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    How Vital to Your Projects is The Relationship With Consultants?

    How Vital to Your Projects is The Relationship With Consultants?

    Successful management of your relationship with Consultants has a tremendous effect on each of your projects. In this article, we would like to outline a few progressive approaches to assure you to get the results you aim for.
    Like for any other category, Supplier Relationship Management (SRM) is a Huge Topic for Consulting Services. The way Procurement manages Consulting Providers should fit in the overall SRM practices for the company.

    How Vital to Your Projects is The Relationship With Consultants?
    1. Correctly identify your Strategic Suppliers
    The principles for segmenting the entire supply base for Consulting Services should be the same for other categories as well. Often companies will choose the largest Consulting Firms as strategic suppliers because they capture most of their spend. But the spend should not be the only or the most important criterion.
    The criteria a strategic supplier should meet:

    Having a unique strategic skill
    Working on strategic projects
    Working on projects with a significant impact on the company.

    2. Always qualify your Suppliers
    Suppliers, even for Consulting Services, need to be qualified. The requirements for these suppliers are mainly based on former clients’ testimonies, case studies, and relevant thought leadership.
    Three points to consider here:

    The references must be relevant to the scope of your qualification. For instance, if you want to qualify John Doe Consulting for Innovation Management projects, they need to give you references for the Innovation Management capability, or at least the Innovation capability.
    Don’t forget that Consulting has a very high human component. The partners or project managers have a significant impact on a project, but that impact, mostly intrapersonal skills and expertise, are not transferable. Very often, the partner who is initiating the relationship will be the owner of the account and will be in charge of most projects. Ask for references of projects s/he led personally.
    When you are inviting a Consulting Firm on a new capability, don’t hesitate to ask for further relevant references. If references are with your competitors, do not hesitate to ask a third party to help you with the process

    READ ALSO
    “Compensation models vary, and using the right one can benefit both parties, Clients, and Consultants, also ensure everyone is happy and gives their best to the project. “

    3. Regularly measure your suppliers’ performance
    Very few Companies measure the Performance of their Consulting Suppliers. Mainly because Consulting is an intangible service, and they are not comfortable evaluating the content of a project.
    We will get back to how to implement a Performance Measurement System in detail, but here is a sneak peek.
    The system should be based on what makes a Consulting Project successful. Top of the mind, you will find the quality of delivery with the time/quality/cost aspects. The impact of the Consulting Team on the business, even though not measurable in numbers, can always be estimated with the satisfaction of the sponsor and the project leader on the results.
    Other elements contributing to the success of the project are the talent and expertise of the team and the soft aspects (ability to build trust or transfer knowledge, for instance).
    For a long-term project, you should consider measuring performance at a mid-project checkpoint. It will help you make sure the project is progressing according to plan and implement necessary corrective actions and changes.
    4. Effectively manage the relationship
    The familiarity between a Consulting Firm and its clients can facilitate and accelerate projects. When you regularly work with a Consultant, s/he is “plug-and-play”: s/he knows your business and your industry.
    Consider and implement regular meetings with your Suppliers to keep them in the loop and communicate the results of their Performance Assessments.
    Implementing Category Management for the Consulting Category can drive significant savings and increase the return of investment of your Consulting projects. For all categories, it implies a close cross-functional collaboration, which can be challenging in a large organization.
    The nature of Consulting Services demands an even more collaborative and flexible approach to category management, since the decision-making and the knowledge are in the hands of the sponsor and the project leader only.
    5. Learn to leverage Consultants’ insights
    After spending a long time working on your projects, consulting firms start to acquire a good degree of familiarity with your business. Obviously, they would love nothing more than having another project with you (unless you have been a painful client, but that is another story).
    Ask your consultants for feedback about your company and what they would do if they were in your shoes. You will be surprised by the power of this simple question. In doing so, you will usually get honest feedback about your operations compared to the state of the industry or the latest thought leadership. It’s a valuable insight you can apply as you best see fit.

    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 | What are the main pitfalls when writing an RFP for Consulting?

    How to negotiate a consulting agreement?

    8 Main Trends to better implement Open Innovation

    Today Open Innovation is part of an interconnected ecosystem where people, organizations, and sectors can nurture inspiration, idea-generation, collaboration, and validation of ongoing iterations all at the same time.

    The 7-High Level Consulting Capabilities Categories That Every Client Should Know

    The Capabilities are the services offered by consultants. They usually mirror the business functions that client organizations need to perform. This dimension is crucial to describe the work in consulting.

