My recent comments challenging a scathing critique of the consulting industry have in turn generated a flood of feedback from our loyal readers. Many of you felt the original article was outrageously one-sided, whilst a few of you actually admitted that consultants’ clients can sometimes be taken for a ride.
The whole debate reminded me of a pertinent statement John Niland made at a recent Top-Consultant seminar. He said consultants should, at all costs, avoid situations where the client ends up receiving a bill based on a calculation involving day rates. His argument was essentially that the very concept of day rates puts the interests of clients and the short-term interests of the consultancy fundamentally in conflict. (As an aside, John will be speaking in London on 17th June – details here for those of you interested)
So if John’s theory is right, are purchasing departments shooting their organisations in the foot by forcing consultancies down a day-rates approach to pricing? Many consultancies would say they are…
Fixed Fee vs Day Rate billing
Given a fixed fee project a consultancy can deliver on the assignment as it sees fit and earn its profit by working smart and by creating a winning solution that turns the client into a lifetime customer. The consultancy is incentivised to achieve results quickly and cost-effectively, because it’s their margins that are eroded if they don’t.
What happens all too often in practice is that consultancies are engaged to provide a consulting team on a day-rate basis where there's additional profit to be made each day that the team remains on site. This creates an incentive for scope creep, where the boundaries of the agreed project are pushed further and further and cost overruns are passed onto the client.
In this kind of scenario, the essential challenge of completing an assignment on time and within budget is sidelined. The client 's interests are no longer aligned with those of the consultancy, pure and simple.
However where does this problem originate and are consultancies therefore really to blame? In my own experience, it is clients’ insistence on breaking proposals down into the component team members, their day rates and volume discounts that poisons the consultant-client relationship. Clients are scared of committing to a fixed budget - and therefore paying “excessively” for actual services delivered. The temptation to challenge the fee by breaking it down into its parts is just too much.
Oh for a world where consultants were paid an agreed amount for an agreed project deliverable and then left to run the project like the mini-business-venture that it is. Unfortunately the proliferation of purchasing departments and PSLs is driving the consulting industry further and further down the day-rates path – and away from this ideal. So the consultant-client relationship is increasingly poisoned and consultants take the rap, when actually we're on the receiving end of pushy purchasing departments. I kind of feel this is like the pot calling the kettle black!! Anyone out there agree with this sentiment or care to add additional thoughts?
Tony
Kamis, 08 Agustus 2013
Consulting vs Outsourcing
Have just been ploughing my way through the latest report from the Management Consultancies Association and it's a pretty remarkable read. Take a look at this chart:
No matter how much has been written about outsourcing in the last years, it's hard to take on board just how much this business line has transformed the face of consulting and the companies that make up the consulting world. These latest figures show that outsourcing has now outgrown all your traditional consulting business lines taken in combination! (as a former strategy consultant, I intentionally sideline IT consulting from this comparison, call it a force of habit)
The MCA have been kind enough to allow us to reproduce some of the key charts and data and you'll find the full write-up of the report findings if you click here. I think you'll find some of the patterns and trends quite eye-opening! Tony
No matter how much has been written about outsourcing in the last years, it's hard to take on board just how much this business line has transformed the face of consulting and the companies that make up the consulting world. These latest figures show that outsourcing has now outgrown all your traditional consulting business lines taken in combination! (as a former strategy consultant, I intentionally sideline IT consulting from this comparison, call it a force of habit)
The MCA have been kind enough to allow us to reproduce some of the key charts and data and you'll find the full write-up of the report findings if you click here. I think you'll find some of the patterns and trends quite eye-opening! Tony
The Guardian takes a dislike to consultants
A number of articles in the Guardian these last weeks leave me pretty convinced. The Guardian has taken a dislike to consultants.
First there were a series of articles in which deep concern was expressed at the increasing role of consultants in the thinking of Number 10 and - horror of horrors - the appointment of some ex-McKinsey advisers into key government roles. The appointees are likely to drive through radical changes in the management and measurement of government departments, to push for efficiency gains and the adoption of online approaches to streamline departments.
