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Podcast | Where to focus in the Consulting Sourcing Process?

Today Hélène is welcoming Laurent Thomas, EVP Oil & Gas at Solvay Novecare & former Senior Partner at Oliver Wyman who will tell us where to focus in the consulting sourcing process.
On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte explains where to focus in the consulting sourcing process
Key Takeaway: If you are launching a project where the choice of the consultants will determine the value generated, you should focus on the selection of the right provider. If the impact is going to be mostly the same, you should focus on the scoping and the negotiations.
 

How People Shape the Consulting Market and Your Perspective – From Global to Niche Specific.

How People Shape the Consulting Market and Your Perspective Too

What we believe becomes our reality. According to psychology, this principle applies to almost everything. We see the world through our own lenses. Our brain is more focused on the familiar, the comfortable, which we perceive as positive, and it tries to avoid the unknown often dubbed as “negative​”.

How People Shape the Consulting Market and Your Perspective – From Global to Niche Specific
You are pretty familiar with the idea of the “comfort zone,” and the effort needed to go beyond the routine and our “comfort zone.” Understanding the Consulting market globally poses similar challenges.
It’s necessary to get the “big picture” and know the niche markets as well. Every country differs in significant ways.

“You can talk to a leadership team in China, and they are all engineers. They get what’s going on immediately. The Americans don’t because they’re all lawyers.” – John Doerr

READ ALSO
Simplification goes a long way when drafting a Consulting agreement as well. However, you need to always consult with your Legal team first and foremost when drafting your agreement, but here are some great recommendations.

Sounds kind of funny, but there is truth in it.
How many Consulting Firms serving your industry can you name?
Having a good grasp of the supply market is key to get the best Sourcing outcomes, but when asked this question, most Executives cannot name more than 10 to 15 rather large companies.
And Procurement Executives don’t necessarily score better at that little game.
The Consulting Market is extremely diverse and complex, and there are several ways to look at it.
Let’s have a quick look at how the market is structured and how the economics for consulting professionals are functioning.
Understanding the Consulting Market’s Structure –

Vast Scale – The overall management consulting market is estimated at approximately $250 billion worldwide, with a CAGR of roughly 6%, clearly outpacing GDP in all countries. At this pace, the industry is expected to break the $300 billion by 2020.

Size of Consulting Companies – There are roughly 10,000 Consulting Firms globally, representing 250,000 consultants, without including the independent Consultants. As a rule, large Consulting Firms tend to be one-stop shops (offering all capabilities and industries in most geographic regions), while smaller companies are often focused on one or two dimensions only.

Richness and Diversity – Most Procurement Executives are looking at the market through the capability/industry lens. They know that one-stop shops such as Mc Kinsey, Bain & Company, Booz Allen, Big 4, and consorts can cover the full spectrum, and they identify a few other players focused on one capability or one industry. But there are other ways to look at the market.

Strategic and Operational Dimension – Another effective way to screen the market through the Strategic Operational dimension. Strategic Consulting is about high-level strategy, transformation, large organization projects, very often at the highest level of the Company, as opposed to more operational projects such as lean, team effectiveness, purchasing, etc.

Hard or Soft Approach to Capability – Sometimes, the same capability can be approached with either a Hard or a Soft angle. If we take as an example the org design capability, Hard would be org charts, job descriptions, processes, handbooks while Soft would be team alignment, culture, change management, and talent.

And many other dimensions can be used to screen the market: Strategy Players with a touch of digital vs. Digital Players with a zest of strategy, Global vs. Local, Blue Chips vs. SMEs, Diagnosis Experts vs. Implementation Specialists, etc.
The great news is –
Consulting Firms are rarely present on the whole spectrum for one dimension, even the large ones, but the odds are quite high that whatever your problem is, there is a Consulting Firm focused on it.

People make all the difference – as surprising as it may sound, identifying a Consulting Firm with the right expertise only gets you half-way there.

Consulting is a human-to-human service, and consultants are not commodities. To better source a project, executives need to understand who the people are behind the Consulting Firms and to assess the fit with your Company’s context and culture.

