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4 best practices of category management that will help you create more value from your consulting

4 best practices of category management that will help you create more value from your consulting.

Category management is one of the most popular procurement methodologies, along with strategic sourcing. It aims to reduce the overall costs of your procurement capability and, more importantly, to maximize value creation

Does category management really work with consulting?
Among the many benefits of implementing category management, we can name more valuable insights for decision-making and improved performance of and the relationship with your suppliers.

“Errors using inadequate data are much less than those using no data at all.” Charles Babbage, inventor, and mathematician

That sounds great, right? But there is a problem. Consulting is rarely managed as a standalone category but rather as part of the indirect procurement together with Travel and Insurance. Sometimes, Consulting is folded into the professional services category.

READ ALSO
When you hire consultants, it is usually to solve an issue or to prepare for the future. The sourcing process is just a means to get a solution that fits your needs.

But depending on your reliance on external consultants, this category can have a significant impact on your strategy and your business.
But does Category Management fully apply to the Consulting Category?
The main principles of category management are implementing a continuous analysis of the spend, the market, and the performance of the suppliers to identify opportunities for improvement.
1. Analyzing your Spend –
Performing a Spend Analysis is often the first step in aligning the Consulting Procurement Strategy with the Company Strategy. To analyze all the projects outsourced and forecast for the future, you need to aggregate the Consulting Expenses across all organizational divisions.
The objective of the spend analysis is to produce a fully documented understanding of the company’s prior and future spend for Consulting Services, broken down by users and suppliers.
2. Knowing your Market –
Knowing the Consulting Market is crucial to procure Consulting Services. Leveraging your existing consulting spend, you can analyze the consulting market for your company’s main capabilities of interest. The second step, often more complex, given the lack of familiarity with the subject, will be to look at the market for the services you could use to accelerate your objectives and create more value.
The outcome from the Consulting Market Analysis should be a better working knowledge of the supplier market and your place in it. You have identified potential suppliers and know your value as a customer.
But unlike other categories, you cannot limit your supplier analysis to only the major players. The complexity of the market, the diversity of the offerings, and your potential needs’ granularity make it necessary to take a deeper dive into the Consulting Industry.
3. Evaluating the Performance of your Suppliers –
The Supplier Performance Analysis should give you a holistic view on the Performance of your Consulting Providers, broken down per capability, organizational division, and project. It is often based on metrics on tangible performance, such as on-time delivery, respect of the initial budget, and quality of the deliverables.
When your short-list is ready, contact your suppliers and check their interest by sending your RFP.
4. Managing the Human Factor –
Consulting Services have an intrinsic human component that has a direct impact on performance. Attitude and relationships have a powerful effect on the project’s outcome.
The Consultant’s behavior with the different stakeholders, his ability to build trust or to transfer knowledge are parts of the delivery as well.
Especially for Large Companies, it is recommended to look at the performance of the consulting firms at the partner or project manager level. Indeed, it is not unusual to see significant variability of performance when looking at a company level. However, performance can be very well correlated with individuals. In other words, people trump brands, and not all Companies are good at everything. Learn to identify the sweet spot of each of your Potential Providers and the partner that you want to work with, depending on your needs.
Last but not least – a Consulting firm can deliver perfect action plans but fail to support you in the implementation or in transmitting enough knowledge to take over when they leave. Make sure this is taken care of.
 

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 | How to Avoid Potential Problems in the Course of a Project

4 best practices of category management that will help you create more value from your consulting

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

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Previous Weeks’ issues

This Week In Consulting: Post-Covid outlook on Transportation and Logistic

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, March 24th ,2021 , All you need to know about How do you adapt your risk management for tomorrow.
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This Week In Consulting: Bringing your digital marketing to the next level

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read more

This Week In Consulting: The manufacturing industry post Covid

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, March 24th ,2021 , All you need to know about How do you adapt your risk management for tomorrow.
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 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!
 