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    Previous Weeks’ issues

    This Week In Consulting: What is the impact of Covid-19 on the Energy sector?

    This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, July 22nd ,2020, All you need to know about the impact of Covid-19 on the Energy sector
    read more

    This Week In Consulting: Is sustainability taking the back seat during the pandemic crisis?

    This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, July 15th ,2020, All you need to know about what’s next for Sustainable Business.
    read more

    This Week In Consulting: How Chinese Companies Have Responded to Coronavirus?

    This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, July 8th ,2020, All you need to know about How Chinese Companies Have Responded to Coronavirus
    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 | How to negotiate a consulting agreement?

    Now you have a consulting proposal that you think answers to your needs:  you can start negotiating. What are the key steps in the negotiation? How should you prepare the negotiation? How do you get the best deal for your organization?
    On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte explains how to negotiate a consulting agreement.
    Key Takeaway: Negotiating a consulting agreement is about getting the best deal for both you and the consulting firms and building long-term relationships.

    Podcast | Why Consulting is a standalone category?

    Mastering the sourcing process is essential to create more value through consulting. But to unleash greater value, you need to start looking at consulting as a category. What are the benefits of category management? How does it apply to consulting?
    On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte explains why Consulting is a standalone category, based on the criteria developed in Jon O’Brien’s book “Category Management in Purchasing.”
    Key Takeaway: The first step to optimizing the Consulting Spend is to recognize Consulting as a strategic category. Indeed, the size of the spend (0.5% to 3% of revenues) added to the potentially significant impact on the business makes it a key enabler of the strategy.

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    8 Main Trends to better implement Open Innovation

    8 Main Trends to better implement Open Innovation
     

    What we observe today on the market is a genuine “hunger” for open Innovation from all players. So it is a topic we like to explore in more detail.
    One of the most interesting features of Open Innovation is that it is no longer a linear process. Today Open Innovation is part of an interconnected ecosystem where people, organizations, and sectors can nurture inspiration, idea-generation, collaboration, and validation of ongoing iterations all at the same time.

    8 Main Trends to better implement Open Innovation
    The linear process on average takes one to two years from idea selection, to implementation, and then to market introduction.
    But there is a quicker non-linear route to Innovation and faster to market. And we see many companies that have started taking their innovation process to the next level, with quicker and shorter iterations, digital collaboration, and cycles of validation to create breakthroughs in traditional R&D areas, but also in business development or social initiatives.
    Let’s take a look at these 8 main trends:
    1. Use customer insights to validate ideas rapidly –
    What if you were able to get thousands of employees, partners, and target customers involved to find the best solution validated by customer insights? Utilizing digital technology is the answer to that.
    IoT seems to connect technology in a way that enables real-time customer engagement. Open innovation initiatives will become dynamically more collaborative to speed up the time-to-market of a product. Interactive methods infused with scalable technologies will allow companies to build up solutions based on customer insights rapidly. Through tech-enabled design thinking and well-defined short sprints, time-to-market will significantly shorten.
    2. Build things faster with agile Innovation –
    Introducing developments faster to the market also depends on being agile. As customer demands evolve quickly, there is an increasing need for shorter innovation cycles. Traditional project management for validating and implementing ideas falls short,  and smaller, faster startups outpace bigger competitors.

    READ ALSO
    “The Capabilities are the services offered by consultants. They usually mirror the business functions that client organizations need to perform. This dimension is crucial to describe the work in consulting.​. ​”