The background of consultants can be essential to understand the type of projects they can work on. Life-long consultants, for instance, will bring you perspective and benchmark, while former executives can bring you hands-on experience.

If you want to accelerate the execution of a project and mobilize a significant amount of resources in a top-down fashion (post-merger integration, for instance), large firms with their pyramidal organization and their structured processes and methodologies can be the right fit.
If you want to align and embark your management team on a disruptive transformation, you may want to leverage the expertise and seniority of a boutique firm that can customize on the fly their methodology to maximize appropriation.
How to find the right match for you and your specific case?

Evaluate the Consulting Company on all dimensions

Understand their range of projects

Pinpoint where their value lies

Assess their proposal with reasonable expectations

Using the above will ultimately allow you to source the best consulting firm for your project and maximize the chances of success.

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

8 Best Practices to Avoid Potential Problems in the Course of a Consulting Project

There are, unfortunately, no guarantees in life, so your best bet is to have a solid agreement and prepare yourself and your organization to deal with any unexpected problems that might arise

Podcast | Where to focus in the Consulting Sourcing Process?

Where to focus in the Consulting Sourcing Process?

How People Shape the Consulting Market and Your Perspective – From Global to Niche Specific.

You are pretty familiar with the idea of the “comfort zone,” and the effort needed to go beyond the routine and our “comfort zone.” Understanding the Consulting market globally poses similar challenges.

Your browser does not support the video tag.

Previous Weeks’ issues

This Week In Consulting: The future of Media & Entertainment at the age of digital & coronavirus

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week,September 23rd ,2020, All you need to know on what does the future hold for Strategic Communications.
read more

This Week In Consulting: What does the future hold for Strategic Communications?

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week,September 23rd ,2020, All you need to know on what does the future hold for Strategic Communications.
read more

This Week In Consulting: Will the Telecom sector conquer the digital space?

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, September 9th ,2020, All you need to know about product development in the digital age.
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 to find new consulting providers for your projects?

Sometimes it is important to understand what your options are before defining your requirements. You can look for consultants before or after writing your RFP, depending on how well you can define your needs…
On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte explains how to find new consulting providers for your projects.
Key Takeaway: There are many talented consulting firms out there. But ultimately, the success of a consulting project is a human-to-human journey. Meet the partners, talk to them and their former clients. It is the only way to make sure they are a good fit for your needs.
 

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The 12 Essential Elements Every Solid Consulting Agreement Should Cover – Part 2

The 12 Essential Elements Every Solid Agreement Should Cover- Part2

Simplification goes a long way when drafting a Consulting agreement as well. However, you need to always consult with your Legal team first and foremost when drafting your agreement, but here are some great recommendations. In this article (“Part 2”) about the Top 12 essential elements of the agreement, we will continue with the remaining points.

The 12 Essential Elements Every Solid Agreement Should Cover -Part 2
(on Payment Terms, Ground Rules, Renewal, Extensions)
1. Clarify How the Performance will be measured-
As we discussed previously, the SOW (Scope of Work) needs to specify the metrics to evaluate the success of the project. For intangible services like consulting, you can define SMART objectives that serve as a guideline to make sure the quality of delivery is there. For instance:
“The Consultant and the Company agree to meet on a regular basis to assess the performance on the project.
The expected results for the project are 20% savings on the Marketing expenses.”

“Great leaders are almost always great simplifiers, who can cut through argument, debate, and doubt, to offer a solution everybody can understand.” – Colin Powell

READ ALSO
” The Agreement formalizes in writing all the aspects discussed during the RFP process and the negotiations. “

