saw that each company has a unique set of markers and a unique consulting “DNA profile”. And being able to draw this profile will allow you to understand the range of projects where this particular consulting firm brings more value.
Ultimately, this gives you the keys to choose the right consulting providers for your projects.
But this week, I’d like to talk about performance and Neymar Jr.
Everybody knows Neymar. The Brazilian football star is one of the most recognizable faces in the world, and an inspiration to millions of kids who love and play sports. Besides the exceptional talent that he has, we can look at something more tangible and applicable to almost any other professional field – the desire to compete. And the desire to win.
If you like to get the best performance from your Consultants, create competition among them.
Competition inspires people to go for peak performance, and lack of it creates opportunities for subpar results.
As an executive, you’re probably used to making quick decisions. Given the amount of work that you have to do, we get it. You want to be efficient. But don’t let that efficiency come at a higher cost of mediocre outcomes for your Consulting projects.
You have to get Crystal Clear on Your Priorities –
What are the exact reasons you need to hire a consultant, and who can be the best fit for your specific project and your organization? The most natural solution is to look into your pool of existing Consulting Providers and to pick and choose from there. However, the best consultant for one project is not necessarily the best one for the next project.
Always Look for the Most Talented Experts in The Field –
People are good at different things, and the degree of talent and abilities can vary substantially from one person to another. Make sure you compare the skill sets of candidates.
And It’s necessary to find a consultant who has substantial experience, creative problem-solving skills, and excellent interpersonal skills. It will be a great idea to interview a number of Consultants and evaluate their skills and talent in the process.
However, if you do all this work, you may find that different consultants have different strengths. One might have excellent interpersonal skills, while another might have many more years of experience. One might be endlessly creative and great with design, while another might be a lot more blunt and honest about what your organization really needs. A good way of identifying strengths and weaknesses is also to check references on prior similar assignments.
Whenever you can, Put Consultants in Competition –
People naturally do more and do better when the job or the reward is at stake. They know they need to do their best and prove themselves. And who benefits from this type of competition? You, the client. This way, you will also get the best value for money from your Consulting Spend.
You need to Have the Desire to Win –
This idea does not apply just to sports. To get the best performance, and to make sure you hire the right people for your project, there is one more aspect to look at – their passion and willingness to win. But since this is not a match, the outcomes are progress, improvement, and solving a particular issue, so make sure they have the motivation to deliver these results. You can’t win if the desire is not shared among all team members, including your Consultants.
It’s way too easy to skip a step and put a little less motivation, and still pass the test, but that’s not what winners do.
You want to Get the Best Value for Your Money –
There is a price advantage to put Consultants in competition. If the consultants know that you will examine other offers, they will give their best efforts to design and price their proposal.
You could always argue that you will take the best for the job regardless of the price, but we all know what pressure on expenses the executives have to live with, especially operating expenses. The better the cost for value tradeoff will be, the easier it will be to convince your boss or your board that this consultant is the right choice.
Many executives blame the consultants when things go wrong. But sometimes, there are the guilty ones. The trick is to keep your eyes on the prize. Be ambitious, clarify your expectations, demand impeccable performance and put the consulting firm in the right conditions to deliver.
And to end this on a lighter note, Neymar Jr. might currently be the highest-paid athlete in the world, but we can be sure that the revenues he brings to his club are way higher to justify the cost of his contract.
Get the star Consultants, and watch the benefits multiply as you successfully complete your projects.
That’s it for today. Next time, I’ll talk about The Future of Consulting (Consulting 4.0)
In the meantime, if you have any questions, or want to learn more about what we do at consulting quest, just send me an email at helene.laffitte@consultingquest.com
You can also have a look at our website smartconsultingsourcing.com to know more about our book and download free templates & guides to improve your consulting sourcing.
Bye and see you next week! Au revoir!

What went wrong with my consulting spend?

What went wrong with my consulting spend?

Consulting is one tricky category. Its very nature makes it difficult to centralize completely. Like many intangible categories, the business lines must keep control of the decision-making during the sourcing process while procurement is there to facilitate the process and ensure compliance. 

What went wrong with my consulting spend?
Collaboration between operational entities and procurement is essential to ensure to capture impact and savings.

“Beware of little expense, a small leak will sink a great ship.” – Benjamin Franklin

Another key to managing your consulting spend is to monitor your expenses. Every year, you should perform a scan of all your projects to identify patterns and potential improvements.

READ ALSO
Building an appropriate performance measurement system is your first step towards creating value through consulting and taking control of the consulting category.

Here are the most common situations you can face:
One part of the organization is spending more than others –
One part of your organization spends 20% more than other entities of similar size. What could be the root causes of this situation?

The scope of responsibilities determines Spending & Value created

All parts of the organization are not equal in their scope of responsibilities. Since Consulting is roughly proportional to revenues, a large Business Unit, for instance, is prone to higher Consulting Spend than a small one. Looking at the ratio of spending vs. revenues can be a good way to look at a situation. Conversely, in a turnaround situation, you might be spending more on smaller GBUs to bring them back to value creation.
The corporate can also be a good client of Consulting Services. For a company with an integrated Corporate in charge of Strategic decisions and Excellence programs, the Corporate can have the larger Consulting Spend. In contrast, a decentralized Company with a light Corporate should expect a small spend for the Corporate functions.
If you have spent large amounts in consulting with questionable results or strategic purpose, you may want to question your governance model or your demand management system.

How the context and the strategy affect Consulting Spend

A regulatory change, a reorganization, or an acquisition and the associated PMI can inflate the Consulting spending. If a part of the organization has launched a major transformation or has an ambitious strategy, it can increase its expenses for Consulting to accelerate the process. It can make sense to capture value faster. However, make sure that you don’t end up overspending with luxury consultants. And put in place a monthly reporting of consulting costs. It will avoid unpleasant surprises.
Sometimes Executives use Consulting as a workaround for strict HR policies since the rules on Consulting are often looser. They end up with an unexpected bump on Consulting Spend in the middle of a recruitment freeze. The cost reduction objective for wages was then perfectly achieved at the expense of the consulting spend.

Consulting Fees vs. Consulting Expenses – the footprint

Keep in mind that most Consulting Projects separate the Consulting Fees from the Expenses of the Consulting Teams during work on the projects. If you are not cautious, you might end up paying up to an additional 30% of the total cost of your project only on expenses. If Consulting Fees are really tight, this ratio can end up being quite high. In this case, mostly make sure consultants are respecting your travel policies. There is nothing worse than consultants flying business while the rest of the company is in a travel ban.
If the entity selecting the Consulting Firms is based in Europe and tends to shop locally, every North America or Asia project will have a premium attached to it. And don’t think that you are safe because you work with a large global Consulting Firm. Because most of them are set up with local P&Ls and are pressured to optimize their local resources, they would rather send their unstaffed European resources than find local resources for your project.
A Consulting Firm is charging more than others –
When looking at the numbers, you realize that John Doe Consulting is charging 40% more than your other Consulting Providers on similar projects. Or maybe they are charging more only when working with Business Unit B, the most profitable of your BUs.

