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Podcast | How to make sure your consulting spend is supporting your strategy?

Having a consulting strategy is about aligning your consulting budget with your strategic priorities to accelerate the execution of your strategy.
On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte discusses about how to make sure your consulting spend is supporting your strategy.
Key Takeaway: Ultimately, the goal of procurement groups is not to take over the decision-making process. But rather to support the business lines through the journey and make sure your company gets the most value from consulting by implementing the right best practices .
 

Leverage the Covid-19 crisis to decrease your consulting costs- part2

Leverage the Covid-19 crisis to decrease your consulting costs- part 2

With the pandemic crisis, consulting firms have been hit hard. The loss in revenue globally for 2020 is slightly over 10%. Most of them are now looking actively for projects and willing to negotiate on the scope and the price to get new projects.

Leverage the Covid-19 crisis to decrease your consulting costs –Act as a “risk-sharing partner.”
This means there are opportunities for client organizations to reduce their consulting costs by redefining their project and negotiating lower costs. Procurement teams will be able to hit their cost reduction targets by using the same old cost-cutting techniques.
But is it a good thing in the long term? And is it the only way to move forward?

READ ALSO
Leverage the Covid-19 crisis to decrease our consulting costs – Most consulting firms are struggling.

What will the post-Covid consulting industry look like?

Once the crisis’s peak starts fading, client organizations will start looking for support from management consultants again. They will need to decrease their costs and improve their bottom line. They will reevaluate their strategy, consider entering new markets, and adjust their innovation pipeline. They will also create new ways to engage with their employees and implement digital solutions to stay connected and reach their customers.
The consulting industry will rebound as it did after the 2008 crisis. The demand side will be there again. But what will the supply side look like
If the crisis is too long, the most vulnerable consulting firms will close down. Small, very niche boutiques will be the first victims. Companies with a larger portfolio of capabilities and industry experience will be better off.
Suppose clients play hardball during negotiations to take advantage of the crisis for too long, or they focus on large brands or one-stop shops because of risk-adversity or lack of expertise in sourcing consultants. In that case, they will accelerate the destruction of the low- and middle-market, not necessarily in their interest short or midterm.
Small and mid-sized companies will be driven out of the market or be acquired by larger firms. The supply side will consolidate, strengthen the large players’ positions, and increase their bargaining power.
Ultimately, the prices will go up, probably higher than pre-Covid. And the diversity, flexibility, and depth of expertise that small players were bringing to the table will be drowned in the big players’ talent pools. After a while, as the barrier to entry is low, most small companies will resurface in some shape or form with a different brand name when the market picks-up, but there will definitely be a lag.
The client organizations might end up on the loser’s end with higher consulting costs and less access to expert knowledge.

What can you do to take advantage of the crisis while acting as a “crisis-sharing” partner?
So how can client organizations be on the winning side in the short and long term?
As an executive, you want the consulting firm to remit their best proposition. In my experience, it comes with healthy competition, especially when the supply and demand are in your favor.
Organizing a healthy competition is not that complex. You have to keep in mind that the process’s goal goes beyond sourcing and focus on the project’s success. Organizing a competition without putting all the candidates in the right conditions to give their best answer is meaningless. You need to bring in relevant potential consulting suppliers and give them a fair chance to get the project.
This technique will work regardless of the consulting firm’s size and is a best practice that can be extended after the end of the crisis.
At this point, small and mid-sized consulting firms will be willing to exchange margin for visibility. Even during normal times, consulting firms are always looking for ways to secure their teams’ staffing. A short project will always have higher daily rates than a long one if you account for commercial and administration.
If you know you will work with them regularly for a given period, for instance, six months, you can adopt a retainer model. You estimate the minimum amount of time you will need their services and negotiate an average daily rate. You then divide this amount by the number of weeks/months in the period, and you have the retainer. Don’t forget to include the negotiated rates in the contract if the project goes over the estimated time by more than 10%.
Suppose you want to work on a given project with a consulting firm and already anticipate potential sequels. In that case, you should adopt a discount-on-volume model, which means that you negotiate the price for a standalone phase 1 and then a discount if you commit to phase 2.
The interest of these methods is that you will obtain extremely competitive pricing for your projects without putting in danger these companies. In return, you will also have some leverage to negotiate lower prices during a difficult time for your company as well.
I would recommend being extremely thorough in the reference checking. All consulting firms will be looking for new projects and stretching their portfolio of past achievements to fit your needs. A strategy consulting firm might overstate their ability to implement actionable plans. An operations consulting firm might declare deep expertise in a niche industry to increase the scope of the project. In both cases, the savings you are making on the price might not cover the decrease of impact.
Some companies apply a “business is business” philosophy anywhere and anytime. After all, companies rise and fall every day. There will always be another company providing the same service. This statement is quite true in the commodity space, but when it comes to intangible services and knowledge, such as consulting, it is just misguided.
What makes a consulting firm unique is the sum of each of its consultants’ skills and experiences. When the firm closes down or is acquired, this knowledge is scattered across other consulting firms and corporations. You may never have access to it again.
What makes consulting such a powerful lever for client organizations is the diversity of its supply market. In the long-run, your organization has more to gain to share the risks now with consultants.