2. Define the Commercial Terms-
Once you have defined what the Consulting firm was supposed to do, you can move to how they will get paid.
The agreement needs to state very clearly how the Consultants will be paid, the amounts, and the conditions linked to the payments.
For hourly fees, include the detailed amounts for each type of Consultant, the kind of cap, if any (hard or soft), and the number of hours to reach the cap.
For a risk-sharing model, clearly define the variable compensation, the metrics on which the variable compensation is based, and how they will be measured.
3. Set the Payment Terms and the Applicable Taxes-
All Consulting agreements naturally define payment terms. Make sure to negotiate terms that are compliant with your company policy. The contract usually states the net price (before sales tax).
Set up a time limit on when payments are due. Standard terms are usually applied between 30 to 60 days after the invoice is issued.
Define the timing of the payment, i.e., weekly, monthly, phase-based, or lump sum. For very large projects, you should consider a monthly schedule.
“The Company will pay a fee of $250,000, excluding expenses and VAT in 5 installments of $50,000 paid monthly.
Travel and other Expenses will be approved in advance by the Company, and charged at cost in the limits of $37,500 (15% of the fees).”
You can also add the description of the fees in the appendix.
“The Services will be performed for the fees described in Appendix D (“The Fees and Expenses”). Prices will be held firm for the duration of the project.”
The Consulting provider could negotiate to establish a penalty for late payment. If you decide to accept penalties for late payment, then add an incentive for early payment.
When you have a time-sensitive project, you can introduce an incentive for early delivery and/or a penalty for late delivery.
When you have a risk-sharing model, take the time to detail the schedule of payments, the amounts, and the associated metrics.
4. Arrange for Agreement Renewal and Extension-
It can be useful when the scope of work is still unclear, to include the potential of extension of the contract. Likewise, for a recurring project, or a project with several phases, you can add the conditions of renewal in the projects. In both cases, the client should be the one deciding to extend or renew the contract.
5. Secure Confidentiality-
Confidentiality is a crucial clause in any Consulting agreement. You would not want the Consultant to go around and tell about the project done with you. If a certain kind of confidential information concerns you, write it in plain English in the contract. Also, make sure you understand the limitations of confidentiality agreements, in particular, when you work globally. Each culture or country has its own approach (and set of laws) to confidentiality. Besides, confidentiality should be limited in time and space. And you also need to:

Agree on the Use of a Third-Party in the Project.

Most Consulting firms work with partners and subcontractors. You can ask to be informed if a third-party works on the project. You can decide between having them sign a specific NDA or to trust the Consultant to assure their subcontractor complies with the NDA signed with you.

Protect Your Intellectual Property.

Intellectual Property is another critical subject. The materials developed during the project (presentations, reports, …) belong to the client. However, the methodologies and tools used by the Consulting firm might be based on pre-existing Intellectual Capital developed by the firm over the years. In that case, the Consulting provider will keep the property of the IP, and the client should negotiate the right to use the results freely. The data gathered on your behalf during the project: models developed for the project, transcript of the interviews, etc. belongs to you.
6. Implement the Client Policies –
If you work with sensitive information, you probably have strict security requirements, and you might want to include these elements in the contract.
More specifically:

Handling data and information (Information Security policies)

Onboarding and vetting any consultant present on your premises and/or working on your data (Vendor Onboarding and/or Vetting requirements)

Making sure the consultants are safe on your premises (Health and Safety policies).

7. Eliminate Conflict of Interest and Set a Non-Compete Clause –
On certain sensitive projects, the Consulting provider might have a conflict of interest if they are already working with a competitor or a client of yours. You can negotiate an exclusivity, but it often comes with additional fees.
You can include in your contract a list of specific companies or a broader definition of your competitors. If you don’t want the Consulting firm to work with your Competitors AFTER the project is over, you need to include a non-compete clause in your contract. For both clauses, you have to give reasonable time and scope limits. Be aware that they are difficult to enforce, so these should be used only in special cases.
 

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

8 Best Practices to Avoid Potential Problems in the Course of a Consulting Project

There are, unfortunately, no guarantees in life, so your best bet is to have a solid agreement and prepare yourself and your organization to deal with any unexpected problems that might arise

Podcast | Where to focus in the Consulting Sourcing Process?

Where to focus in the Consulting Sourcing Process?

How People Shape the Consulting Market and Your Perspective – From Global to Niche Specific.

You are pretty familiar with the idea of the “comfort zone,” and the effort needed to go beyond the routine and our “comfort zone.” Understanding the Consulting market globally poses similar challenges.