The scope and deliverables

Look closely at the scope and the deliverables of the projects. For broad projects with several phases, you can either contract in one large project or several small projects following the phases. Another point you want to look at is the range of the projects. For instance, for a Lean Manufacturing project, one Business Unit might have decided to work on all the factories simultaneously, when another one works on a small pilot group, and then implement in the rest of the organization.

The complexity

The complexity of the project can also have an impact on the price. Maybe you are using John Doe Consulting only on more complex projects because they are knowledgeable and can mobilize a huge volume of expert resources in a short period. Obviously, this often comes at a premium. In the same way, if only a handful of companies can complete a given strategic project, supply and demand rules prevail.

The footprint

The organization’s footprint can also impact the price of the projects through the expenses, as mentioned earlier. A business unit heavily centralized and solely based in one region will probably face lower Consulting Expenses than a Company based in several regions.

The price–value dilemma

Some Consulting Firms are just more expensive than others. The real question that you should ask yourself is: “What is worth the investment?”. Spending more is not always wrong if the return on investment is excellent. What matters most is the fit and the impact.

The Culture

If your teams are culturally homogeneous, or on the contrary, extremely diverse, the performance evaluation will probably not be impacted by individual cultural differences. However, if your Business Units have different cultural structures, then it might not make sense to compare the performance results from one with the other. In other words, your Brazil Headquartered BU will probably have better scores, independently of the latest results of the soccer team.

The quality of their providers

Lower-Performance scores can come from the quality of the providers. It can be linked to the quality of the local Consulting Market. When you are sourcing the best providers for your direct business, the logic behind your direct business should also apply to your consulting expenses. The probability of finding them in a 5-mile radius is fairly poor. Having been classmates with one of the partners or belonging to the same baseball fan club is not much better.
One Department works almost exclusively with one Consulting Firm –
Working with familiar consultants is comfortable. The Consultants know very well your business, its complexity, and even internal politics. However, we are always amazed to see the same senior partner morphing from a pricing specialist to a lean expert or a digital guru. And if it was only the senior partner teaming with other qualified partners, but you see the same phenomenon at the principal and consultant level. Or simply put, always the same team, different color jerseys.
 
Once you have identified the outliers in your spending, you can take corrective and preventive actions. There is a myriad of ways to approach this challenging situation. What really drives the way forward is the sense of urgency you have. Here are four from the simplest to the most disruptive.

Implement a systematic competition policy to keep providers on their toes
Centralize consulting budgets in each business line to align priorities
Set a ceiling in consulting spend per unit vs. historical or top line
Implement a demand management process to match spend and ROI.

Author detailsAuthor Bio

Hélène Laffitte

Co-founder & CEO at Consulting Quest

Hélène is the author of Smart Consulting Sourcing, a step by step guide to getting the best ROI from your Consuting. You can follow @helenelaffitte on Twitter.

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Hélène Laffitte is the CEO of Consulting Quest, a Global Performance-Driven Consulting Platform and author of “Smart Consulting Sourcing”, a step by step guide to getting the best ROI from your consulting. With a blend of experience in Procurement and Consulting, Hélène is passionate about helping Companies create more value through Consulting.

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Podcast | The US Consulting Market

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Podcast | The Future of Consulting (Consulting 4.0)

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Podcast | How to select the right consulting partner for your project?

The consulting landscape today is rich and diverse, and while this is beneficial to Clients, it also represents a challenge and to maximize the chance of success for your project, you want to hire consultants who have the right knowledge and who understand your business.
On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte explains how to select the right consulting partner for your project?
 
Key Takeaway: In an ideal world, you would like consultants to have the right expertise, geographical coverage, and the availability to meet your project needs. But each company has a unique set of markers and a unique consulting “DNA profile”. Being able to draw this profile will allow you to understand the range of projects where this particular consulting firm brings more value.