9 secrets to getting the best proposals for consulting services

9 secrets to getting the best proposals for consulting services.

When you hire consultants, it is usually to solve an issue or to prepare for the future. The sourcing process is just a means to get a solution that fits your needs. ​The procurement professionals are here to help their business lines to get the best proposals to chose from.

9 secrets to getting the best proposals for consulting services
But what is a winning proposal exactly? It is a proposal that helps you answer these three questions:

Does the consultant clearly understand the issue we are trying to tackle?

Is the consultant able to tackle the issue?

Can we work with this consultant?

Implementing a structured sourcing process adapted to consulting services will put you in the right conditions to get several solid proposals.

“Failing to prepare is, generally speaking, preparing very well to do the wrong thing”- Sam Harris (Neuroscientist)

READ ALSO
So small or large spend? Managing the consulting tail spendcan be challenging, but are 4 best practices to help you get started.

 
1. Don’t rush it –
Understanding your needs and articulating your expectations in writing is a key step when sourcing consulting. It is also one of the most challenging. Many RFPs for Consulting are rushed in their development. Sometimes the details or the context are insufficient to understand the business problem you are facing.
Maybe some key requirements are missing, or the language is ambiguous. You also might have omitted the common pricing framework to be followed or given too little time for the candidate consultants to respond to RFI/RFP. However, the result is always the same: it is difficult for Consulting Firms to send a solid proposal, in particular, if they are newcomers.
The RFP will be the reference document for the consulting providers you invite to the competition. Don’t forget to include elements on the RFP process such as timeline, criteria of choice, and requirements. It will help the candidates to be laser-focused on your needs.
2. Look for the Right Consultants –
With your RFP in hand, you can start identifying the potential candidates. You might be impressed by some Consultants’ expertise or interesting projects they have been part of, but the most relevant question remains to determine if they are right for you and best fit for your project?
3. Adapt your short-list to the project’s Budget and Timeline –
Look closely at the project’s scope, the budget, and the internal procurement policies to define your criteria of selection for the short-list. Be mindful of your time and adapt your short-list’s length to the level of priority and the budget of your project.
When you have a very tight timeline or small projects with limited impact on your business, prefer a small short-list to spend enough time on the proposal and the references checking. We recommend not going beyond three prospective providers.
For larger projects, you can broaden the first round (briefing/proposal phase) to up to ten consulting firms (depending on the project and the stakes) but keep at most four-five companies for the final round (pitching phase).
When your short-list is ready, contact your suppliers and check their interest by sending your RFP.
4. Secure Confidentiality –
It is important always to protect your confidential information. Don’t hesitate to make your candidates sign a confidentiality agreement at the beginning (even at RFI or RFP stage) to protect proprietary information and make sure the consulting firms will not be sharing your project’s details with your competitors.
If the proposal includes collaboration and sub-contracting, make sure that an NDA legally binds all the project contributors.
If your project is particularly confidential, you should even consider working with a third-party sourcing company, like Consulting Quest, that will handle the process anonymously. They will keep your company and your project confidential until the short-list stage.
5. Remember simplicity Always Wins –
And it’s best to make things simple. Unless you are handling a multi-million dollar project, don’t organize extravagant tenders. Looking through proposals and listening to consultants’ pitches can be extremely time-consuming. It will also considerably slow down your project. Make sure that your RFP process is adapted to the scope and the budget for your project.
If you only have a small number of consulting firms, or if the project is specifically complex, you might want to organize briefings to discuss the project’s details and make sure the consultants have well-understood what is at stake.
If you have a large number of candidates, a clear RFP, and little time on your hands, you can just send the RFP and assess the written proposals to identify the most promising one for the next step.
6. Assess the written proposals –
Once you have received the proposals, take the time to review them with the other stakeholders. Always keep your objective in mind: maximizing the chances of success of your project. You need the candidates to submit their best proposals, and for that, they need to understand the problem very well.
Level the ground, so all companies have a fair chance in the competition. It is in your best interest to do so too. Don’t hesitate to explain in length the background of your company and the context of the assignment and to take some time to polish the Q&A documents.
7. Evaluate the fit with your RFP –
Make sure the candidates have responded to the most important elements in your RFP. Their proposals should help you answer the following questions:

Has the consultant understood our objectives?