Your browser does not support the video tag.

Previous Weeks’ issues

This Week In Consulting: The future of Media & Entertainment at the age of digital & coronavirus

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week,September 23rd ,2020, All you need to know on what does the future hold for Strategic Communications.
read more

This Week In Consulting: What does the future hold for Strategic Communications?

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week,September 23rd ,2020, All you need to know on what does the future hold for Strategic Communications.
read more

This Week In Consulting: Will the Telecom sector conquer the digital space?

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, September 9th ,2020, All you need to know about product development in the digital age.
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 12 Essential Elements Every Solid Consulting Agreement Should Cover – Part 1

The 12 Essential Elements Every Solid Agreement Should Cover- Part1

Let’s discuss first the importance of the Agreement when working with consultants, and the absolutely necessary elements that every good Agreement should have. You can customize these elements to fit your project better, and also use this as a template when you decide to do another Consulting project.

The 12 Essential Elements Every Solid Agreement Should Cover -Part 1
(on Managing Your Expectations, Defining the Scope of Work, Detailed Timeline, Governance Model, Escalation Process)
The Agreement formalizes in writing all the aspects discussed during the RFP process and the negotiations. During the first round of talks (and all the further ones), you should thoroughly review the contract and make all of your required changes to it. Also, insist the Consultant does the same. It’s advisable to develop your own Agreement, and you will see why.
The 12 Essential Elements in Your Consulting Agreement –
1. The 4 Main Dimensions a Consulting Agreement Usually Covers:

Statement of Work, what will be done during the project,
Terms and Conditions, what will be paid and how,
Rules for delivery, how the work will be done,
Deviation measures, what will be done if there is an issue.

“Most people spend more time and energy going around problems than in trying to solve them.” -Henry Ford

READ ALSO
“A solid and clear Make or Buy Decision Framework can ensure objective and efficient decisions. The framework has to be in line with your Strategy and Culture.. “

2. Statement of Work -Define Your Expectations.-
The first step when drawing up the contract is to define the Statement of Work (SOW), or in other words, to lay out your expectations of the project.The goal of the SOW is to make sure the Consulting providers commit to the results and not the means. The elements stipulated in the contract will be the reference in case the performance is not at the level you expected.
The statement of work normally includes:
A/ SOW Main Points –

Scope of Work and Deliverables,

Schedule and Phasing,

Governance and Escalation,

Expected outcome and Metrics.

When you are working with a frame contract or Master Service Agreement (MSA), the statement of work will serve as a Consulting Agreement. It will define the work to be done and the specific terms on the other dimensions. The rest of the terms will be covered in the MSA.
B/ Define the Scope of Work.
The scope of work will be very close to the scope defined in the RFP and adjusted along with the discussions with the Consulting providers.
For example:
“The Company has engaged the Consultant to provide services in connection with the Company’s Commercial Excellence Program. The Consultant will help to define the new organization for the Marketing function at the group and business unit level.
The expected deliverables associated with the project will be:

Diagnosis of the existing organization,

Future Organization recommendation,

Top-Down Impact Projection,

Organization Principes for the Marketing Function,

Future Organization by Business Unit,

Tailored implementation roadmap per Business Unit.”

You can also include the RFP and the proposal in the appendix of the contract to maintain an emphasis on the expected results for the project.
“The Consultant will help to define the new organization for the Marketing function at the group and business unit level as more particularly described in Appendix A (the “Services”).”
3. Specify the Timeline for the Project.-
The timeline should clarify and define the different deadlines, including the phasing, the milestones, and the schedule for the deliverables. Here is a good example:
“The Project will be organized intotwo phases:
Phase 1: High-Level diagnosis –To be delivered before the end of August 2019

Diagnosis of the existing organization,

Future Organization recommendation,

Top-Down Impact Projection,

Phase 2: Organization Design –to be delivered before the end of November 2019

Organization Principes forthe Marketing Function,

Future Organization by Business Unit,

Tailored implementation roadmap per Business Unit.