Transcript
Hello and welcome to the episode 44 of our podcast: Smart Consulting Sourcing, THE podcast about Consulting Procurement.
My name is Hélène, and I’ll be you host today.
Each week I’ll give you the keys to better use, manage and source consulting services.
This week, I’ll explain how to select the right consulting partner for your project
Last week, I explained How to Avoid Potential Problems in the Course of a Project
We saw that There are, unfortunately, no guarantees in life, so your best bet is to have a solid agreement and prepare yourself and your organization to deal with any unexpected problems that might arise during a consulting project. Just remember that all problems have a solution, and the better you plan ahead, the better the outcome will be.
But this week, let’s dive into how to select the right consulting firm for a project.
If there is a “secret sauce” to find the right provider, it probably lies in the combination of 8 key markers.
But before I talk about these key markers, let me establish the right foundation first.
That’s what I call the consulting “DNA profile” of a Consulting firm-
You know, the consulting landscape today is rich and diverse, and while this is beneficial to Clients, it also represents a challenge.
So the question to any business is that in order to create the best value versus cost, the Client should find the best provider that matches their needs and requirements.
To maximize the chance of success for your project, you want to hire consultants who have the right knowledge and who understand your business.
In an ideal world, you would like them to have the right expertise, geographical coverage, and the availability to meet your project needs.
In other words, you should look for consulting providers with the right consulting “DNA profile.”
Every project is different, and so is the RFP. However, there are some elements of a consultant’s profile that you will always need to screen. The best way is to review your RFP, where you should find most of the information, and discuss it with your colleagues to understand their expectations fully.
So what are the main markers to look for exactly?
First marker, Capabilities – Do they have the capability you need?
Understanding what capabilities will be used to deliver a project is very important. Besides, the way Consulting firms describe their offering is rarely in line with how their clients would describe them. They tend to describe what they do but not necessarily the problems they solve. They can also use technical jargon that their clients don’t always know.
For instance, a company will have its capabilities listed on their website: strategy, operations, and organization. For a seasoned consulting buyer, this description can be enough to understand what this consulting firm does. But for the average executive, it doesn’t mean much.
These three capabilities can be really broad. At first sight, we could say that this company is handling projects from high-level strategy down to operations excellence— that’s quite a program.
Let’s take the same consulting firm. Now the management has decided to revise their website and detail further their capabilities.
. Supply Chain Strategy
. Supply Chain Organization
. Distribution Strategy
. Asset & Working capital optimization
Now what they do is much clearer. Their previous description was accurate but too broad.
When the description of the capabilities is not clear, have a look at the case studies. That should help you narrow them down.
Marker number 2: Industry experience – This really matters.
Defining the industry experience you are looking for is an easier task. However, be careful to pick up the details of the context and the expected results to finely define what breadth and depth of knowledge you need. For instance, if you look at the Oil & Gas industry, you can be interested in the industry broadly, or maybe your project is about Upstream Operations, or even Exploration/Production, and more precisely about Well Stimulation.
When you look for a very niche expertise, you have to be quite thorough in your research.
Marker number 3: Footprint – Are they present where you need them?
The scope of your project can call for a global company or a company with offices in a given country. Consider the locations where the consulting firm will need to work, the languages they will need to speak, the cultures they need to understand. Think also about where and how the team should interact with the project leaders.
Let’s say you have a Lean project for a High Tech company based in Germany with factories in Korea, and in the U.S. You might want to find a company with offices and consultants in both countries. The travel expenses must be included too. When the consultant comes in from very far away, the additional costs can go up to 25-30% of your initial project amount.
Do you really need the consultants onsite? Can you leverage modern communication technologies? You have many options here.
Marker number 4 the Size of the Consulting firm – Is a brand or a boutique firm a better fit for you?
What are your policies regarding small firms or independent consultants? What is your timeline for the project? All those questions will help you to choose what consulting firms could work with you on a specific project.
Beyond the purely technical capability of a firm, you have to look at the ability to deliver that is linked to the resources.
Number 5 – Are you clear on the budget and the value you expect?
Knowing your budget is crucial to source your consultants. Consulting fees can vary from one firm to the next by a factor up to five. It is not a surprise that large Consulting firms will charge more than smaller ones. The size of a consulting firm is usually a decent proxy to estimate the consulting fees. If you have a tight budget, you will look into small local boutiques. If your budget is more accommodating, you can test several sizes of consulting firms.
Marker number 6– Next Credibility – How to decide quickly and objectively on that?
Credibility is usually established through 3 main channels: Brand, Thought Leadership, and Partner profile.
Let’s start with Brand – sometimes, you will need a brand Consultancy for your project. When your project has a board exposure, or when the value expected is largely political, you want to work with the large players. They will have the credibility at the highest level of the company and with your investors, and the shoulders large enough to roll with the punches if you need a scapegoat.
– Thought Leadership – companies with relevant thought leadership can bring you insights at the right level of expertise and on niche fields too. Let’s say that you are looking     for deep expertise in multimodal transportation for process industries, for instance. Your teams are reluctant to work with consultants because they “know nothing.” You now bring a consultant who wrote a book, or several white papers, about network distribution optimization and multimodal transportation. There is a good chance that your teams will welcome this consultant.
Finally Partner Profile – another way to get the buy-in of your teams and your major stakeholders is to bring in consultants with the right profile. For instance, if you are working on building an intrapreneurial program to boost your innovation, you might like to look at innovation consulting firms with partners mixing entrepreneurial and corporate experience. When you want to optimize your tail spend without a lot of resources on your hands, working with consultants with a past in corporate procurement can be very efficient.
Market Number 7: Delivery Model – What are the deliverables?
How do you want to collaborate with your consultants? Do you want them to help you diagnose the problem or design your strategy? Or do you want them to support the implementation of your decisions? Consulting firms rarely excel at both. Besides, implementation consultants are usually less expensive than strategy consultants.
Another dimension to take into account is the hard vs. soft approach. Let’s imagine that you want to reorganize your procurement team and redesign the processes. Ask yourself what your priority is. Is it to get the buy-in of your existing teams? Are you looking for a collaborative approach? In that case, you need to look for a consultant with a high-sensibility to change. But if your main priority is to get the work done, then you will need a consultant who is more focused on the hard aspects of the project.
Finally, how senior do you need your consultants to be? If you want to professionalize your teams in the process, then you will need consultants that transfer knowledge. Hence, you want to work with senior consultants that have an on-field experience. If you are mainly interested in the results of the project, then you could work with younger consultants supervised by a more senior colleague.
Last but not least, Culture – Do you see any prospective challenges working with diverse teams?
Companies are becoming more and more global. Their teams are more ethnically, culturally, and linguistically diverse than ever. Beyond language, many elements of business life are different from one country to the next: management culture, business etiquette, communication preferences, you name it.
For example, when you have a highly-sensitive project in Asia, you might want to find consultants that understand the local culture and speak the language. Part of the consultants’ job is to establish trust with their clients’ teams. And it’s important to avoid any communication issues.
So you see, each company has a unique set of markers and a unique consulting “DNA profile”. And being able to draw this profile will allow you to understand the range of projects where this particular consulting firm brings more value.
Ultimately, this gives you the keys to choose the right consulting providers for your projects.
That’s it for today. Next time, I’ll explain How to Get the Best Performances from Your Consultants
In the meantime, if you have any questions, or want to learn more about what we do at consulting quest, just send me an email at helene.laffitte@consultingquest.com
You can also have a look at our website smartconsultingsourcing.com to know more about our book and download free templates & guides to improve your consulting sourcing.
Bye and see you next week! Au revoir!

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Consulting Performance: Measure What is Measurable and Make Measurable What is Not

Consulting Performance: Measure What is Measurable and Make Measurable What is Not

In God we trust; all others must bring data:
As consultants hammer home to their clients, the only way to prove that you are good is to bring the proof, the data. Paradoxically, however, they don’t apply that sound principle to their own shops. Management consulting has always been something of an informal business when it comes to measuring and proving its own impact.  Daniel McGinn, a senior editor of Harvard Business Review writing in the magazine’s September 2013 issue, described consulting as a “black box.” And because there is no widely accepted, objective methodology for measuring consulting, the management consulting firms that attempt to create measures are inventing their own recipe.
Most firms measure their performance through the volume of sales and re-sales per consultant. Partners thus are encouraged to bring in more revenue and conduct projects which, instead of fully meeting the client’s needs at the outset, lead to further projects without necessarily cultivating good long-term relationships with the clients.  And then there are the Attila-the-Hun type of consultants who pursue a scorched-earth policy, wringing as much revenue from the client as quickly as possible and then moving to the next target while being handsomely compensated for it. Some firms attempt a cross-partner evaluation, whereby a partner surveys a colleague’s clients to gauge their satisfaction.  The result is often a quid pro quo in which the evaluator returns a favorable report on the colleague’s performance in hopes of being included in the colleague’s next big project. In addition, many consulting firms are organized as partnerships, which encourages individualistic and short-term behavior that works against long-term relationships, specialized expertise, and team play.

Measure what is measurable, and make measurable what is not
Even though production in management consulting appears to be mostly intangible, there are still dimensions that can be measured based on the expectations of the clients.  Those dimensions include:
Commercial Approach. Was the client convinced by your proposal? Your pitch? Was your proposal in line with the client’s expectations?
Relationship. How well do your consultants do with the clients and their teams? What image do clients have of your company? Collegial? Honest? Trustworthy?
Expertise. How is your expertise perceived by the client? What were their expectations?
Delivery posture. How does the client perceive your posture? Are you available? Flexible?
Project Management. How did you perform on the traditional triad: scope, time, and cost?
Impact. What impact did you work have on your client’s organization in terms of savings, ROI, change, and the like?
Client satisfaction. Is the client satisfied overall with your company?