Do the deliverables answer our questions?

Do we trust the approach the consulting provider proposes?

Does the team have the required experience?

Is this consultant the right fit for you?

Does the budget fit the value we expect?

Note if there are any gray areas and potential for misunderstanding
8. Identify the most promising proposals –
When working on a large cohort of Consulting Providers, you should focus at first on the most promising proposals to save time and energy. You can always go down your list if you are not satisfied with your first batch.
Start ranking your proposals based on your assessment of the proposals. You can use these five dimensions: objectives, deliverables, approach, experience, fit and budget.
9. Discover and resolve any uncertainties –
You should also be able to put your finger on the proposals’ uncertainties and articulate them into questions. The list of questions will be the basis for the pitch session with the most promising Consultants: an excellent opportunity to clarify the RFP if necessary and assess the fit with your teams.
 
 

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 | How to Avoid Potential Problems in the Course of a Project

4 best practices of category management that will help you create more value from your consulting

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

Your browser does not support the video tag.

Previous Weeks’ issues

This Week In Consulting: Post-Covid outlook on Transportation and Logistic

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, March 24th ,2021 , All you need to know about How do you adapt your risk management for tomorrow.
read more

This Week In Consulting: Bringing your digital marketing to the next level

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, March 24th ,2021 , All you need to know about How do you adapt your risk management for tomorrow.
read more

This Week In Consulting: The manufacturing industry post Covid

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, March 24th ,2021 , All you need to know about How do you adapt your risk management for tomorrow.
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

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Podcast | Few pointers to solve your make or buy dilemma

Many companies have internal consulting groups. But how to know how and when to include them in a competition for a consulting project? To help you decide whether it is better to use your Internal or External resources, always focus on the benefits and the specifics of the particular project.
On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte gives you a few pointers to solve your make or buy dilemma .
Key Takeaway: Make or buy is not new. Most companies and their procurement function work to optimize their external spend and their pool of suppliers to better support the overall strategy.And it applies also to the consulting category. But there is a prequisite: you need to centralize the Category to some extent.It’s critical to be able to monitor your budget, and centralizing the Category will provide that capability. Some companies have responded to what is mostly a ‘Make-or-buy’ dilemma by centralizing Consulting procurement.