At the end of phase 1, the Company will decide the launch and the duration of phase 2.”You can also add the project schedule in the appendix as you did for the scope of work.”The Services shall be performed in accordance with the planning described in Appendix B (“The Planning”).”
4. Establish a Governance Model-
In your SOW, you should describe the governance of the project and, in particular, the escalation procedure. Clarify how the performance will be measured.
The SOW needs to specify the metrics to assess the success of the project. For intangible services like consulting, you can define SMART objectives that serve as a guideline to make sure the quality of delivery is there.
We have said several times that Consultants should commit to the results, not the means. However, in certain circumstances, the means can be of importance too. When you have chosen a specific Consulting firm for their team composition or the availability of a given expert, you can (and should) add your expectations in the contract.
For example: “When applicable, the consultant will maintain the composition of the team, as initially described in “The Team Composition,” for the period of the Agreement. In the event of a member of the team assigned to the project,for any reason,unable to pursue the goals of the project, he/she will be replaced with anotherconsultantof the same expertise at no additional fee. (added in “Appendix C”)”.
5. Set Escalation Process Guidelines-
All types of issues might arise in the course of a project, and it’s highly recommended that every organization has an Escalation Process protocol. In case your organization does not have one, here are a few tips you can implement.
When to escalate an issue? The short answer is when you see thatcritical problems are not addressed and promptly resolved. Critical problems include areas and activities that, if not completed, will delay a major project milestone, result in budget overruns, jeopardize the estimated due date for project delivery, break other commitments to Clients, for example, and various others.
As a project manager, it’s your responsibility to remove the obstacles teams might face that can lead to delays or inadequate deliverables. The issues should be documented and forwarded to the manager in charge, the project sponsor, and to higher management to address them; in other words, an Escalation Process should take place. Often there are tough decisions to be made, but escalation is a healthy part of the project’s life, and it generally benefits all the parties.
 
 

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

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Consulting sourcing tips

8 Best Practices to Avoid Potential Problems in the Course of a Consulting Project

There are, unfortunately, no guarantees in life, so your best bet is to have a solid agreement and prepare yourself and your organization to deal with any unexpected problems that might arise

Podcast | Where to focus in the Consulting Sourcing Process?

Where to focus in the Consulting Sourcing Process?

How People Shape the Consulting Market and Your Perspective – From Global to Niche Specific.

You are pretty familiar with the idea of the “comfort zone,” and the effort needed to go beyond the routine and our “comfort zone.” Understanding the Consulting market globally poses similar challenges.

Your browser does not support the video tag.

Previous Weeks’ issues

This Week In Consulting: The future of Media & Entertainment at the age of digital & coronavirus

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week,September 23rd ,2020, All you need to know on what does the future hold for Strategic Communications.
read more

This Week In Consulting: What does the future hold for Strategic Communications?

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week,September 23rd ,2020, All you need to know on what does the future hold for Strategic Communications.
read more

This Week In Consulting: Will the Telecom sector conquer the digital space?

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, September 9th ,2020, All you need to know about product development in the digital age.
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 Clear-cut Make or Buy Decision Framework Based on 4 Main Considerations

The Clear-cut Make-or-Buy Decision Framework Based on 4 Main Considerations

Successful companies apply a sound financial management principle: Hiring external consultants has to bring more value than leading the project internally.
One way to build these new practices and get the buy-in of the users is to assemble a cross-functional team including, Strategy, Finance, Procurement, and a few business lines, so all the benefits can be obtained and evaluated.

The Clear-cut Make or Buy Decision Framework Based on 4 Main Considerations
A solid and clear Decision Framework can ensure objective and efficient decisions. The framework has to be in line with your Strategy and Culture. Depending on how procurement-savvy are your executives, you might want to describe in more or fewer details about what each item means.
Here is how to successfully develop your own Make or Buy Decision Framework –
1. Decide on the “Externaliz-ability” of the Project-
Before analyzing if a project should be externalized or not, you need to assess if the issue you want to solve and if your project is suitable for externalization. Best practices in procurement recommend having a well-defined project that can be handled independently (as much as possible) for the rest of the organization. Few points to consider:

Are you able to define clear deliverables for your project?