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But evaluation shouldn’t stop there.  You need to assess performance at the right degree of granularity. Evaluating the company performance as a whole won’t allow you to identify the partners’ blind spots and to surface best practices. And going down to the consultant level will be very hard to organize (and consequently very costly) in exchange for little in the way of extra value.
However, if you are evaluated using the same methodology used on similar firms offering the same range of services, then you can benchmark yourself internally and against the competition.  Such benchmarking is invaluable in terms of positioning and strategy.  All that is required is an independent organization that can conduct your evaluations.  Such independence provides the objectivity and the confidentiality needed to get candid feedback from your clients, a fair assessment of your partners, and an accurate comparison with your competitors.
To measure is to know
Once all of the relevant dimensions have been measured, you will have a wealth of inputs that your firm can use to:
Understand. One key element of the business is to understand your client expectations and whether your work met their needs.  Sometimes client expectations may be explicit, like a specific type of expertise.  Or they can be implicit expectations like trustworthiness, ethical behavior, or active listening on your part.  The ability to hone in on those expectations, both explicit and implicit, confers significant competitive advantage.
Strategize. Evaluation will give you greater insight into your strengths and weaknesses and help you evaluate the effectiveness of your value proposition and your strategy. You can also gauge your performance in each of the various segments you serve.
Learn. Identifying best practices and capitalizing on experience can spur innovation. Evaluation can also help you identify your partners’ blind spots and gain a better understanding of your firm’s ecosystem.
Improve. Assessment also provides a better understanding of how you perform in each of the different steps of your process: matching the right partner or team with the project, the proposal, delivery posture, project management, team composition, and impact. You then have the keys to improving on the dimensions important to your clients.
Manage. Knowing your clients’ specific needs enables you to continuously improve your performance, build better offerings and teams, and increase your success rate. But evaluation can also be a key tool for talent management, giving you valuable insights into your employees and enabling you to better manage their development and compensation in an industry where attracting and retaining talent is essential.
By changing nothing, nothing changes
Used wisely, performance evaluation can help you capitalize on strengths and mitigate weaknesses.  And it could be easier to implement than you think.
Why?
It doesn’t cost a thing.  The cost of evaluating a client engagement represents only a negligible percentage of the engagement’s revenue.
It’s already there. You are already evaluated by your client (informally), and your clients are familiar with evaluation processes.
Think ROI. Your return on investment is highly positive.
You can use an objective evaluation to build your reputation, enhance your credibility, strengthen your relationship with existing clients, and enlarge your portfolio.
In a nutshell, evaluating your performance will enable you to guarantee a certain level of performance, build loyalty, and improve your success rate.
So what are you waiting for?

Consulting Playbook: Reorganization and Change Management in Communications Department

Consulting Playbook: Reorganization and Change Management in Communications Department

The Consulting Playbook, Edition #25
A global Pharmaceutical company’s new CEO set about to transform the company and challenged the Communications function to deliver on a new set of expectations.  The function needed to build new capabilities as technology created new ways of communicating with key stakeholders.  At the same time, there was pressure to reduce costs, streamline many processes, and reorganize the department. Below we have outlined the actions taken.
The Selected Approach by the Consultant
A significant organization redesign was performed, whereby the consultant facilitated working sessions with the department’s management team to define new expectations, deliverables and capabilities.   Specific actions to reorganize the department, define new positions, support new leader on-boarding, engage the staff, and to establish new operating procedures were outlined too. This included coaching managers how to handle new challenges of the department’s transformation, creating project plans and communications to key stakeholders.
Several working sessions with key stakeholders to implement the department’s transformation took place, including:

A department-wide offsite to clarify new objectives and established specific plans and actions to achieve those objectives
Meetings with counterparts in the business divisions to clarify roles, responsibilities, and operating procedures
Meeting with the department’s management team to review progress and make course corrections

The Successful Outcome
The goals of reducing staff, hiring new talent, and reorganizing were achieved.  The new operating procedures were implemented and the efficiency/cycle time on key projects was improved. The new structures were put in place to effectively coordinate messaging throughout the enterprise and to establish communications strategies in support of key business priorities. Organizational layers were reduced, new hires brought needed capabilities, new skills were developed and dependence on outside consultants was reduced. The project’s outcome included lowered costs, better quality output, and greater efficiency in handling projects.

Additional Information

Best Principles in Developing and Applying Organizational Design
Having a great business strategy will not accomplish much unless your organization is properly designed to execute this strategy.
From shifting the organization’s focus, changing the business model, implementing new technology, reorganizing sales teams, marketing approach, or simply appointing a new CEO, companies need an efficient organizational design to operate and successfully meet their goals. The alternative would spell trouble.
Let’s take a closer look at some of the best practices you can follow to align your organization with all the challenges and expectations it faces in today’s environment:

Every Company is Different – the best organizational design for each company will combine highly effective methods together with a unique fit to the organization’s status and priorities. As an executive, you need to take all that into consideration when devising the organization’s plan.
Organization’s Purpose is a Priority – As a true leader you need to start with the core mission of the company, and let all other functions and methods stem from that purpose, and support that purpose. What sets your company apart from competition is how you can deliver unique value to your prospects which undoubtedly follows the core strengths your organization possesses.
Get the Foundation Right – the main building blocks of your organization’s design include:

Basic elements: Information processing of knowledge and data, and IT utilization; structure, business processes, motivation, and performance.
Secondary elements: Mindsets of team members, their self-identity, commitment and dedication; Norms of operations – values, standards, behavior; Networks – effective communication, cooperation and shared goals.

Leverage Your Talent – People make the difference in every industry or professional field. Your team has special talents that will be unwise to misuse or overlook. A savvy and progressive executive will evaluate and optimize personal strengths of team members and offer them necessary support in areas where they do not excel. The best organization’s structure will emphasize people’s talents and minimize weaknesses where necessary.
Fine-Tune the Structure – with a clear vision where you like your organization to go, and having analyzed strengths, weaknesses, opportunities and challenges (on a consistent basis), you can step back and look at the big picture. The best and most practical design will support your specific mission and vision, and will set you on the path of sustainable progress.

For Further Reading:

Organizational structure
What Is the Vision of an Organizational Structure of a Best-Practice Organization?
10 Guiding Principles Of Organization Design
Effective Organizational Design: Best Practices To Grow By

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About The Consulting Playbook
The Consulting Playbook is a collection of posts designed to offer insights into how businesses and their executives can utilize consulting as a strategic lever to boost performance. Each Consulting Playbook post is broken down into a few elements: Case Study, Additional Information regarding the technical application, and Additional Links related to the topic.

How to Improve the Scoping of Your Consulting Project with These 7 Powerful Techniques

How to Improve the Scoping of Your Consulting Project with These 7 Powerful Techniques

“More important than the quest for certainty is the quest for clarity.” – Francois Gautier

The most important factor probably for the success of your Consulting project, is the “why” behind it. What is the purpose of launching your new project, and what are your main expectations of it? As we talked about crafting an effective RFP and engaging in talks with a few prospective Consulting providers, you will gradually sharpen your view and clarify all aspects of the project. Clarity is extremely important and based on many years of experience, we’ve made a short list comprised of the most effective techniques you can use.
1. Set the scope right  –
It is not unusual to realize when you start explaining your needs that you are embracing a scope too large, or that the project could be broken down into smaller pieces. The main objective here is to provide a high-level overview of the problem. And adjust the scope that is best suited to the purpose of the entire project.