    3. Open innovation projects often include high risk and uncertainty –
    Stage-gate type of Innovation may work best for incremental product development where details of what to build are given and where risk is minimal. However, enterprises are beginning to experiment with more agile processes.
    With an agile approach, a potential solution is not researched for months but broken down to an MVP with multiple sprints of ideation, prototyping, and customer validation… This process allows for shorter iteration cycles and swift validation.
    4. Integrate everyday Innovation into your company culture –
    One-time success is not enough. To implement a sustainable innovation mindset, companies will need to start identifying new problems and opportunities, providing methods for creative problem-solving, design thinking, and guidance.
    5. It’s not just for product development –
    We need to recognize that open Innovation does not apply to just product development, but rather to any development where problem-solving is involved. That means basically everything. You will need to involve people from all kinds of areas of the organization with all sorts of different skill sets. The best way to do that is to invite participants for short sessions of design thinking or ideation where they can experience higher productivity than in a traditional meeting.
    6. Design an all-inclusive process –
    The key to success here is to design a process where a diverse, highly motivated group of employees, customers, or partners collaborate, using design thinking and agile infused methods to build on customer insights.
    7. New drive towards collaborative Innovation –
    Many industries today are embracing open Innovation and co-creation. And logically, in engineering-intensive industries, Innovation is key to competitive advantage. Still, R&D sectors are predominantly strong in their Innovation, but many organizations channel their investments toward more collaborative Innovation too.
    8. The Large-small company balance –
    Large companies are often struggling to explore disruptive ideas as they focus on their core business. On the other hand, some companies have great ideas but are not always equipped to develop and commercialize them.
    Sharing with your suppliers your unmet needs can be mutually beneficial, as you will have the opportunity to influence their research efforts.
    There can be a significant value associated with knowledge, ideas, and technologies. That value can come from all levels of the value chain, from customers to suppliers, academics, and even competitors.
    You can access ideas beyond the scope of your proprietary research. As a result, you will be able at the same time to reduce development costs, create new markets, and boost the returns on your research investments.
     

    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 | What are the main pitfalls when writing an RFP for Consulting?

    How to negotiate a consulting agreement?

    8 Main Trends to better implement Open Innovation

    Today Open Innovation is part of an interconnected ecosystem where people, organizations, and sectors can nurture inspiration, idea-generation, collaboration, and validation of ongoing iterations all at the same time.

    The 7-High Level Consulting Capabilities Categories That Every Client Should Know

    The Capabilities are the services offered by consultants. They usually mirror the business functions that client organizations need to perform. This dimension is crucial to describe the work in consulting.

    Your browser does not support the video tag.

    Previous Weeks’ issues

    This Week In Consulting: What is the impact of Covid-19 on the Energy sector?

    This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, July 22nd ,2020, All you need to know about the impact of Covid-19 on the Energy sector
    read more

    This Week In Consulting: Is sustainability taking the back seat during the pandemic crisis?

    This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, July 15th ,2020, All you need to know about what’s next for Sustainable Business.
    read more

    This Week In Consulting: How Chinese Companies Have Responded to Coronavirus?

    This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, July 8th ,2020, All you need to know about How Chinese Companies Have Responded to Coronavirus
    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

    The 7-High Level Consulting Capabilities Categories That Every Client Should Know

    The 7 Consulting Capabilities That Every Client Should Know

    The right Consultant can play an instrumental role and can help your organization save money, make money, and solve a plethora of business issues. However, the challenge is finding the best candidate who will turn great ideas into carefully executed Consulting projects, and deliver stunning results.
    Have you ever wondered, looking at consultant’s website: “What do they actually do? What problems do they solve? And what are they good at?”
    Well, it’s not uncommon for companies that are helping others to define their value proposition, sharpen their strategy and optimize their marketing budgets, many consulting firms are quite slow to embrace the internet and even more social media. So to facilitate your future browsing we have tried in this chapter to give you an overview of the key dimensions that characterize the DNA of a consulting firm.

    The 7-High Level Consulting Capabilities Categories That Every Client Should Know
    What Do “Consulting Capabilities” Refer to?
    The Consulting Capabilities are the services offered by consultants. They usually mirror the business functions that client organizations need to perform. This dimension is crucial to describe the work in consulting. Most Consulting Firms will have at least this information on their company presentations.
    We have developed a template to include the main Consulting Capabilities in 7-High Level Categories –
    1st. Strategy & Management-
    Strategy is about building a competitive advantage among the competition and make profits. As a result, the capability is geared toward high-level, corporate decisions. It helps leaders define “where to play” and “how to win” for achieving a financial return. A significant share of high-level Consulting engagements falls in this category. For long, strategy was the dominant capability. Its relative share in the overall consulting market has been decreasing while implementation and excellence projects were flourishing. Today this category represents about 10% of the global market.
    This category includes capabilities such as Corporate Strategy, Business Unit Strategy, Organization Architecture, Management Model, Corporate Governance, Innovation Strategy, M&A, Strategic Communication as well as Economic or Government Policy.
    Sample projects include :

    Designing and implementing a customer-centric organization in Consumer Goods
    Crafting a 5-year strategic roadmap to go from a commodity to a specialty player in Chemicals
    Using Game theory to anticipate moves from Competitors and take strategic decisions in telecommunications