Most organisations I know would love to hire as employees a team of ex-McKinsey consultants. Bring all that expertise in house, have the ability to push through more initiatives internally without the need for calling in consultants - and be in a position of strength when negotiating with consultancies for those engagements that are still deemed necessary. Most FTSE firms are trying to hire lots of ex-consultants, yet because this is happening in the public sector it is labelled as scandalous. Ridiculous.
This was followed up in the last days by another article in which the Observer / Guardian Unlimited tore shreds out of consultants for their unethical practices and client scams. This was all based on the rantings to be found within David Craig's recent book about how consultants rip off their clients. I've already submitted a letter of complaint to the Editor, copied below. If you'd like to do the same simply email: politics.editor@guardianunlimited.co.uk
I write in response to Nick Cohen's article "Natural born billers" in which the majority of management consultants are made out to be charlatans and common thieves. I am concerned by the ease with which the author David Craig has been able to persuade mainstream media to tout his views of the consulting industry. We are, after all, talking about a chap who has a book to sell here.
I am a former management consultant myself and now work in the recruitment sector. Both sectors have a few rotten eggs - as does any sector where there's significant money to be made or lost - but the vast majority of professionals are going about their business in an honest and upright manner and delivering huge value to clients both in the public and private sectors.
If we look at the Enron scandal and how the reputations of Andersen employees were tarnished worldwide, we see how easily the media can fan the flames of isolated incidents and turn them into widely held beliefs and prejudices. In the case of Enron it was accountants worldwide that were dragged through the wringer and whose integrity was questioned; by promoting this book's premise you are taking consulting in the same direction on the basis of what can only be described as very limited testimony.As you are undoubtedly aware, repeat business in the consulting industry is absolutely key and I would put it to you that any professional that succeeds in doing business with FTSE clients year after year is clearly doing a great many things right. Most consulting firms generate the majority of their revenues from repeat clients - which must result either from the success of the engagements or be down to gross negligence on the part of most FTSE Directors. Are you seriously suggesting the majority of FTSE Directors simply have the wool pulled over their eyes and pay up year after year? I thought not.
Finding examples of bad practice is easy in any industry, but portraying these practices as industry norms is doing both your readers and the country a gross disservice. I trust you will strike a more balanced view in your future commentaries
Yours faithfully
Tony Restell
Company Director
___________________________________________www.Top-Consultant.com
Switchboard: +44 (0)207 667 6880
First there were a series of articles in which deep concern was expressed at the increasing role of consultants in the thinking of Number 10 and - horror of horrors - the appointment of some ex-McKinsey advisers into key government roles. The appointees are likely to drive through radical changes in the management and measurement of government departments, to push for efficiency gains and the adoption of online approaches to streamline departments.
Most organisations I know would love to hire as employees a team of ex-McKinsey consultants. Bring all that expertise in house, have the ability to push through more initiatives internally without the need for calling in consultants - and be in a position of strength when negotiating with consultancies for those engagements that are still deemed necessary. Most FTSE firms are trying to hire lots of ex-consultants, yet because this is happening in the public sector it is labelled as scandalous. Ridiculous.
This was followed up in the last days by another article in which the Observer / Guardian Unlimited tore shreds out of consultants for their unethical practices and client scams. This was all based on the rantings to be found within David Craig's recent book about how consultants rip off their clients. I've already submitted a letter of complaint to the Editor, copied below. If you'd like to do the same simply email: politics.editor@guardianunlimited.co.uk
I write in response to Nick Cohen's article "Natural born billers" in which the majority of management consultants are made out to be charlatans and common thieves. I am concerned by the ease with which the author David Craig has been able to persuade mainstream media to tout his views of the consulting industry. We are, after all, talking about a chap who has a book to sell here.
I am a former management consultant myself and now work in the recruitment sector. Both sectors have a few rotten eggs - as does any sector where there's significant money to be made or lost - but the vast majority of professionals are going about their business in an honest and upright manner and delivering huge value to clients both in the public and private sectors.