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2. Provide the basics and be precise   –
Start with giving the basics. What is the state of your industry? What are the main challenges you are facing? What have you done so far? What would you like the Consultant to help you with? Here is a good example to help you grasp the points: “Slow Economic Growth in Europe, in particular, compared to other markets, has limited the growth of the Insurance Industry. After a slight increase in 2017, growth went down again in 2018. In 2016, new European regulations, namely Solvency 2, started to get implemented. As a result, the pressure on risk and compliance functions increased significantly. European politics could also impact the regulatory stance in major markets.
As a result, Risk is becoming more than ever a core function in the organization. Insurers need to adjust business processes and strategies to this new environment.
In 2017, Insurance Co created a Risk and Compliance team at the group level to supervise the implementation of Solvency 2 in the different business units.
Insurance Co would like now to review the various options for organizing its risk activities at the corporate and business unit level and identify the most efficient set-up while taking into account the position of the regulators on this critical matter.”
At first sight, it sounds like a simple organization design project. However, if you look closer, some key elements seem to be missing.

The context doesn’t give any information about the results of the existing Risk and Compliance team. Why does the corporate team want to re-organize the risk function only two years after the creation of the team?
There is no mention of the political dimension of the corporate relationship with business units, which is often a key element in an organization project.

It might also be interesting to provide some benchmark on existing models and anticipate the position of the regulator.

3. Give a clear idea of where you are in the process   –
Your Consultant needs to know all these elements that will help them understand exactly where you are on the path to success, and design a proposal customized to your needs.
You can also define the high-level questions you want to answer with the project, such as:

What is the existing performance of the industrial set-up? How do we compare it with the competitors’?
What are the high- and low-performers by function?
What are the different opportunities to harmonize the organization structure?
What are the best options to improve the efficiency of the organization based on an internal benchmark?
For each option, what would be the impact/risks to consider? The associated costs and potential benefits?

A first high-level assessment shows a potential of 7% of savings that will contribute to the overall synergy objective of the merger.”
4. Write the description   –
Once the context is set, you can move to the description of your requirements for the project. In your RFP make sure to integrate the questions consulting firms would ask to be able to provide the solution tailored to your needs. You can use a sparring partner or another member of your team to review it and ensure the context is clear and accurate.
5. Focus on the value Consultants will bring  –
There are many ways consultants can generate value on a project, but very few of them can guess what you expect if you don’t state it plainly. The best way to start is to reformulate your problem statement at the start of this section.
Remind the consulting firms included in the RFP process what are the objectives, and the expected outcomes. If you have specific expectations regarding benefits, now is probably a good time to express them.
The high-level objective can be clearly defined in a few lines. However, many roads if not all of them are leading to Rome.  You might need to add some precisions on the scope, the level of confidentiality and also who should be involved on your end as well as your timeline for the project.
6. Aim for clarity with “what” not “how” to do it  –
There is a fine balance when describing the expected deliverables. Some companies tend to provide the ‘what’ and the ‘how’ at the same time. However, as soon as you start describing how the consulting firm should produce the deliverables, you lose the creativity and the experience an external provider can bring in. You automatically reduce the consulting firm to an externalized workforce. This situation can work if you know very well the job to be done but it does not constitute a best practice.
Our experience shows that, even if you might be tempted to specify the methodology, it is important to leave room for the consultants to propose how they would approach the issue. This allows to adjust later on and will most often provide you with fresh perspective.
7. Add any important additional information  –
Each project is different, and often clients can omit details that pertain to the project, their circumstances, or the niche market. Do not hesitate to add additional information that could be implicit for you but Consultants who are less familiar with your company cannot anticipate:

Do you expect the consultant to do everything on his own or do you anticipate a joint team?
Will the work be performed on site?
Is there a preferred location? Specific language requirements maybe?
Do you have specific requests regarding knowledge transfer at the completion of the project?
Are there additional “side questions” that should be addressed?

And now the final key question –
Describe how you intend to proceed with the selection process? This way, you can guarantee a fair process and ensure that Consulting companies will decide to participate.

Ready to launch your next project?
We will be happy to help. Please give us a call today, at no obligation.
And let’s get the conversation started
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The Future of Consulting (Consulting 4.0) and How Disruption Can Benefit Clients & Providers Alike?

The Future of Consulting (Consulting 4.0) and How Disruption Can Benefit Clients & Providers Alike?

The disruption in the Consulting value chain can benefit clients in many ways. Due to the digital transformation affecting modern industries, we see disruption unfolding in major areas such as Marketing & Sales; Knowledge; Data Analysis; Methodologies & Solutions; Services and Resources. Clients today have an abundance of opportunities to source talent, expertise, and to use offerings tailored to their specific needs.

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Providing and receiving feedback is key to create dynamic and healthy relationships.

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Understanding disruptions can help you take advantage of the powerful new trends and position your company to optimize for the trends that will shape the future.

If we take a quick look back, we will see that the Consulting industry is pretty resilient and adaptable. It started with a value proposition around work optimization, and then shifted swiftly to more value and a focus on strategy.
Since then, consulting firms have shown a high capacity in embracing the top trends in management. They developed specific offerings to help their clients implement new management concepts such as: total quality, globalization, voice of the customer, design to X, value pricing, lean six sigma, and succession planning.

Today is all about digital-
Pretty much every Consulting firm today has incorporated a digital layer in its offering.
The recipe for success until now was rather simple. Consultants had to accumulate experience, gather knowledge and data, organize information, process information at light speed, and organize findings into superior looking reports. Sounds simple? Let’s see how digital seems to be reshuffling the cards.
The Consulting Value chain is constantly evolving, in all its sectors, from Marketing & Sales, to Knowledge and expertise, Data and Data analytics capability, Management tools & Methodology, Proliferated Talent pools, and much more.
It’s important to mention that Clients are evolving simultaneously as well, expanding their knowledge and expertise, access to Data, and are relying on in-house Consultants more than before.
In that line of thought, the Consultants’ role is shifting too.
The Consultant added value becomes their capacity to frame the problem and analyze the data provided by the expert.
Companies such as Evalueserve are offering outsourced knowledge services to management consultancies such as knowledge management, business intelligence, market-specific or clients insights to support business development. Until recently most companies had none or very scarce resources dedicated to data analytics.
With all the hype around artificial Artificial Intelligence, Big data and Machine learning, that situation is about to change. Major companies are building teams of data scientists to take advantage of their data and even for some of them to create new business models..
Now let’s take a look at the future of Consulting-
We are now entering the era of Consulting 4.0 – a term borrowed from the industrial revolutions’ stages – industry 1.0 to industry 4.0.
New technological developments, or digitalization to be more exact, have affected the Consulting category as well.
The fundamental business model based on solving problems, whether developing a new strategy, cost-cutting solutions, or implementation of new technologies, guaranteed the Consulting industry’s success.
But in the aftermath of the 2008 economic downturn, things have dramatically changed.
Declining revenues, growing competition, and market consolidation are among the main factors that make Consulting firms worry.
However, a better perspective to look at this, is to frame it as the beginning of a new era – Consulting 4.0
The consulting industry has to reshape itself with new business models, new growth areas, and innovative products and services to be created. We can confidently say that Digital transformation is at the core of Consulting 4.0
Consulting 4.0 – Main Characteristics:

