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The downturn in the consulting market has been greeted with a degree of relish by the business media: an arrogant industry has been justly humbled. Consultants, meanwhile, see themselves as scapegoats for organizations’ post-e-business, post-Y2K, post-Enron hangovers.
Against this backdrop, client attitudes to consultants appear, at best, polarized and, at worst, nonsensical.
There’s no shortage of clients willing to praise the contribution that consultants make. ‘Without any doubt,’ said one executive, responsible for consulting projects worth several tens of millions over five years, ‘most of the projects with which I’ve been involved would not have been delivered without consultants. Consultants bring up-to-date skills, a focus on outcome and speed of delivery. Moreover, they carry no in-house baggage with them.’
Yet, weighted against this is an equal amount of acrimony directed at consulting firms that appear to enrich themselves at the expense of their clients while delivering little in the way of tangible benefits. ‘I can remember one specific incident,’ recalled one client, ‘when a large consulting firm undertook a worldwide exercise to map our business processes. At a one-day exercise at a factory in Newport, Wales, the ‘facilitator’ – a Frenchman with unintelligible English, who had only joined the company two weeks before – was trying to involve a range of staff from all levels, all of whom spoke English with heavy Welsh accent. The facilitator had no idea what he was supposed to achieve, and was unable to describe anything to the cross section of staff. Consequently, they thought the whole process was a joke (but not a particularly amusing one, when they realized the Frenchman was earning three or four times what they did).’
From the research undertaken for this report, it’s clear that clients do think consultants add value, but only when consultants operate in one of two distinct modes:
(1) Specific, specialist projects
The use of consultants in focused areas is part of the larger make/buy decision made by organizations. ‘We use consultants in areas where we have little experience,’ said an executive in a multinational corporation. ‘When we need resources and access to best practice, the downsides of employing consultants (primarily cost and lack of specific knowledge) outweigh the benefits relative to using our internal networks.’ ‘Using consultants allows us to apply specialized skills and knowledge without having to acquire these things for ourselves, via training or experience,’ agreed another. ‘We use consultants with expertise in areas where we need help to get a project completed,’ confirmed a third. ‘The value of consultants to us is that we do not have to keep trained specialists on our books when we might only need them for a particular project. We can easily go to the market and hire the expertise.’
Not surprisingly, this way of using consultants has grown in line with organizations’ need to reduce fixed costs. As one client pointed out, ‘the consulting industry allows us to square an otherwise impossible circle – undertaking major projects while also operating a leaner structure.’ ‘Although consultants are expensive,’ said another, ‘much of the work we ask them to undertake would be prohibitively expensive if we were to do it by ourselves.’
For some, this shift from fixed to variable expenditure has gone too far. ‘We went through a stage when consultants were everywhere,’ said one executive. ‘It was a headcount game: we couldn’t employ the people we needed on a full-time basis, but we could use consultants, so we did what we were supposed to do without hiring. Some managers have done themselves a disservice because they’ve given the impression that it’s possible to do a lot of work with a small number of people. They’re now reaping the whirlwind because their “discretionary” expenditure has now been cut back as well.’
However, the value of consultancy does not stem solely from the consulting industry’s superior economies of scale in disseminating knowledge. Just as valuable to clients is consultants’ ability to obtain otherwise inaccessible information. ‘We simply don’t have a consulting firm’s resources when it comes to skilled interviewers and researchers,’ was the experience of one typical client. ‘We can’t carry out anonymous research, and we don’t have consultants’ breadth of experience when it comes to ferreting out information.’ ‘We use consultants to validate major changes in strategic direction and potential acquisitions, because they have access to information we don’t have and because they generally have a broader perspective about what’s going on in the market place’ was another reoccurring argument.
Equally important to this style of consulting is the ability of consultants to use their external position in order to challenge an organization’s status quo. ‘We value their creativity,’ said one client, ‘and their ability to bring new and different perspectives which are not available in-house.’ ‘They bring fresh and innovative ideas to complex problems,’ said another. ‘Consultants tend to have a wider perspective and to have been exposed to more approaches to solving problems than internal employees. On successful consulting projects, much of the value consultants bring lies in their objectivity – by analyzing a problem and proposing a solution in a way that could not have been done in-house.’ Not just objectivity, but independence is often critical here: ‘we really value having an independent discussion partner, where there is no potential conflict of interest’ said one executive.
Consultants’ better access to information and their neutrality also mean that they have a valuable role to play in marshalling the support of stakeholders both within and outside the client organization. As one client put it, ‘we use consultants to convince executives who aren’t prepared to accept an internal point of view.’ ‘Decisions get taken more quickly if we bring in consultants to support what we’re saying,’ agreed another. ‘A consultant can validate or legitimize a current or future process.’
(2) Large-scale change projects
At the opposite end of the spectrum, consultants also add value by providing the resources, know-how and momentum required to manage and sustain complex projects, often centred on the implementation of new computer systems. ‘The time saved and process management skills are vital,’ was how one client summed up the contribution of consultants here. ‘We get extra pairs of hands, and new information on how other, similar companies are performing.’ ‘Although consultants are expensive, using them for project-related work proves time- as well as cost-efficient,’ commented another.
Independence and innovation are much less important here than up-to-date knowledge, particularly of suppliers’ products, and the ability to ensure the seamless integration of the different parts of a project. Clients looking for consultants to work on IT projects actively want them to have knowledge as good as that of the developers themselves and fully accept that this requires a close working relationship.
Alongside specialist consultants, large-scale projects often need flexible resources – people who are prepared to roll up their sleeves and do whatever it takes to make a particular milestone, irrespective of the original specifications of their role. This facility is hugely valuable to clients who always find it hard to free up sufficient people internally to cope with the peaks of work that occur on big projects, and who often find that even those people who are free are unwilling to work in unfamiliar areas.
However, respect is often grudging: most executives would prefer to use in-house resources. ‘We go to great lengths to avoid using consultants’, said one. ‘The only use we have for them is where there are people who have specialist technical knowledge needed to deal with a specific and tightly-defined problem. We believe we can get better results from our own people if we have issues of the type most “management consultants” are employed to address.’ Many see consulting as an evil made necessary by years of pressure on headcount which have deprived them of the skills and resources they need. ‘It’s been a numbers gain,’ commented one manager. ‘Consultants have allowed budget-holders to achieve their objectives while keeping fixed costs down.’
Why is value so hard to achieve in practice?
The dissatisfaction expressed by clients essentially stems from confusion between these two consulting models. Clients, looking for specialized, independent input are disappointed when:
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