    Performing an M&A screening to build a pipeline supporting strategic priorities in financial services
    2nd. Sales & Marketing-
    Sales & Marketing is focused on top-line activities to help companies drive profitable growth. Sales & marketing consultants support clients to deliver above-market growth by developing their marketing capabilities or improving their sales effectiveness. This capability is striving in the consulting market as its impact on P&L is usually direct and measurable. The category represents close to 10% of the management consulting market.
    This category includes capabilities such as Branding, Revenue Management, Market Entry Strategy, Omni Channel Marketing, Sales Effectiveness or Customer Experience.
    Sample projects include :

    Optimizing Yield / Revenue Management for an Airline using data analytics and customer behaviors
    Improving in-branch customer experience for clients in a traditional bank
    Optimizing the organization, territories, and activities for the commercial teams after a merger of pharmaceutical companies

    Implementing Machine Learning to optimize Marketing investments in consumer packaged goods. 

    “You can’t build a reputation on what you are going to do.”  – Henry Ford.

    READ ALSO
    “Successful management of your relationship with Consultants has a tremendous effect on each of your projects. ​”

    3rd. Operations–
    Operations are one of the largest lines of services. It regroups most of the activities where products and services are usually built or delivered. Even though Operations can be a source of innovation and a differentiator, most of the time the focus is on reducing costs and increasing throughout. Operations consultants use concepts such as Lean, Six Sigma, or Quality Management to help their clients streamline and improve operational efficiency. It represents about 25% of the market for management consulting.
    The category includes capabilities such as Manufacturing, Procurement, Supply chain, Quality Management, and Compliance, G&A Optimization, Lean or Knowledge Management.
    Sample projects include :

    Defining a make-or-buy strategy for parts of the activities for an OEM

    Designing and implementing a blueprint for manufacturing activities for a Flat Carbon Producer

    Leveraging Blockchain to optimize the supply chain of an automotive company

    Using Lean to optimize back-office activities in the private loans department.

    4th. Finance & Risk –
    Consulting firms specialized in financial advisory service work with finance and risk management executives (such as CFO’s). They help them make decisions, develop customized strategies and deliver superior results by analyzing the financial and economic risk and uncertainties for their companies. The category represents close to 20% of the management consulting industry. Its size is often difficult to assess given the overlap of the activities with legal firms, auditors and M&A boutiques.
    The category includes capabilities such as Corporate Finance, Actuarial, Restructuring and Crisis Management, Tax Advisory or Risk Management.
    Sample projects include :

    Leveraging Supply Chain Financing to optimize cash management between Customers and Suppliers

    Analyzing potential impacts and defining optimum strategies to face significant changes in Tax Policies (Brexit, Trade-War, …)

    Implementing new Risk Management regulations and associated governance in Financial Services (BASEL III, …)

    Turnaround management for companies close to Bankruptcy.

    5th. Human Capital –
    Human Capital consulting focuses on maximizing the value created from Human Resources, or employees, in an organization. The offering is quite wide from Organization and Leadership Development to Improving the Effectiveness of the HR function. Since the capability has low barriers to entry and many consultants set up their own business, the market is highly fragmented. Besides, there is a low level of market share concentration despite the significant number of operators. The top four companies in the industry generate just over 20.0% of the industry’s revenue. The category represents about 10% of the overall consulting market.
    The category includes capabilities such as Talent Management, Organization Development, HR Effectiveness, Social Relations or Compensations & Benefits.
    Sample projects include :

    Building an efficient strategy, embraced by the management to boost Employee Engagement in a Transportation Company

    Leveraging advanced workforce planning analytics to map career flows and anticipate future needs and shortages in Aerospace Engineering

    Designing a robust succession planning for the key executives of the company in a High Tech Startup

    Implementing Digital Tools and driving the associated change management to optimize HR processes.

    6th. Research and Development –
    Research & Development Consulting is helping companies to optimize the way they are developing Products and Services. Companies aim to find the right balance between with a strong focus on customer needs and delivering cost-effective returns. In a time of constant change and when innovation cycles are accelerating, the research and development activities have become a key differentiator. The consulting offering ranges from identifying where technologies and skills will be required to how products and services are developed. With about 5%, it represents a small but very valuable portion of the consulting market.
    The category includes capabilities such as R&D Strategy, R&D Effectiveness, Product Development,  Manufacturing Engineering, Open Innovation :
    Sample projects include :

    Globalizing R&D and Optimizing the footprint for a global food ingredients company

    Defining and Implementing an effective Innovation Portfolio Management in Mining

    Leveraging concurrent engineering to accelerate product development in Aerospace

    Implementing and Innovation System to spur Innovation for an Insurance Company.