Consulting 4.0 is more than the digitalization of the industry. It includes a fundamental change in almost all sectors.
Some of the factors behind it include volatility and uncertainty, as the global economic environment is constantly changing, and to a big extend has created to the disruptive forces we are witnessing.
Clients-Consultants relationship has changed – a complex and uncertain global economic environment created many new challenges for Client organizations.
Clients today have more information – with the launch of many new platforms and information services in the past ten years, clients have access to quality and quantity of information, giving them a strong preference for which consultants they want to hire.
The demand for Consulting services has changed – and Clients today are less dependent on Consultants. They are either doing in-house consulting or prefer very niche and specific services rather than general management Consulting services.
Low cost and high-end expertise services – as Client perceptions evolve, they are reshaping the consulting industry, driving it into two distinct directions – Low-cost consulting fixing problems and discovering solutions. And on the other end of the spectrum – high-end, specific consulting solutions to problems that Clients don’t have the confidence or expertise for.

How to be a winner in this new economic domain?
Both Clients and Consultants need to understand the new dynamics and utilize the latest developments, while building their relationship on transparency and mutual interest.
The consulting industry’s market leaders – strategy consultants, IT consultants and system integrators or the Big Four – have the chance to position themselves as multi-specialists, sometimes by eagerly acquiring smaller specialist consulting firms.
Smaller consulting companies on their own too, with their deep specialist know-how and innovative business models, could be well-positioned to make a remarkable amount of work in nearly all sectors as clients realize the possibilities for wide-ranging change, major transformation, and are rethinking their business models.

So who is the right Consultant for your project?
The one who is able to navigate through this complex consulting landscape, and deliver the best solutions and desired outcomes.
Let’s discuss your projects in more detail, and we can offer you an expert perspective on how to move forward.
Book your call

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Leverage the Covid-19 crisis to decrease your consulting costs

Leverage the Covid-19 crisis to decrease your consulting costs.

According to Nariman Behravesh, Chief Economist at the consulting firm IHS Markit, “COVID-19 has caused an economic shock three times worse than the 2008 financial crisis.” Most countries will face a recession of epic proportions, and millions of companies are fighting for their survival​.

Leverage the Covid-19 crisis to decrease your consulting costs – Most consulting firms are struggling.
The consulting industry is no exception to the rule. The industry has always followed the cycles of the economy. Client organizations have delayed projects, reduced scopes, or froze consulting spend altogether, leading to a 10% contraction in value in 2020.
With the pressure on OPEX, client organizations are now screening their expenses to find savings opportunities. And Consulting, which seats in the indirect category and can represent up to 3% of the income, seems like an obvious target. As an executive, you might be tempted to attack the cost base with traditional cost-cutting measures and price negotiations.
But before we go there, let’s have a look at the bigger picture.
 

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When companies face difficulties such as Covid 19 and start to be cash-constrained, they often look to reduce their consulting spend, and Consulting looks like a non-essential line.

How do consultants build their prices?

Consultants are selling their time, or more precisely, the access to expert knowledge and execution workforce during a certain period of time. The potential of production of a Consulting firm is the amount of time available for billing. Every day not billed is lost just like an empty airplane seat. So, the fee structure is usually geared to optimize the utilization rates.
Since Consultants are primarily selling their time, the time spent on a project is the main driver of cost. Usually, the price is calculated as the product of the daily rate per the number of days spent on the project.
The daily rate is most of the time defined with a Cost Plus analysis. What determines the level of daily rate is often the depth of expertise and experience.
An expert guru in a given field can charge up to $10k/day. Indeed, the time spent by a consultant to grow his expertise, develop new methodologies, and share his knowledge through books and articles is not billable. But it influences your buying decision and the success of your project. In a way, you could consider those $10k as 2 for the time and 8 for the expertise’s value.
The seniority can also make a huge difference. You can expect a multiplication factor of 5 or more between an experienced partner and a newly-graduated analyst. Even though you might not be able to fully reconcile the fees with the salary as significant markups and overheads are applied. If you look at most client companies, there is also a significant multiplier between junior roles and vice president ones.  The gap often comes from the analyst starting salary being almost twice what junior profiles can get in the industry combined with the markups and overheads mentioned earlier.
As a result, a project’s team composition is instrumental in defining a consulting project’s price. For instance, a partner at 50% plus 2 juniors full time will cost significantly more than a partner part-time teaming up with some of your team members, especially as the partner will, in most cases, assign a manager to drive the work of the 2 juniors. Suddenly you end up paying much more for the workforce than the expertise you wanted in the first place.

How do Consultants make money?
Now that we know how Consultants invoice their clients let’s take a step back and get the big picture. Of course, understanding your suppliers’ cost structure is just one small part of the equation, but it will help you get the gist of the constraints.
Whatever the size of the Consulting Firm, the main expense item is people. If you think about it, it probably makes sense since consultants are the service. Consulting Firms spend a lot of money on attracting and retaining talents. Within most consulting firms, non-partners consultants are considered as fixed costs.
Depending on the company’s size, overheads can represent a very significant share of the overall costs. Top consultancies have made a fancy address and fancy offices a large part of their brand. They also present an almost balanced ratio between consultants and nonconsultants in their staff. Obviously, boutique consultancies and independent consultants will be much leaner on this cost category.
Once you have the cost of employees and overheads covered, the next cost center on the center of the list will be marketing and sales. Building a brand, growing recognition, getting thought leadership out there is key to generate leads and solidify a company’s position. Again, this category can be quite slim for small firms.
Indeed, the consulting cost structure is that simple, fixed costs are limited to some overhead and SG&A, the main cost by far being the wages of consultants.
Take the full salary, including potential bonus, add some margin expectation to cover for various SG&A, add some margin expectation and divide by a target utilization in a given number of days: you just got yourself a daily rate.
The recipe for profitability is simple: utilize your consultants enough to cover those three categories. Any turnover beyond this threshold will fill the bonus pool to pay the partners and shareholders.
Sales and pricing will drive the top line, but utilization is king. The consulting firm’s right-sizing will drive profitability. Oversize and partners will share a meager bonus as most revenues will be used to pay the teams. Undersize, and you might miss significant opportunities. It explains why more and more companies are using a flexible workforce and the recent rise of consulting marketplaces.
How do Consulting firms face the crisis?
Many consulting firms took a bit hit since the beginning of the crisis. Between the travel restrictions and the consulting freezes, they may not have worked on new projects since March.
They have used their cash at hand to cover costs for a while and then probably have stopped all subcontracting and furloughed some or all of their employees. Since most of the costs come from wages, this measure should have allowed them to balance their cash flows.
But then the next step is probably to cut rent and marketing expenses. In an industry that is increasingly relying on thought leadership and content creation, consulting business owners have to make tough decisions to reduce their costs without jeopardizing future sales and brand awareness.
Another important factor for them to manage is talent retention. Consulting Firms cannot keep their consultants on furlough forever. And since consulting is about selling your time and expertise, they need to maintain this expertise by staffing consultants and projects and keeping employees engaged by assigning them on interesting projects.
As a result, consultants will be hungry for projects. After all, 80% of something is better than 100% of nothing.
Large consulting firms have little room to cut their margins because of their shareholders and their pyramidal structure. They will focus on reduced expectations and accept smaller projects. The odd staffing practice requiring consultants to work full time on projects will, for sure, limit their options.
Small to mid-sized consulting firms are more flexible. They will accept smaller projects than usual and lower prices. They might also accept projects outside their core expertise, putting their brand and reputation in danger.
As you can see, there will be opportunities for client organizations to reduce their consulting costs through negotiations. And in the short-run, you can probably expect a decrease of 10-15%.
But what would be the impact of the long run? And how to take advantage of the situation in a socially responsible way?
Next week: Leverage the Covid-19 crisis to decrease your consulting costs – Act as a “risk-sharing partner.”
 