Transcript
 
Hello, and welcome to episode 41 of our podcast, Smart Consulting Sourcing THE podcast about consulting procurement. My name is Hélène and I will be your host today. Each week, I’ll give you the keys to better use, manage and source consulting services.
This week, I’ll give you a few pointers to solve your make or buy dilemma. Last week, I discussed how people shaped the consulting market and your perspective. We saw that there are many ways to look at the market. We can look at capabilities and industry experience, strategic versus operational positioning, hard and soft aspects… But ultimately, consulting is about people that drive the culture and the skill set of a consulting firm. Understanding what a consulting firm is about and what value it brings will allow you to source the best consulting firm for your project and maximize the chances of success.
But today I wanted to chat about make or buy. So many of you have internal consulting groups, whether they call it like that or not. But how and when do you decide to include them in a competition?
So to help you decide whether it is better to use your internal or your external resources, remember to focus always on the benefits and the specifics of this particular project. When you are constrained by a limited operations budget, you must carefully prioritize and efficiently organize your projects, which may include external consulting services. But let’s go back to the very start. Shall we?
What are the different options for your project? So launching a project with internal resources is obviously top of mind for any executive because it means keeping the cost at a minimum and optimizing the use of your internal skills and resources. But this option can very quickly reach its limits if the project team is not given the appropriate time and responsibilities to lead the project efficiently. Besides, because the leaders of internal projects are often high-potentials on the leadership fast track, they might find it challenging to push boundaries. And confront the more established leaders and influencers who hold the key to their careers. And what is interesting is that when you assign an independent task force that can bring focus, speed, pressure to the table, which is sometimes enough for the success of the project.
So we saw the benefits of working with potentially an external team or an independent team, but how do we solve that make or buy dilemma? Make or buy is not new, right? Most companies and the procurement function work to optimize their internal spend and their pool of suppliers to better support the overall strategy. And they have already put in place some make or buy strategy.
And it means that they have solved some tough questions, such as what are the key activities that can be outsourced? What the pool of potential suppliers look like? How mature is the market for suppliers?, What providers are appropriate for us?and is it worth it to outsource a particular activity for the long term? So the same questions apply when you’re sourcing consulting services. Unfortunately, most companies have neither the experience nor the methods to answer them. Yet, today, all leaders throughout an organization from the head of procurement to senior executives, responsible for signing off on major consulting projects are expected to align their activities with the overall strategy of the company. So what can we do to have executives make faster and smarter decisions when buying consulting services? So when it comes to making those decisions about consultants, executives often fall back on word of mouth, perceptions of the reputations on various providers, all of the fancy claims the consultants are doing, and it’s true that they take the line of least resistance and simply hire the consultant they have used in the past, regardless of whether those consultants are the more appropriate for a particular project or for furthering the broader strategy of the company.
So why do they do that? Right? It’s because they have no reliable way to determine whether a particular consultant meets their company’s needs or to evaluate the likely level of performance of a consultant. And they have no benchmark against which compare providers. And until they find a way, an independent, credible way to assess providers and match them to the company’s needs, they are likely to lag the competitors who have.
What are the advantages of using external consultants? So, you know, consultants are usually familiar with the problem because they worked on many projects with many companies in many industries, therefore they can really solve that problem more efficiently and at less cost than internal resources. They can also make up for lack of internal resources and flexibility that prevents internal personnel from being diverted from their regular jobs.
So how can your company use the expertise of consultants? So, sometimes, you know, clients use consultants for broader purposes than the project itself, and that could include training of executives on new skills, introducing external change agents, learning best practices in the industry or capability. It can be exposing the organization to a fresh perspective or relying on the stamp of a recognized consulting brand to reassure board members and investors. But even under those conditions, hiring external consultants is not always the best solution. For example, consulting services that meet your needs may not be available in your industry or your country.
But on the other hand, leading an internal project can be tricky. The internal team may not be aware of the latest trends in the industry or the capability. They may waste time reinventing already well-established improvement methodologies resulting in longer projects and higher overall costs. And again, the fact that the team members are part of the company can make it difficult to disrupt the established order.
But is it really only internal or external? Actually, there’s a middle path that can you bring you the best of both worlds. And this is a hybrid execution. So let’s imagine a project. And in that project you have parts that can be isolated in standalone work streams where confidentiality and service availability will not be a challenge. If you have a highly experienced project leader, you outsource parts of your project and keep the rest in house.
There is a prerequisite: you need to centralize the category to some extent. It’s critical to be able to monitor your budget and centralizing the category will provide that capability. And actually some companies have responded to what is mostly a make or buy dilemma by centralizing consulting procurement. The goal is to have a more global vision of consulting efforts, a better understanding of the costs and more powerful levers to negotiate volume discounts and create synergies across functions and business units. When you recognize that consulting is an accelerator for change, you usually make consulting management the responsibility of the head of strategy and or a transformation leader. But more generally putting the accountability of the consulting budget and therefore the monitoring of the consulting expenses close to the group in charge of the strategy seems to be the right move. And that team will need to define what are the rules when procuring consulting services.
They should work on demand management, make or buy strategy and consulting spent analysis to make sure that the overall strategy is aligned with the spend and consistent across the board.
That’s it for today. Next time I’ll explain what are the main features of the European consulting market and why that diversity is a strength. 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 and guides to improve your consulting sourcing.
Bye and see you next week. Au revoir.