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.

View Profile

Mail Me

Call Me

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 | Should you freeze your Consulting expenses during a crisis?

Should you freeze your Consulting expenses during a crisis?

Should client organizations stop working with large consulting firms?

Should client organizations stop working with large consulting firms? Many executives are frustrated with the increasing prices, the lack of actionable recommendations, and the juniorization of the consulting teams.

Podcast | How to make sure your consulting spend is supporting your strategy?

What is disruption in consulting?

Your browser does not support the video tag.

Previous Weeks’ issues

This Week In Consulting: What is the impact of the covid-19 crisis on your digital marketing strategy?

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week,December 2nd ,2020, All you need to know about the impact of the covid-19 crisis on your digital marketing strategy.
read more

This Week In Consulting: What’s next for the Mining & Metals Industry?

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week,November 18th ,2020, All you need to know about How and when will the Aerospace Industry recover from the coronavirus crisis?
read more

This Week In Consulting: How and when will the Aerospace Industry recover from the coronavirus crisis?

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week,November 18th ,2020, All you need to know about How and when will the Aerospace Industry recover from the coronavirus crisis?
read more

Choose the best next step for you

Buy the Book

Talk to usWe are always open to a discussion. Just book a 30-min virtual coffee with us and let’s get the conversation started
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Podcast | What is disruption in consulting?

Disruption is pretty much everywhere which means that there are opportunities to work with consultants to take advantage or react to the disruption in your industry.
On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte interviews Laurent Thomas to discuss about what is disruption in consulting.
Key Takeaway: There are many ways to work with consultants and each company will have its own path. The explosion of the traditional consulting model as well as the adaptation of consulting offerings to their clients’new needs, are opening new opportunities for clients to leverage consulting to create more value.
 

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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.
 

READ ALSO
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.

View Profile

Mail Me

Call Me

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 | Should you freeze your Consulting expenses during a crisis?

Should you freeze your Consulting expenses during a crisis?

Should client organizations stop working with large consulting firms?

Should client organizations stop working with large consulting firms? Many executives are frustrated with the increasing prices, the lack of actionable recommendations, and the juniorization of the consulting teams.

Podcast | How to make sure your consulting spend is supporting your strategy?

What is disruption in consulting?

Your browser does not support the video tag.

Previous Weeks’ issues

This Week In Consulting: What is the impact of the covid-19 crisis on your digital marketing strategy?

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week,December 2nd ,2020, All you need to know about the impact of the covid-19 crisis on your digital marketing strategy.
read more

This Week In Consulting: What’s next for the Mining & Metals Industry?

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week,November 18th ,2020, All you need to know about How and when will the Aerospace Industry recover from the coronavirus crisis?
read more

This Week In Consulting: How and when will the Aerospace Industry recover from the coronavirus crisis?

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week,November 18th ,2020, All you need to know about How and when will the Aerospace Industry recover from the coronavirus crisis?
read more

Choose the best next step for you

Buy the Book

Talk to usWe are always open to a discussion. Just book a 30-min virtual coffee with us and let’s get the conversation started
Book a call

Podcast | Do I really need an RFP for a Consulting project?