 

Author detailsAuthor Bio

Hélène Laffitte

Co-founder & CEO at Consulting Quest

Hélène is the author of Smart Consulting Sourcing, a step by step guide to getting the best ROI from your Consuting. You can follow @helenelaffitte on Twitter.

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Hélène Laffitte is the CEO of Consulting Quest, a Global Performance-Driven Consulting Platform and author of “Smart Consulting Sourcing”, a step by step guide to getting the best ROI from your consulting. With a blend of experience in Procurement and Consulting, Hélène is passionate about helping Companies create more value through Consulting.

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Consulting sourcing tips

Podcast | The US Consulting Market

Make-or-buy for consulting services 101

Podcast | The Future of Consulting (Consulting 4.0)

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Podcast | What are the main features of the European Consulting Market

Europe is the second largest economy in the world with two distinct zones.However, the size and dynamics vary significantly by country, and we need to look at the market at a more granular level.
On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte explains what are the main features of the European Consulting Market .
Key Takeaway: 2020 has been a particularly difficult year for social stability and security in many regions of the world and the pandemic has amplified social unrest in Europe. If we look at where revenues are growing fastest, retail and manufacturing are providing a glut of work for consultants, as clients continue to respond to the disruption caused by e-commerce and the need to update legacy technology throughout the supply chain. At the same time, digital disruption is pushing a growing number of manufacturers to seek external expertise. Europe is a diverse market and the covid-19 crisis has severely impacted the growth, but 2021 should gradually show an upturn that will benefit the consulting industry.

Transcript
Hello and welcome to the episode 42 of our podcast: Smart Consulting Sourcing, THE podcast about Consulting Procurement.
My name is Hélène, and I’ll be you host today.
Each week I’ll give you the keys to better use, manage and source consulting services.
This week, I’ll explain what are the main features of the European Consulting Market and why its diversity is a strength
Last week, I gave you a few pointers to solve your make or buy dilemma
We saw that Companies, constrained by limited operations budgets, must carefully prioritize and efficiently organize their projects, which may include external consulting services.Many organizations have craked the make or buy dilemma by centralizing Consulting procurement.
The aim is to have a more global vision of consulting efforts, a better understanding of the costs, and more powerful levers for negotiating volume discounts and creating synergies across functions and business units.
Demand management, Make-or-Buy strategy, and Consulting Spend analysis are parts of the answer to ensure alignment with the overall strategy and consistency across the board.
But today let’s take a look at the unique features that characterize the European market for consulting:
Europe is the second largest economy in the world with two distinct zones:
Western Europe & Eastern Europe
So with the UK, Germany, France, and Italy, the western part of Europe comprises 4 of the top 10 economies in the world. Growth in the region is relatively stable, slightly below 2% despite the Brexit dip for the UK, and the rest of the continent.
Meanwhile, Eastern Europe, even though starting from a lower base with Poland, Bulgaria, and Slovakia, is growing at a higher rate at about 4%. The Western Part of Europe is larger, but Eastern Europe is growing twice as fast.
With the outbreak of Coronavirus last year, the economy of the European Union is expected to shrink by 7.4 percent in 2020, with an economic recovery anticipated in 2021. The Consulting market is always following the ups and downs of the Economy, and we can expect the same growth profile.
I said before that European diversity was a strength. So let’s have a closer look.
The region accounts for robust services and a strong manufacturing sector. Europe has a very active Financial sector, in particular, Banking and Insurance. Also, even though not evenly distributed, the region has access to great natural resources and is home to some of the largest players in Energy. Europe is the 2nd largest Consulting market in the world. It boasts an aggregated value close to $100 billion and is growing at roughly 3%.
However, the size and dynamics vary significantly by country, and we need to look at the market at a more granular level.
The Eastern Europe consulting market has seen a steady year of growth in 2019, with every major country in the region – Poland, Romania, Czech Republic, Hungary, and Slovakia – expanding faster than the year previous. And the market of early 2019, was worth $1.9B.
The main drivers of growth come from regulatory changes at the EU & national level, as well as market entry and operations effectiveness initiatives.
But 2020 has been a particularly difficult year for social stability and security in many regions of the world. The pandemic has amplified social unrest in Europe. We have seen massive public protests in France with the now famous “yellow vests”, but also in Germany.
Besides, the tensions have increased with the Middle East, Turkey in particular, and the UK.
But Eastern Europe’s shaky environment have not tampered the steady growth of 5% between 2012 & 2019. 2020 saw a plunge of roughly 3% but the regional GDP is projected to return to growth in 2021 as activity recovers from the pandemic.
Poland is by far the largest market in Eastern Europe and is emblematic of the trends engulfing the whole region. While the nation has been struggling with a constitutional crisis, Poland’s consulting industry continues to grow.
According to Source Global Research, The Polish consulting market grew 5.4% in 2019, now reaching 555M€ and represents 30% of the Eastern European management consulting market. The second largest market is Russia.
In Western Europe, the top Consulting markets are the DACH region (Germany, Austria, and Switzerland) with combined turnover of 11B€, followed by the UK & Ireland with 8B€.
But the Eastern consulting market is affected by corruption.
Romania might have enjoyed higher growth but there is also political turmoil following the population unrest due to state corruption allegations. According to Transparency International’s annual Corruption Perceptions Index, as of 2017, Romania is the 3rd. most corrupt country in the European Union, after Bulgaria and Hungary.
Other countries that deal with serious corruption issues include Albania, Bosnia, Croatia, Macedonia, Serbia, and Slovenia. These markets combined have around 10% market share.
The private sector continues to be the core source of consulting work in the region, with the financial services remaining the market’s largest one.
The demand is mainly driven by the growing need in front-to-back digitization, regulation, and data & analytics, boosting the need for technology-led efficiency projects, and large-scale transformation, besides regulatory work.
But if we look at where revenues are growing fastest, however, retail and manufacturing are providing a glut of work for consultants, as clients continue to respond to the disruption caused by e-commerce and the need to update legacy technology throughout the supply chain.
At the same time, digital disruption is pushing a growing number of manufacturers to seek external expertise, with manufacturing the second fastest-growing consulting market at 9.7% in Eastern Europe in 2017.
As you can see, Europe is a diverse market. The covid-19 crisis has severely impacted the growth, but 2021 should gradually show an upturn that will benefit the consulting industry.
That’s it for today. Next time, I’ll explain How to Avoid Potential Problems in the Course of a Project
In the meantime, if you have any questions, or want to learn more about what we do at consulting quest, just send me an email at helene.laffitte@consultingquest.com
You can also have a look at our website smartconsultingsourcing.com to know more about our book and download free templates & guides to improve your consulting sourcing.
Bye and see you next week! Au revoir!
 