How big is your consulting Tail – 4 best practices to start tackling it

How big is your consulting Tail? – 4 best practices to start tackling it

The Tail Spend is the part of the spend that is not actively managed in a given spend category and might still impact the company’s performance through COGS or S&A. It contains a small portion of the spend (usually less than 20%) but represents many suppliers.

How big is your consulting Tail? – 4 best practices to start tackling it
Companies often tend to neglect the small consulting projects contracted directly by the business line managers. However, consolidated at the Company level, they can add up to 25% of the Consulting Spend.

“Many small streams make a big river.” – Danish proverb

Not much, you might say. But when the Consulting Spend can be 0.5% to 3% of the total revenue, any savings on this front can significantly improve your bottom line and delight your CFO.
 

READ ALSO
Demand management allows the teams to differentiate between the “must-have” and the “nice-to-have.” We have 5 tips to do it right!

The first question you can ask yourself to find out if you are managing your Tail properly is: “How big is my Tail? And what is in it? “
Mismanagement of the Tail Spend, independently of the category, usually involves the following elements:

A scattered supplier base
Decentralized purchasing behaviors where customers are buying on their own, and procurement is almost uninvolved.
A minimal supplier Qualification
No or minimal performance Evaluations
Limited or no category management

Consulting is no exception to that. However, contrary to other indirect categories, the absence of comparable elements and the projects’ diversity combined with the importance of interpersonal relationships can make it challenging to optimize and control.
1. Consolidate Your Supplier Base with Caution –
One of the levers used to manage the spend is to consolidate the number of suppliers. Some companies have applied this methodology at the Category level. Suppliers have to be qualified for a given category, and the number of suppliers per category limited.
What starts well can end up with a sound failure if you don’t consider the specificity of the Consulting category. If your sub-categories are not granular enough, you might end up with a handful of large one-stop shops. Price increase mechanically, erasing the savings made by the cleaning-up of the Tail Spend.
2. Effectively Manage the Variety of Projects –
To help you organize and manage the various projects, it’s best to sort them out into 5 categories:

One-time projects. One-time projects are the core of your Tail Spend. They are usually small projects with a clear scope and little likeliness of sequel. (Think diagnosis or workshop facilitation)
Recurring projects. Recurring projects are, most of the time, medium-sized projects designed with a repeat model. (Think pulse survey, voice of the customer, benchmarking, coaching)
Never-ending sequels. You have certainly already seen one of these large projects designed in small chunks to fly under the radar. (Think one diagnosis per plant, any project reaching phase 4 and more)
Duplicate projects. Several business units or departments can contract small or mid-sized projects with similar scopes and methodologies. They can be performed by the same or different consultancies.
Externalized workforce. The consultants can also be hired to bypass too stringent HR rules or compensate for lack of internal expertise punctually.

3. Use the right levers to tackle the Tail Spend –
To efficiently clean-up your Tail Spend, you could use many levers, but the below selection should probably give you a good 80/20.

Gather data on previous projects.

The main challenge for most companies when facing the Tail Spend is to clearly identify the projects in the Tail and cluster them into manageable sub-categories.
If your organization is decentralized, you will need to get the support of the different parts of the organization to make sure that you have “clean data.” If you haven’t performed a spend analysis, maybe now is an excellent time to launch it.
Interview the project sponsors and leaders to identify high- and low-performers.

Regroup what you can.

Recurring and duplicate projects are good candidates for strategic management and should not be treated as the Tail. How about a frame contract on coaching or a cross-business-unit RFP for excellence programs or digital transformation?

Develop your knowledge of the local Consulting market.