    7th. Technology & Digital –
    Technology Consulting might also be referred to as IT consulting. However, the rise of Digital, Fintech and all the Tech Startups activities is changing the rules of the game. The capability has been rejuvenated as most companies have now elevated technology to the highest level of their agenda. Technology consultants offer services helping companies embrace new technologies, digitize their processes and modernize their legacy systems. In short, leverage technology as a source of competitive advantage. The scope for this activity overlaps with strategy and functional areas for strategy, media, and specific systems and with IT services for the low end/recurring activities. Depending on definitions the category can represent up to one-third of the global consulting market.
    The category includes capabilities such as Digital Strategy, Digital Architecture, Systems Integration (CRM, ERP, …), Data Management and Analytics, Cyber Security, or IT related services.
    Sample projects include :

    Helping Retailers to make buy vs. build decisions when deciding on their new IT Platforms

    Leveraging Machine learning to understand customer behaviors better and reduce churn in telecommunications

    Assessing the enterprise cybersecurity architecture and technical controls in Payments.

    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 | What are the main pitfalls when writing an RFP for Consulting?

    How to negotiate a consulting agreement?

    8 Main Trends to better implement Open Innovation

    Today Open Innovation is part of an interconnected ecosystem where people, organizations, and sectors can nurture inspiration, idea-generation, collaboration, and validation of ongoing iterations all at the same time.

    The 7-High Level Consulting Capabilities Categories That Every Client Should Know

    The Capabilities are the services offered by consultants. They usually mirror the business functions that client organizations need to perform. This dimension is crucial to describe the work in consulting.

    Your browser does not support the video tag.

    Previous Weeks’ issues

    This Week In Consulting: What is the impact of Covid-19 on the Energy sector?

    This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, July 22nd ,2020, All you need to know about the impact of Covid-19 on the Energy sector
    read more

    This Week In Consulting: Is sustainability taking the back seat during the pandemic crisis?

    This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, July 15th ,2020, All you need to know about what’s next for Sustainable Business.
    read more

    This Week In Consulting: How Chinese Companies Have Responded to Coronavirus?

    This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, July 8th ,2020, All you need to know about How Chinese Companies Have Responded to Coronavirus
    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 | How to monitor the consulting category?

    It may sound obvious, but you won’t see the benefits of your consulting unless you measure the impact. What elements to monitor? How to segment your category? How to define the targets? How to track the results?
    On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte explains how to monitor the consulting category.
    Key Takeaway: Monitoring the consulting category can yield substantial value creation for your organization. It will help you keep the expenses under control, and make sure the projects are delivering on impact and ROI.

    How Using the Right Compensation Models Can Benefit Your Project

    How Using the Right Compensation Models Can Benefit Your Project?

    Compensation models vary, and using the right one can benefit both parties, Clients, and Consultants, also ensure everyone is happy and gives their best to the project. 
    Every project is different, so choosing the best Compensation model can have a great impact on the ROI of the project. To maximize your benefits, take the time to evaluate and select the Compensation model you think is right for you and your organization.
    Now let’s dive into the most used Compensation models and see how you can make your dream project happen while properly compensating your Consultants

    How Using the Right Compensation Models Can Benefit Your Project?
    Here is how this works – If you want to optimize your consulting spend, you might be tempted to attack the cost base with traditional cost-cutting measures (reducing budgets, negotiating discounts, setting up multiple validations, etc.). Even though this can provide short-term results, we should not lose sight of the fact that using consultants is about value creation. As such, despite all the bad press about consultants and their fees, discussions should primarily be about impact and value.
    Now, let’s review the most used Compensation models:
    1. Deliverable-based fees or flat fee
    Most Consulting firms use the flat fee structure for their projects. The Consultant will evaluate the work to be done and staff a little team. The total fee will reflect the total cost of the team to provide the work.
    Pros:  The Consulting team will do the work even if the workload is higher than expected. The risk for the Client is limited. Incentives for the Consultants are through repeat business and resource optimization.
    Cons: The Client pays the amount agreed, even if the consulting team does the work faster than expected. The Consultant can be tempted to “supercharge” their resources to mitigate the risks. The Consultant can allocate resources to the proposal that will never work on the project to create a buffer.
    2. Time-based fees or daily rates
    This system is very common, in particular with small projects and independent consultants. It can also apply to interim management assignments. The Consultant will define a daily rate, and invoice the Client based on the number of days actually worked for the Client.
    Time-based fees will be perfect for projects where you mostly need extra arms and legs such as interim management, or spot team reinforcement.
    Pros: The Client will only pay for the work done and time spent.The fee structure is particularly transparent and adapted to projects with a finite duration.
    Cons: A low-performing consultant will charge more days. Besides, the incentives for the Consultants are to stay longer to charge more. And what happens if you are not available and the work cannot progress as planned? The Client has little control over the total cost of the project. The risk is mostly on the Client’s side. 