Consulting Playbook: Challenges in Implementing a New Business Model

Consulting Playbook: Challenges in Implementing a New Business Model

The Consulting Playbook, Edition #3
When a new business model is designed, one of the top priorities in implementation of it would be the strategic client-centric approach. The importance of this is illustrated here below.
Establishing The New Business Model –
A Healthcare-Pharmaceutical organization with a dedicated Organization Transformation practice, and references with more than 2/3 of Healthcare global competitors, was facing incoherent changes as the standard go-to-market model in the pharmaceutical industry was no longer viable. The main agenda was to implement a new business model based on sustainable growth and innovation that would allow them to prevail over the “patent cliff”. In order for them to accelerate the change process, their new CEO asked for consulting support.
Key Organizational Changes Made –
The consultant worked tirelessly with the executive team to establish a shared strategic platform and identify key organizational changes to be made. An integrated Transformation Program was developed. Effective governance initiatives and metrics for major change were established. He also helped senior leadership align around key strategic dimensions, choices, and compromises. Cross-company departmental platforms (including go-to-market methodology) received the necessary support in standardization of all changes.
The Impact on the Business Included:

Consolidation of effort in aligning the executive team on the new strategies and plans of transformation
Transformation plan created to launch the change process
Supported the organization’s effort to become a fully customer-centric one (such as regional commercial teams, key account management, customer strategy, etc.)
Promoted further culture change through the Strategic Clarity frame of reference aimed to channel decision making by employees easier, and empower the client-facing staff with greater flexibility

Here you can create the content that will be used within the module.

Additional Information

Steps in Aligning an Organization and Its Business Model with a Modern Customer-Centric Strategy
Any sustainable business strategy today involves a modern and dynamic Client-centric approach. But how would we define the best practices in this field?
The Outside-In Approach –
Companies with a Customer-Centric Approach try to fully understand customer needs, problems and expectations. And as they do, they are prepared to provide customized solutions, often unique from their competitors addressing the customers’ needs.
Delegate More Rights to Employees at the Point of Interaction –
In order to quicker solve problems, whatever they might be, at the point of customer interaction, employees need the freedom and power to provide the best solutions as they deem appropriate. When they don’t have such freedom, and authority in a decision making process, the customer centric model effectively diminishes.
Highly Efficient Business Model –
Customer-Centric Organizations pride themselves on efficiency, speed and customer satisfaction. As they understand their customer interaction at any point of the lifetime value a customer represents, they can tailor their approach depending on various factors. A high value customer will enjoy more benefits, and a lower value customer would be attracted to become a higher value one, to get all the perks.
Cross-Company Transparency and Consistency –
An organization’s culture and vision is not an idea but a practical guide to be demonstrated at every point of customer’s interaction. Customers like to be served efficiently by knowledgeable and responsive staff, and they create a perception of a brand, as a whole rather than sections of it. Therefore, cross-company consistency, as well as transparency, are crucial.
For further reading:
– Putting Customers First: 5 Companies Reveal How They Do It
– The journey toward greater customer centricity
– Customer-centricity explained – what it means to be customer-centric

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About The Consulting Playbook
The Consulting Playbook is a collection of posts designed to offer insights into how businesses and their executives can utilize consulting as a strategic lever to boost performance. Each Consulting Playbook post is broken down into a few elements: Case Study, Additional Information regarding the technical application, and Additional Links related to the topic.

The African Market Structure is still driven by the large Companies

The African Market Structure is still driven by the large Companies

Welcome to the fourth issue of our Blog Series -“Exploring the African Consulting Industry”. In this series, you will learn “everything-you-need-to-know” about the African Consulting market through a set of fun infographics. In the previous issue, we discussed that the Top Three Capabilities in the African consulting market are Strategy, Human Capital and Operations. The total number of capabilities covered on average is 2.5 and almost a quarter of the consulting firms is specialized in only one capability.
In this issue, we will take a look at the top Consulting industries the region and how they compare to those on a global scale.

The Industries
According to Consulting Quest’s research and data from the Global Directory, the Top Three Industries of the African Consulting market are 1) Financial Services; 2) Health & Life Sciences and 3) Energy & Environment. Interestingly, the consulting offering does not reflect the local needs, which are primarily rooted in Agriculture, Natural Resources and  Financial Services.
In addition, over 14% of the consulting firms in Africa are specialized in one industry, yet the total industries covered on average is 6.3. This finding is congruent with our previous observation that large global Consulting Firms are over-represented in the region compared to the rest of the world.
This post concludes our series on the African consulting market. In the next series, we will shift our focus to the Consulting market in Asia-Pacific and explore the unique consulting offering there. Stay tuned!

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Consulting Quest Global Directory
Consulting Quest Global Directory is the World’s Largest Professionally-Managed Directory in the Consulting Industry. Searchable by consultancy name or by region, capability or industry, it lists and describes more than 6000 consultancies worldwide, with links to their websites and social media channels. With such a powerful database, we decided to dig deeper into the directory and analyzed the consulting offering in each of the following regions of the world: North America, Europe, Middle East and Africa, Asia-Pacifics and LATAM.

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These 5 Key Levers Can Help you Boost the ROI of your Consulting Spend

Working with consultants can bring in tremendous benefits, but if you don’t know how to manage the procurement process, the results might be far from satisfactory. A first scan of your expenses, where the observation period will be the previous fiscal year, will give you a good basis for slicing and dicing the information. Having this structured data will allow you to understand the patterns of your Consulting Spend. You can capture quick gains, get the buy-in of your employees and embark on a self-funded journey.

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Top 5 Articles

These 5 Key Levers Can Help you Boost the ROI of your Consulting Spend

Working with consultants can bring in tremendous benefits, but if you don’t know how to manage the procurement process, the results might be far from satisfactory. A first scan of your expenses, where the observation period will be the previous fiscal year, will give you a good basis for slicing and dicing the information. Having this structured data will allow you to understand the patterns of your Consulting Spend. You can capture quick gains, get the buy-in of your employees and embark on a self-funded journey.

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