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Buying consultancy, and how you approach it, can have a big impact on the success of your project. Guest contributor Fiona Czerniawska explores why it’s hard to get it right, and how you can get better at it.

Co-founded by Fiona Czerniawska in 2007, Source for Consulting provides specialist research on the management consulting market. For consultancies like Berkeley, Source provides great insight into the market and industry trends. For buyers, several of whom are also Berkeley clients, Source provides information to help them buy consulting services more efficiently and effectively. 

With this in mind, Unspun invited Fiona to share some of her thoughts…

According to statistics from the Management Consultancies Association (MCA), companies spend an estimated £9bn a year on consulting services – a sizeable sum, so it’s essential that organisations get the most out of the money they are spending.

Bought properly, consultancy services can help organisations grow, meet their objectives, and operate efficiently. Expenditure on such services can have a return of tens or even hundreds of times its cost.

But the converse also applies. Sometimes expenditure on such services is wasted or, even worse, has a negative impact, which can result in losses many times the costs of the services in the first place. Although 86% of executives who had used consultants said they were either satisfied or very satisfied with the work consultants had done (according to an independent survey carried out by the MCA in 2006), many feel they do not obtain value for money.

So why is it so hard to get right?

Buying consultancy is not easy. It’s very different from other types of purchasing:

  • A consultancy firm can have a major impact on the success or failure of the client’s organisation.  The same can’t be said of your paper clips.
  • Consultancy is not a regulated industry. There are no qualifications or a defined set of skills a consultant must have.  This makes it hard to identify and assess quality and apply standards.
  • Lack of information makes it hard to compare and evaluate professional services firms.  Consultancies don’t come in boxes with ingredients printed on the side. The services they offer are almost always tailored to meet the needs of individual organisations, as opposed to being a “commodity” purchase. Client confidentiality may limit what you are told, and objective data can be hard to come by.
  • Procurement teams are, quite rightly, starting to get more involved in the purchasing decision. But they are often perceived by both the business and the consultancy as having limited specialist knowledge and being fixated on ticking boxes and cutting costs.
  • Within an organisation, consultancy is likely to be a subject about which many stakeholders, often the most senior, have strong opinions.
  • The quality of the service provided depends as much on the end-user as the consultancy and, to a large extent, on the relationship between the two.
  •  And sometimes it can be very hard to measure tangible outcomes of the work delivered. 

And how can you improve your current approach?

If you can find an effective and efficient way of purchasing professional services, it can only lead to greater value and benefits for all parties involved. A laudable aim. But how can you make it happen? 

There are a number of key skills you need to bring to bear:

  • Market knowledge: Take steps to understand your potential suppliers, what they offer, their skills and experience, and their pricing structures. Place this in the context of the specific service you are buying, and try to form comparisons across firms. Be clear on what you need, and explore the specific value each external adviser could add. Articulate and consider explicitly with them how you’ll measure and track success. 
  • Internal intelligence: Get a handle on patterns of demand and supply within your own area and the wider organisation. For example, has another business unit recently hired a consulting team to look at the same issue? Could this resource be leveraged across the business, or could the team help you join the dots across the organisation?
  • Communication skills: Share information and opinions (good and bad) about consultancies with your colleagues and with the procurement team. Where have projects worked for you? And why? But be honest if projects have not gone well. Where the fault lies in your own organisation, learn from it and move on. But if it’s more fundamental, and you’re disappointed with the quality of work, your consultant needs to know. As do others in the organisation, including the procurement department. You’ll help educate their team, and they can pass on feedback more widely, to ensure others avoid making the same mistake.
  • A thought-through process: This doesn’t just mean covering off key stages of supplier selection (short listing firms, inviting proposals etc), but also thinking carefully about the selection criteria against which you’ll judge your consultancy. What’s most important to you? The firm’s record? Reputation? Technical knowledge? The experience of its people? Value for money? The importance of these may vary according to the project and stage in the buying process.     
  • The right supplier relationship management approach: The role of the buyer should not stop when the contract is signed. More value can often be generated through effective supplier management than during the purchasing process itself. Segment your supplier base, identifying who are your strategic partners versus your tactical support. Then strike the right balance in terms of your engagement, bearing in mind that both parties must somehow benefit from the relationship if it is to be successful.  

Bought wisely and in a disciplined way, consultancies can play a crucial role in helping organisations manage their performance, protect their interests and pursue their strategic goals. Bought poorly, they can cost an organisation far more than the fees paid. When things go wrong, it is often tempting to blame the consultants, but the fault usually lies as much, if not more, on the buyer’s side. As Niccolò Machiavelli rightly observed in The Prince: “Good advice depends on the shrewdness of the prince who seeks it”.
 

With more than 15 years experience as a management consultant, Fiona Czerniawska is now a leading commentator on the consulting industry. She is the joint founder and managing director of Source (www.sourceforconsulting.com), an independent research company specialising in the management consulting market. She recently co-authored the Economist book, “Buying Professional Services. How to get value for money from consultants and other professional services providers”, with Peter Smith.
 

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