You need to describe the results or outcomes you expect from the project. It can be done as a document (report, presentation) or in a meeting (workflow, seminar).

Can you define a firm deadline for the project?

Your project has to be clearly limited in time. Interestingly enough, the ability to define a firm deadline is closely related to the level of priority of your project. The higher the priority, the firmer the deadline.

What is the level of uncertainty of your project?

Another very important point is the level of uncertainty. If your project has a lot of interdependencies with other internal activities, it can soon become impossible to deliver on quality and time if any other party involved does not deliver on quality and time. You can your project to be as independent as possible from other parts of the organization.

Do you have access to the necessary resources?

Tricky question. The idea here is to assess if the resources you need for your project are accessible internally or externally. Or in other words, are there individuals in your companies or in external consulting firms able to deliver on your project.

“The breakthrough innovations come when the tension is greatest, and the resources are most limited. That’s when people are actually a lot more open to rethinking the fundamental way they do business. ” – Clayton M. Christensen

READ ALSO
“All products and services have price and value they create, and that equally applies to Consulting projects designed to solve an issue, generate savings or bring in extra revenues. “

2. Strategic Value of the Project-
Each project should be aligned with the overall Strategy of the Company. The Strategic Value is the measure of the contribution of this specific project to the Strategy.

Is the project strategic for the Company?

There is the obvious situation where a project has a high strategic value. But some projects that are not strategic still bring value when they enable another project that is strategic.

What is the expected impact of the project?

You can expect an impact or the top line, the bottom line, the costs, the culture, the leadership… This information will help you define the level of priority for the project.

How much are you willing to pay for the project?

Or in other words, can we afford this project right now.

Is now the best timing for the project?

Even when a project is strategic, the timing is not always “right” now. The project can require an enabler project to be done before. Or it might be a regulatory project, and we still have a couple of years.
3. Externalization Value of the Project-
Once you have identified the strategic value of your project, you can evaluate the externalization value or the value created through the outsourcing of the project.

Are the skills involved in the project core for your Company?

When you have the right skills and resources available internally, it might make more sense to do the project in-house. If that is not the case but the skills are or will soon be core to your Company, you might want to beef up your existing teams and launch the project internally.

Is there a specific reason to go external?

You might want to take advantage of an independent expertise, get third-party validation for your management decisions,  or .leverage a consultant’s brand to justify a painful decisions. In all these cases, working with external consultants will be a key success factor of your project.

Do we improve the business case if we accelerate the project?

Outsourcing a project should bring more value than doing it  in-house. If boosting the project (compared to the time it would take internally) is adding value, then you want to work with consultants.

Do we have the necessary skills and resources to supervise the project?

You will need to find a project manager that understands the scope of the project and the work the Consulting Firm will do. And you will need to free some of his team to supervise the project properly.

Are there companies that can provide that service?

This is a tricky question. If you are looking for a very niche or a hybrid skillset though, it might make sense to do a little bit of research.

Is there sensitive IP or information involved in the project?

You don’t want your IP or your Strategy to be out there. Some consultants have specialized in working across the board on one industry and selling their benchmark.
4. Working with Your Business Lines-
Now your Make-or-Buy Decision Framework is ready, the last part of the work is to bring it to the business lines and get their buy-in.

Explain the case for change

Any change implemented has to be explained and rationalized to your employees. Putting in place a framework to make-or-buy decisions will help your Company in keeping your focus on the Strategy and the consulting costs under control.

Inventory the projects

Once your teams are onboard, you can start identifying the pool of projects to be analyzed.
At that stage, you have probably already implemented demand management. You can only consider the projects that are highly strategic or over the threshold.

Map the benefits vs. efforts

Another important filter is a rough estimate of the benefits vs. efforts or the expected value creation for each project identified. This should help you make a first prioritization, and leave one the side projects with lowe created-value.

Select candidates for externalization

First step in the framework, select the projects that are externalizable easily. That will save you some time and energy. You can always come back to some of the projects that have high benefits, but vague deliverables/timelines later with more of a retainer structure.