An excellent way to keep control of the Tail without spending too much time on the management is to have at hand a list of additional providers. By exploring the local Consulting market, you will be able to identify potential suppliers and develop relationships. That will allow you to be reactive when one of your business lines wants to launch a one-time project on a given sub-category.

Fine-tune the rules for the tail projects.

To maintain your Tail Spend reasonable, and make sure you are not building up another false tail, you need to set up workflows with the right agile check and balance and chase the false Tail
4. Launch your Tail Spend Project right –
Below we have listed a few proven steps you can take.

Evaluate the size of the prize

First compulsory stop on your journey: evaluate the potential savings and improvements to expect. We have stressed many times the importance of creating value. You need to make sure that there is more to gain with the project than what you are spending.
It is the right moment to start gathering data about the different projects to build a solid overview of your Consulting Spend. Depending on your Procurement practices’ maturity, you can expect between 5% to 40% savings on your Tail Spend.

Get the buy-in of key managers

One thing is sure – if your managers don’t believe in your project, it will never happen. You need to develop a sense of urgency, or in other words, demonstrate why it is essential to launch and implement the project now.
Develop a compelling story to tell your key managers and convince them—leverage meetings gathering your top leaders to explain that small streams make big rivers. The efforts from all of them may seem insignificant taken separately, but altogether they are worth the effort.

Design the battleplan and confirm the stakes

Like any large project, you will need to define how you will proceed. It means having a project team, governance, and a clear work plan. Then start analyzing in detail the consulting spend and the past performance of your providers. You can now refine the stakes lever by lever.
Some of the projects that you led in the previous years were not strategic or redundant. You can probably take most of that part of the spend out of the equation. Grouping projects and negotiating on larger volumes can allow you to secure 10 to 30% of the costs.

Identify and involve the most impacted Executives

Some of your Executives will be directly impacted by the project, particularly those who use Consulting regularly. Through your Tail Spend analysis, you will identify the individuals or departments spending a lot on small projects.
When you have identified the most impacted Executives, take the time to listen to them to understand why they are buying Consulting Services in small bulks. There could be many good reasons why they would work that way. Think broader than procurement itself. The roots can be in strict HR policies, local management decisions, regional culture, etc.

Formalize the case for change and the communication plan

Take a step back. You have created a sense of urgency in your top management team, defined your implementation plan, and worked with the most impacted Executives to design the right solutions.
You should now organize your findings in a well-built case for change to minimize resistance to change and make sure you capture the most value from your Tail Spend projects.
 
Most successful companies start small. Of course, you want to adopt a medium-long-term mindset to make the savings (and the change) sustainable. But modest quick gains can ease the way, convince the last diehards, and capture enough savings to have a self-paid 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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Consulting sourcing tips

Podcast | How to Avoid Potential Problems in the Course of a Project

4 best practices of category management that will help you create more value from your consulting

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

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Previous Weeks’ issues

This Week In Consulting: Post-Covid outlook on Transportation and Logistic

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, March 24th ,2021 , All you need to know about How do you adapt your risk management for tomorrow.
read more

This Week In Consulting: Bringing your digital marketing to the next level

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, March 24th ,2021 , All you need to know about How do you adapt your risk management for tomorrow.
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This Week In Consulting: The manufacturing industry post Covid

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, March 24th ,2021 , All you need to know about How do you adapt your risk management for tomorrow.
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 | How People Shape the Consulting Market and Your Perspective

Having a good grasp of the supply market is key to get the best Sourcing outcomes.How many Consulting Firms serving your industry can you name? They are many ways to look at the consulting industry, but ultimately it is about the people.
On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte explains how people shape the Consulting Market and your perspective .
Key Takeaway: Most client organizations look at the consulting industry only through the capability/ industry experience lens. They are often missing the other dimensions such operational vs strategic, local vs global, etc…Understanding what makes a consulting firm, and who are the people behind the brand is essential to source the right provider for your project and maximize its impact.