Writing well-defined requirements is the cornerstone of a successful consulting project. Even when you don’t organize a tender..
On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte discusses about the RFP for Consulting services
Key Takeaway: Writing RFPs for all projects is a prerequisite to implementing demand management, making or buying, and tight project management principles. In other words, it is the first step to taking control of your consulting spend.
 

4 efficient ways to reduce your consulting spend (crisis or not)

4 efficient ways to reduce your consulting spend (crisis or not).

When companies face difficulties such as Covid 19 and start to be cash-constrained, they often look to reduce their expenses, and Consulting looks like a non-essential line. The most common option is to initiate a consulting freeze​.

4 efficient ways to reduce your consulting spend.
But is Consulting a nice-to-have expense? Or are companies leaving value on the table?
Actually, Consultants can help companies to get their battle plan in order, identify short- and medium-term opportunities, and prepare for the aftermaths.
There are many projects where consultants can help their clients create value better and faster or sort out priorities when issues are piling up. As an outsider, a Consultant often can form a perspective that others in your organization can’t provide.
There are several levers that these companies can use to optimize their consulting spend and do more with less.
 

READ ALSO
If there was a “secret sauce” to find the right provider for a Consulting project, it probably lies in the combination of 8 key markers

Make sure you spend on the right projects –

Demand management allows the teams to differentiate between the “must-have” and the “nice to have.” You can keep your money for what is really important. Focusing the efforts on a limited number of impactful projects is often yielding a much greater value than sugar coating on a large number of minor projects. Difficult to assess what the impact can be as it relates to the quality of your demand management. However, assuming you can redirect 25% of funds to higher-value projects can be a good proxy.
Demand Management has to be rooted in a robust decision-making process that allows maintaining the strategic direction of the Company while controlling the costs. You need to define what part of the budget will be allocated to strategic projects, and what part will be left at the discretion of managers. You can also prioritize your projects and start with the ones that generate immediate value, such as cost savings projects, for instance.
Pros: Ensures the alignment between spend and strategy, Keeps costs under control
Cons: Requires some degree of centralization, requires strict governance

Focus on the most urgent problems to solve –
Defining the right scope has a direct impact on the overall cost of a project. Scope on the wrong problem and you spend a lot of money for nothing. Scope on a subject too wide, and you will pay for more than you actually needed or use the wrong consultants for part of the job. The impact can be significant as scoping mistakes can lead to 50 to 100% extra costs, and the value missed could have a considerable opportunity cost.
Working internally to define your problem and identify the options is key to inviting the right consultants to the discussion. It doesn’t mean that your requirements are final. You are just optimizing the chances that the project you are launching will fix the issues you face.
Pros: Ensures you focus on the most urgent problems to solve, Gives procurement an opportunity to lead the consulting sourcing effort
Cons: Does not apply to regulatory changes
Work with the right consultants-
Sourcing the right consultants for your project is key to make sure you will get the right value at the end of the process. Besides, organizing a relevant competition will ensure that you get competitive proposals and provide some leverage for negotiation. Without proper sourcing and a relevant competition, you will lack proper leverage and risk ending up doing the work with the wrong consultants. By experience, setting up a relevant competition can yield from 30 to 50% of savings. Obviously, working with the wrong consultants can significantly reduce the impact. As a working assumption, a 25 to 50% impact difference seems reasonable.
It can be interesting to leverage 2nd and 3rd Tier Consulting Firms (small to mid-sized) to decrease the average costs, cover the niche and/or very operational needs from your business lines, and help you control the Tail Spend while optimizing the ROI.
A good indicator to check if you are using Consultants properly from this Tier is to look at your top 10 Consulting projects from the previous year. Can you identify some small specialized niche players? Do you see mostly the same names coming up over and over?
Pros: Helps lower your average consulting costs, Gives you access to more niche expertise
Cons: Is difficult if you have long payment terms (90+ days), Is not always possible for highly political projects
Manage your projects to deliver the right value –
To assess the importance of the managing step, you can simply picture an internal project lacking project management, governance, or support from key stakeholders. What are the odds of getting something meaningful achieved? Pretty low, right? The same is true for consulting projects. Without proper management, you will be at risk. Not managing the project can waste up to 100% of the project cost (not accounting for your teams’ wasted time), the value you were expecting from the project itself.
When you are outsourcing parts or the whole project, you add another layer of complexity to project management. While managing the project will impact the triangle cost-quality-time, managing the contract will ensure compliance with the contractual terms. The changes in scope or staffing should be traced all along with the life of a project.
Pros: Increases the chances to reach the targeted impact, Keeps costs in tracks
Cons: Requires internal resources
You can use one or all of these levers to optimize your consulting spend. Implementing some form of demand management will help you make sure to invest where the most value will be created. Consequently, you can focus on selecting the right projects, sourcing the right consultants, and managing them to maximize the impact.
This does not prevent you from giving your organization savings targets but will ensure a balanced result.
 