Apply a make-or-buy matrix

Apply the make-or-buy matrix to refine your selection of high-priority projects to be realized either internally or externally.

Implement governance

Define the governance for the make-or-buy strategy matters. If your Company is extremely centralized, including the procurement of Consulting Services, you might consider building a Consulting committee examining the different projects and monitoring the results at company level. If you are more decentralized, you might think of several committees per business unit, or function.
 
 

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

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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

8 Best Practices to Avoid Potential Problems in the Course of a Consulting Project

There are, unfortunately, no guarantees in life, so your best bet is to have a solid agreement and prepare yourself and your organization to deal with any unexpected problems that might arise

Podcast | Where to focus in the Consulting Sourcing Process?

Where to focus in the Consulting Sourcing Process?

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You are pretty familiar with the idea of the “comfort zone,” and the effort needed to go beyond the routine and our “comfort zone.” Understanding the Consulting market globally poses similar challenges.

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This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week,September 23rd ,2020, All you need to know on what does the future hold for Strategic Communications.
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How to Decode the Price of a Project With These 4 Simple Tactics?

How to Decode the Price of a Project With These 4 Simple Tactics?

All products and services have price and value they create, and that equally applies to Consulting projects designed to solve an issue, generate savings or bring in extra revenues.
Before you start contemplating if the proposals have a price that makes sense to you, let’s have a closer look at how this price is structured. Be careful as the most affordable proposal is not always the one that has the lowest face value

How to Decode the Price of a Project With These 4 Simple Tactics​?
Get crystal clear on what’s included in the price
The price of a project depends on the scope, the approach, the timeline, and the resources used in the project. There are three elements you need to analyze to understand the possible price of the project: the fee structure, the expenses, and the total budget.
1. Understand the Fee structure
Consultants can normally use several fee structures:

Hourly rate

You will pay per hour. We don’t recommend this fee structure, because it is challenging to control the spending. Besides, it often shows the Consultant can’t or won’t accurately size the project or don’t have enough experience. You will hold all the risks.
However, it might be interesting to go this route if the scope is vague, or the project is very small. Make sure you integrate a soft and/or a hard cap on the hours.

Flat fee

The Consulting firm commits to deliver the work in a fixed envelope. It is the most common fee structure. Make sure that the fee is not subject to adjustments if they have to change the staffing of the consulting team for lack of performance, or in internal turnover.

Risk-sharing/Value-sharing approach

The Consulting firm will be paid a variable amount depending on their performance, often calculated as a percentage of savings or income increase. Check the payment schedule to make sure you can withhold a significant part of the fees until the work is completely done.

“The most important distinction between price and value is the fact that price is arbitrary and value is fundamental.” – Phil Town (on stock pricing, for Forbes magazine).

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2. Consider the Other Expenses
Once you have understood the fee structure, take the time to look at the other expenses, such as travel. Some consulting firms apply an automatic 5% on their proposal for phone and copies. Others are using an automatic 30% of the project amount for travel expenses. Make sure you integrate as much as possible of the expenses in the project price. Concerning the travel expenses, we recommend aligning them to your company’s travel policies and include them in your terms and conditions.
When you have identified all the fees in the proposal, define the two or three most likely scenarios on how the project will impact your company. Calculate the fees in each category and each proposal. Make sure all the amounts are indicated in the same currency to facilitate the analysis. Add an estimation of the expenses in the total, in particular, if the conditions between the different consulting firms are extremely different.
If you have questions on the pricing of the proposal, it is the right moment to ask. Try to understand how they structured their price and what their constraints are.
3. Get ready to select your Consultant
Start with assessing the chemistry.
There is one thing you can never judge on paper: how well you will be able to work with the consultants. The ability to deliver on a project is linked to the technical competencies and expertise, but also the attitude of the consultants. Here is a list of useful questions you need to answer before you proceed:

What type of personality the partner in charge (the project manager) has?

Do you see your project sponsor working with them? Your project manager? Your teams?

