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Wednesday, January 07, 2009 | Home | Site map | Contact us |
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 by Michael Cleary Evolution of the Consulting Business and Procurement Technology Calls for a Fresh Approach Introduction Thank you for visiting our website. In the next few paragraphs, I would like to explain why I founded ProfessionaLink and how our service can help create a more productive relationship between client and consultant. More Choices of High Quality, Lower Cost Resources The variety of high quality consulting resources has expanded dramatically in the last 10-20 years, fueled by extraordinary growth. The industry is now 10 times bigger than in 1980. An informal poll conducted by ProfessionaLink indicates that one third of the 30,000 consulting firms in operation today were established in the last 10 years, another third in the 80s. The top 40 firms have actually lost market share during this period. For any given assignment, there are now several specialist 'boutique' firms available who are expert in the topic. Often these are 'spin offs': groups of individuals who have developed a specific expertise who leave a larger firm and establish their own practice to capture income opportunities, to achieve operational independence and to focus on their craft. The best of these firms offer substantial advantages over their larger, generalist counterparts: - Their consultants are more seasoned and experienced vs. large firms' junior consulting resources, resulting in higher productivity per hour billed - They often have lower overheads, allowing many to charge lower rates at each level - They are willing to accept more narrowly focused projects; their partners do not have $5-10 million sales goals which encourage them to engage in 'scope creep' A 10-20% advantage in each of these cost drivers can result in overall project costs which are 25% to 50% lower, overwhelming any volume-based billing rate discounts offered by the larger firms.
Corporate Buyers Becoming More Demanding Three factors have resulted in a more demanding clientele for consultants - a trend that tends to benefit boutique firms over their generalist counterparts: - Authority for consulting is moving down corporate organizations to VPs, Directors and Managers closer to the action who can be more specific about the role of the consultant. The consultant is hired to 'fill gaps' that cannot be cost-effectively addressed internally. - Consulting purchasing is no longer a novelty for most executives. They understand the importance of defining clear project deliverables and demanding specific domain expertise. - Consulting expenditures have become a major line item for corporations, attracting the scrutiny of top executives and procurement organizations concerned with obtaining value. It's Hard to Change Larger generalist firms have, until now, have two major advantages: incumbency and brand recognition. With on-site teams and often a partner or two dedicated to the account, it is very easy to approach large incumbent firms regarding a project. They rarely decline an engagement on the grounds that they lack the relevant expertise. Large firm brand recognition results in participation in RFP lists, unsolicited calls from clients and a perception of quality assurance, at least to the many executives who regularly buy their services. On the other hand, it is hard to identify and qualify the specialist firms. Executives don't want to spend hours scanning the internet or canvassing their colleagues, friends and acquaintances for names. This ad-hoc approach rarely leads to a high quality consulting resource. Once identified, there is additional work to be done to confirm each firm's areas of expertise and to check references. In other words, the cost of taking advantage of the new set of consulting choices is high for most executives. As a result, firms with lesser expertise but higher profiles often get the business by default. A Consulting Expert Weighs In Consulting News, a leading trade magazine for the consulting industry, offers the following perspectives: "For buyers of consulting services, the most important distinction is the nature of each firm's expertise. Many consultants claim to be experts in specific industries…while others [focus on] particular consulting services, such as ERP or strategy." "As independent commentators for the last 29 years, we see increasing evidence that client demands for both industry knowledge and service expertise cause many consulting firms to offer both. Few consultants …are hired simply by being smart." " Among the largest firms, most are attempting to offer a full slate of services from strategic counsel to operational re-engineering to systems management. It is debatable whether there is great benefit to clients in such "one-stop-shops". Most clients are concerned to hire the very best consultant for the project in question. The convenience of having a single soup-to-nuts vendor is unlikely to be worth compromising the quality of service provided." Possible Solutions A few models have sprung up to address the consulting procurement issue. Arguably the highest value add of these is ProfessionaLink, which focuses on Fortune 1000 companies and 'boutique' consulting firms to match expert, high quality consulting firms to the particular project requirements. The advantage of this service for clients is obtaining the most qualified, highest resource for the engagement. This approach was developed to displace the relatively low value add "posting model," which became pervasive in general during the dot com craze from 1999 and early 2000. Our service offers corporations a valuable service for free: an external resource which is entirely focused on identifying, qualifying, classifying, evaluating and coordinating thousands of consulting firms selected for their quality and expertise. It allows executives to 'have their cake and eat it too': they can have the convenience of dealing with a single entity while having access to the full array of specialty resources they need. Whether you are a consultant or a corporate executive, I invite you to contact us to see how we can be of assistance. |
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