Podcast | How to Streamline Your Sourcing Process So You Can Have More Time for Things You Love

To build a perfect sourcing process with little margin for error, lets talk about a few methods that can make it way more effective.
On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte explains how to Streamline Your Sourcing Process So You Can Have More Time for Things You Love.
Key Takeaway: Don’t forget that the success of Consulting Projects is very dependent on the personality and knowledge of the consultant in charge. Consulting sourcing is not rocket science. It is very similar to other procurement categories. The trick is to know what part of the process are important and make sure you do them right.

To build a perfect sourcing process with little margin for error, lets talk about a few methods that can make it way more effective.
On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte explains how to Streamline Your Sourcing Process So You Can Have More Time for Things You Love.
Key Takeaway: Don’t forget that the success of Consulting Projects is very dependent on the personality and knowledge of the consultant in charge. Consulting sourcing is not rocket science. It is very similar to other procurement categories. The trick is to know what part of the process are important and make sure you do them right.

8 best practices to make sure you get the best from the money you invest in consulting

8 best practices to make sure you get the best from the money you invest in consulting

Client organizations spend up to 3% of the revenues in consulting every year. But, Surprisingly, they don’t always monitor the returns on this significant investment. They argue that the intangibility of consulting services makes it difficult to measure results

8 best practices to make sure you get the best from the money you invest in consulting

“Half the money spend on advertising is wasted; the trouble is I don’t know which half” – John Wanamaker

And they are not entirely wrong. However, there is a huge difference between managing imperfectly and not managing at all. We have identified eight best practices to help client organizations get more value from their investment in consulting.
 

READ ALSO
There is a multitude of reasons why Executives don’t like to work with Consultants.

1. Make sure your projects are strategic.
Among the consulting projects done during the last 12 months, how many were supporting your Strategy? Or at least considered strategic at the time they were launched?
There are mainly two types of strategic projects – Core Strategy Projects and Strategic Adaptation Projects. For example, a project that supports the advance of the company’s long-term vision is a Core Strategic Project, and one that supports the adaptation of internal rules and organizations will be Strategic Adaptation Project.
2. Your projects should aim at the same overall goal-
Whatever strategic model you are using, creating a sustainable competitive position relies on making choices and strengthening specific activities to achieve a unique value proposition. Those activities also referred to as capabilities, will reinforce each other and make your positioning very difficult to replicate by the competition.
The efforts you are deploying to implement your strategy need, as a consequence, to be congruent. You need to make sure you have mapped the key activities to execute your Strategy and not leave some key pieces on the side. It will probably require regularly reviewing your resources allocation and particularly the utilization of your consulting budget.
3. Planning your projects can make a whole difference-
Timing is everything, as the popular saying goes. It can make all the difference when you are planning projects through the years and sequencing them smartly.
Take another look at the projects you launched last year.

Did you launch them at the right time?
Was the whole project a high priority?
Did you break down the project into relevant phases?
Were there phases that could have been launched later?
Did you evaluate the interdependencies with other activities or projects in your sequencing/timing of the project?
Were you able to self-fund some of your projects?
Did your projects integrate quick gains to facilitate change?

4. Keep an eye on the ROI-
We cannot talk about Strategy alignment and Consulting Spend without touching upon Return on Investment and performance. You must know if you have spent your money on the right projects, and if you got the results you expected.

Were you able to attain the strategic goals you had defined at the beginning of the year?
Are you satisfied with the ROI of the projects you launched last year?
Are you satisfied with the performance of the consultants you hired last year?
Do you feel you got the right value for your money?

Measuring your consulting project’s performance and evaluating the Return on Investment is the first step to optimizing your use of Consulting.
5. Define your consulting Strategy-
Maybe that’s the most important part. Like any strategic lever, Consulting must be integrated early on in the strategic cycle to get the full benefits of its utilization. We have mentioned the importance of aligning your consulting spend and your overall Strategy. Going one step further, you can define how you use consulting in your company by translating your Strategy into a Consulting Strategy.