Do the consultants listen to you? Are they flexible in their approach?

Do they demonstrate values that are compatible with yours?

Do you think they will have credibility with the upper management?

Will they be able to build trust with the main stakeholders?

Do you feel the Consultant had a well-balanced approach between the sales and the delivery imperatives?

Do you think their posture/personality/culture will have a positive impact on your project?

Proposal revision – give the Consultant a few days when they need to revise the proposal.
Always keep in mind that the goal of that exercise is to get several solid proposals that you could choose from. You want the most promising candidates to produce their best proposal.
During the meetings, you have probably asked for clarifications, and/or modifications. Give the consulting firm a few days to integrate your demands and adjust the price if necessary.
The RFP and the proposal are often the basis for the reception of the project (and potential litigations). You have to make sure that it describes closely the work you expect to be done, and the team you have agreed on.
Check their references.
If you haven’t checked the references yet, now is the right moment to do so. There are several elements that you want to confirm:

The references are recent. Ideally, less than 2 years, and in any case, no more than 5 years.

The consultants on the proposals worked for the project. In particular, make sure the partner in charge of your project had an active member, if not the project manager, of the project in the reference.

The reference is relevant to your project. The relevance will depend on your criteria. It can be a project in the right industry, the right capability, or with the right approach
 
4. How to make your final decision
The goal here is objectivity. Some consultants will leave an excellent impression after the pitch because they are brilliant communicators. However, the methodical evaluation of their proposal will end up with a much lower score than expected. The actual value of the proposal is probably somewhere in between. Scoring and ranking the proposals can be an exciting activity, as now we are getting closer to the conclusion.
We recommend building a weighted score where all the criteria are graded on a similar scale, and each criterion has a weight reflecting the level of importance to your project and your company.
The weighting could look like this, depending on your current needs, might include the following dimensions:

Quality of Approach – 30%

Aligns well with corporate culture/fit – 15%

Inspirational, breakthrough thinking; originality – 15%

Team expertise – 10%

Quality of written proposal and clarity of deliverables – 10%

Price – 20%

Once your proposal evaluation matrix is ready, you can start screening and grading the proposals. On each criterion, asses closely every bid and compare it to the rest of the proposals. You can work either criterion per criterion or proposal per proposal.
The proposal analysis is usually a good start, and you can adjust the scores based on the pitches. Then you can start reviewing the elements that are not in the analysis
 

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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Mail Me

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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

8 Best Practices to Avoid Potential Problems in the Course of a Consulting Project

There are, unfortunately, no guarantees in life, so your best bet is to have a solid agreement and prepare yourself and your organization to deal with any unexpected problems that might arise

Podcast | Where to focus in the Consulting Sourcing Process?

Where to focus in the Consulting Sourcing Process?

How People Shape the Consulting Market and Your Perspective – From Global to Niche Specific.

You are pretty familiar with the idea of the “comfort zone,” and the effort needed to go beyond the routine and our “comfort zone.” Understanding the Consulting market globally poses similar challenges.

Your browser does not support the video tag.

Previous Weeks’ issues

This Week In Consulting: The future of Media & Entertainment at the age of digital & coronavirus

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week,September 23rd ,2020, All you need to know on what does the future hold for Strategic Communications.
read more

This Week In Consulting: What does the future hold for Strategic Communications?

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week,September 23rd ,2020, All you need to know on what does the future hold for Strategic Communications.
read more

This Week In Consulting: Will the Telecom sector conquer the digital space?

This Week in Consulting – Curated News on the Consulting Industry published every Wednesday brought to you by Consulting Quest. This week, September 9th ,2020, All you need to know about product development in the digital age.
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 pitfalls when writing an RFP for Consulting?

When you write an RFP, You want to make sure that you will get solid proposals from your short-listed providers so that you can choose the best fit for you. Do you hire the right team? What are the results you are expecting?
On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte explains what are the main pitfalls when writing an RFP for Consulting.
Key Takeaway: Many companies rush the RFP process, make it either too vague or too precise. In both cases, they are decreasing their chances to maximize the outcome of the project.

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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.