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.

View Profile

Mail Me

Call Me

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 | Should you freeze your Consulting expenses during a crisis?

Should you freeze your Consulting expenses during a crisis?

Should client organizations stop working with large consulting firms?

Should client organizations stop working with large consulting firms? Many executives are frustrated with the increasing prices, the lack of actionable recommendations, and the juniorization of the consulting teams.

Podcast | How to make sure your consulting spend is supporting your strategy?

What is disruption in consulting?

Your browser does not support the video tag.

Previous Weeks’ issues

This Week In Consulting: What is the impact of the covid-19 crisis on your digital marketing strategy?

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week,December 2nd ,2020, All you need to know about the impact of the covid-19 crisis on your digital marketing strategy.
read more

This Week In Consulting: What’s next for the Mining & Metals Industry?

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week,November 18th ,2020, All you need to know about How and when will the Aerospace Industry recover from the coronavirus crisis?
read more

This Week In Consulting: How and when will the Aerospace Industry recover from the coronavirus crisis?

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week,November 18th ,2020, All you need to know about How and when will the Aerospace Industry recover from the coronavirus crisis?
read more

Choose the best next step for you

Buy the Book

Talk to usWe are always open to a discussion. Just book a 30-min virtual coffee with us and let’s get the conversation started
Book a call

Podcast | What does make or buy strategy look like for the consulting category?

When you launch a project, you know that assigning an independent task force can bring focus, speed, which is sometimes enough for the success of a project. Lets see what could be your options.
On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte explains how Make or buy strategy looks like for the consulting category.
Key Takeaway: Implementing make or buy for consulting like this requires some degree of centralization and an increase collaboration between procurement, business lines, strategy, finance and human resources.
 

Top Secrets of Getting the Key Markers Right, And Why It Matters

Top Secrets of Getting the Key Markers Right, And Why It Matters.

If there was a “secret sauce” to find the right provider for a Consulting project, it probably lies in the combination of 8 key markers. Before we reveal these key markers, let’s establish the right foundation first​.

Top Secrets of Getting the Key Markers Right, And Why It Matters.
The “DNA profile” of your preferred Consulting provider –
The consulting landscape today is rich and diverse, and while this is beneficial to Clients, it also represents a challenge. 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.

“The secret sauce of the business that I can offer is my creativity, and in order to keep my creativity alive and fresh, I have to pretend that no one is watching the show, … I’m just telling a story.” – Shonda Rhimes

To maximize the chance of success for your project, you want to hire consultants who have the right knowledge and who understand your business. You should listen to your teams and be ready to dig in to solve your most challenging business problems. In an ideal world, you would like them to have the right expertise, geographical coverage, and the availability to meet the 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.
What are the key markers to look for?

READ ALSO
Building your Consulting Strategy is about choices, evaluating information, and creating a vision for your organization that is agile, inspiring, and constructive.

8 Key Markers in selecting your ideal Consulting provider –
1- Capabilities – Do they have the capability you need?
Understanding what capabilities will be used to deliver the project is extremely 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—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.

2- Industry experience – It 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.
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 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?
4- 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? If you have a tight timeline and multiple locations, you might consider a larger company with a global footprint. If your timeline is looser, and you only need support in one single location, you can probably make it work with a smaller firm.
5- Budget – 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 at small local boutiques. If your budget is more accommodating, you can test several sizes of consulting firms.
6- Credibility – How to decide quickly and objectively on that?
Credibility is usually established through 3 main channels: Brand, Thought Leadership, and Partner profile.

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.

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.
7- Delivery Model – What are the exact 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.
8- 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, etc.
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.
Defining the right key markers is the first step to sourcing the right consultants and get the impact you need from your consulting project.

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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