Translate your high-level priorities into clusters and define what resources you want to allocate to each cluster.
Identify the potential projects and determine the contribution to each of your clusters
Define priorities, smarty sequence your projects, manage interdependencies and run a make-or-buy assessment.

Defining the Consulting Strategy is a team exercise. If your volume of Consulting is significant, you should consider devoting a small team to run the strategy definition cycle and guarantee the Strategy’s execution. Don’t hesitate to mix roles between Strategy and Procurement teams.
Ultimately, the goal of this exercise is not to take over decision-making. The Business Lines need to keep control over their Consulting Spend. However, you still need to make sure that they get the most value from Consulting by implementing the right practices.
6. Optimize the way you use consulting-
Are you grouping similar projects? Among the strategic projects, you might find some redundancies on the projects and/or potential synergies. You might find yourself in one (or more) of the following situations:

You have launched roughly the same projects in different parts of the organization. When a strategic direction is set, all the business units and functions have to translate into their Strategy. And often, it is translated into the same actions and projects.
You have worked with the same consulting firm across the board. Some consulting firms have unique niche expertise. If different parts of the organization had to work in the same field, they might have worked with the same consultants. Client familiarity and personal recommendations are two major drivers of choice for consulting providers.
You have worked on the same subject through a set of projects. It can happen because your teams wanted to stay under the demand management threshold or because the uncertainty was too high at the beginning of the project to engage on a larger scale.

As you can see, there are many ways to find synergies on projects. One common mistake in the situations mentioned above is the lack of anticipation.
7. Implement a make or buy Strategy-
Most companies weigh in the benefits of handling a project internally rather than hiring consultants. But all executives don’t understand project management, consulting, and procurement the same way, leading to uneven decisions and thus value creation.
To even the field and take control of the process, you should define a Make-or-Buy strategy closely related to your demand management system. Your Strategy should guide your executives through 3 main steps:

Is my project a good candidate for externalization? Project “cemeteries” are full of projects with a vague scope and unclear deliverables.
Is this project key to executing my Strategy? Or in other words, is the project aligned with my Strategy?
Will hiring external consultants on this project create more value than building an internal team? It is a key element of the Make-or-Buy dilemma. You can decide to outsource a project to access niche skills or leverage a third-party intervention. But in any case, you need to generate a higher value.

8. Take care of the Tail of your Consulting Spend-
A lot of companies are starting to realize that the tail can represent huge savings potentials. Since the pressure on operational expenses is not going away, it can be another initiative to reach their savings target.
More than in other categories, the tail spend has to be assessed by executives with a solid understanding of both procurement practices and the consulting market and economics. The good news is that when the tail spend is properly managed, you can expect from 5% to 40% of savings. Sounds exciting, doesn’t it?

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.

Join our newsletter

  Thank you for Signing Up

Please correct the marked field(s) below.

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Consulting sourcing tips

Podcast | How to Avoid Potential Problems in the Course of a Project

4 best practices of category management that will help you create more value from your consulting

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

Your browser does not support the video tag.

Previous Weeks’ issues

This Week In Consulting: Post-Covid outlook on Transportation and Logistic

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, March 24th ,2021 , All you need to know about How do you adapt your risk management for tomorrow.
read more

This Week In Consulting: Bringing your digital marketing to the next level

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, March 24th ,2021 , All you need to know about How do you adapt your risk management for tomorrow.
read more

This Week In Consulting: The manufacturing industry post Covid

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, March 24th ,2021 , All you need to know about How do you adapt your risk management for tomorrow.
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

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  • Know the Consulting Category
  • Source Consultants
  • Optimize your Consulting Spend
  • Create Value Through Consulting
  • Leverage disruption to create more value through Consulting