    “As a consultant at McKinsey, I learned the value of data and the ability to shape that information into an answer.” – Pete Buttigieg .

    READ ALSO
    “Demand management allows the teams to make the difference between the “must have” and the “nice to have.” You can keep your money for what is really important.”

    3. Retainer-based fees
    When a client needs continuous part-time support, s/he can opt for retainer-based fees. The Consultant and the Client agree on a number of days per week/month/quarter where the Consultant will be on “stand-by.” The retainer can be paid in a lump sum or on a monthly basis, independently of the work done by the Consultant.
    Pros:  The Consultant has to stay on top of the Client’s organization and priorities. The Client is sure to have access to the Consultant for the agreed period. This type of model works particularly well when deliverables are unclear and can change during the assignment.
    Cons: The consultants can have several projects at the same time. The “retainer” client is not always their #1 priority as that project is secured. Some consultants tend to consider retainers as paid commercial time.
    4. Value-based Pricing
    Value-based pricing is a pricing strategy where the prices are set not on time and materials, or cost + margin, but rather on the perceived value for the Client of the service delivered. For Consulting services, it could be a share of the savings realized in a cost-cutting project, for instance.
    Pros: The clients and the consultants share the same interests: the more value created, the more value for each party. The risk for the Client is very limited. The Client only has to commit to a small flat fee.
    Cons: The baseline and the conditions of success have to be defined very precisely, so the Client doesn’t end up paying more than the value really created. The model is more difficult to apply for intangible deliverables with no direct, measurable impact on P&L. Traditional consultancies are reluctant to use this fee structure that does not fit their pricing and risk management models (you cannot reserve a team of four consultants from the pool when the payment for only two can be secured).
    5. Value Sharing – a Win-win Proposition
    More and more consultancies are exploring ways to share the value with their clients. The movement started with Bain & Company when they moved from pure strategy work to more operational support.
    Value-sharing fees make sense when the stakes are high, and you expect the consultants to go above and beyond their normal delivery by aligning their interests with yours and giving them, beyond the sole repeat business, the perspective of a substantial upside in case of success. Classical cases will include cost-saving programs, pricing optimization, and a new business launch. To mitigate the risk, you will have to implement governance to make sure the activities (and how they are performed) remain in line with your overall strategy and culture. Indeed, the consultants will take a very active role in the execution of the project, but you remain at the bar. And what are the expectations beyond their normal job that would justify a special bonus?
    The catch, when using value-sharing, is to define clearing the starting point and the parameters involved in the measure.
    In conclusion, for each project, you can identify the fee structures that will yield more value for your company. It will depend on the type of project, the nature of the deliverables, the context of the project, the flexibility you have on fees, and the level of commitment you expect from the Consultant.

    Author detailsAuthor Bio

    Hélène Laffitte

    Co-founder & CEO at Consulting Quest

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

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

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    Consulting sourcing tips

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    Previous Weeks’ issues

    This Week In Consulting: What is the impact of Covid-19 on the Energy sector?

    This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, July 22nd ,2020, All you need to know about the impact of Covid-19 on the Energy sector
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    Podcast | How to select the right consulting provider for your project?

    After assessing the proposals and selecting the most promising, you have now a short-list of the most promising candidates. How do you narrow down to one winner?
    On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte explains how to select the right consulting provider for your project.
    Key Takeaway: The presentation (or pitch) phase is an excellent opportunity to challenge the proposals, assess the chemistry with your teams, and get the buy-in for the different stakeholders.

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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

    8 Main Trends to better implement Open Innovation

    Today Open Innovation is part of an interconnected ecosystem where people, organizations, and sectors can nurture inspiration, idea-generation, collaboration, and validation of ongoing iterations all at the same time.