If we look at the Enron scandal and how the reputations of Andersen employees were tarnished worldwide, we see how easily the media can fan the flames of isolated incidents and turn them into widely held beliefs and prejudices. In the case of Enron it was accountants worldwide that were dragged through the wringer and whose integrity was questioned; by promoting this book's premise you are taking consulting in the same direction on the basis of what can only be described as very limited testimony.As you are undoubtedly aware, repeat business in the consulting industry is absolutely key and I would put it to you that any professional that succeeds in doing business with FTSE clients year after year is clearly doing a great many things right. Most consulting firms generate the majority of their revenues from repeat clients - which must result either from the success of the engagements or be down to gross negligence on the part of most FTSE Directors. Are you seriously suggesting the majority of FTSE Directors simply have the wool pulled over their eyes and pay up year after year? I thought not.
Finding examples of bad practice is easy in any industry, but portraying these practices as industry norms is doing both your readers and the country a gross disservice. I trust you will strike a more balanced view in your future commentaries
Yours faithfully
Tony Restell
Company Director
___________________________________________www.Top-Consultant.com
Switchboard: +44 (0)207 667 6880
Careers Fair preview... Management Consultancy Careers Fair coming to London
In just over 3 months I hope you'll be joining us for the largest Management Consultancy Careers Fair ever to be staged in the UK (and arguably the world!). We used to run smaller events for 200 candidates to meet with recruiters from half a dozen consulting firms. But this year the demand for new consulting hires has gone ballistic and so in partnership with the Management Consultancies Association we've organised a far more impressive event...
We're expecting some 350 company representatives and recruiters to be at Olympia, who combined will be looking to make several thousand new consulting hires this year. Already we've got many of the world's leading consultancies and niche players signed up to attend (Accenture, Capgemini, DiamondCluster, IBM, PA Consulting...). You'll be able to find out about opportunities both in the UK and across Europe.
Anyway, the reason for alerting you via my blog is because the reservation system went live today. As there are only enough places for 1% of our readers to attend, you'll want to get in quick if this sounds like the type of event you don't want to miss.
You can get full details of who'll be there and how to sign up by going to:http://www.top-consultant.com/UK/events/Article_display.asp?ID=48
Look forward to seeing you there, Tony
We're expecting some 350 company representatives and recruiters to be at Olympia, who combined will be looking to make several thousand new consulting hires this year. Already we've got many of the world's leading consultancies and niche players signed up to attend (Accenture, Capgemini, DiamondCluster, IBM, PA Consulting...). You'll be able to find out about opportunities both in the UK and across Europe.
Anyway, the reason for alerting you via my blog is because the reservation system went live today. As there are only enough places for 1% of our readers to attend, you'll want to get in quick if this sounds like the type of event you don't want to miss.
You can get full details of who'll be there and how to sign up by going to:http://www.top-consultant.com/UK/events/Article_display.asp?ID=48
Look forward to seeing you there, Tony
Tips for engaging consultants
Whilst much of the press seems intent on maligning the consulting industry this month, I was pleased to see a more measured article in today's FT counselling clients on how to get the best return from their investment in consultants. Rather than castigating investment in consultants as money down the drain, this piece gives some good insights into how and when to use consultants effectively. A good read for clients and consultants alike. See:http://news.ft.com/cms/s/f6f90514-e6a7-11d9-b6bc-00000e2511c8.html
Rgds, Tony
Rgds, Tony
Breathtaking sights await consulting candidates
BT's fast-growing consulting business have been very shrewd and decided to make use of the BT Tower in London as an enticing venue for its next experienced hires careers event taking place on 26th July.
I was also invited to the BT Tower in the last months and I have to tell you it is simply breathtaking!! From the top you're so high up you feel like you're in the clouds - then you look down and see the London Eye way below... it really is quite an experience.
So if you're free the evening of 26th July and would be interested in finding out more about consulting career opportunities at BT then take a look here and be sure to register in the next days. This is an opportunity not to be missed...
Tony
I was also invited to the BT Tower in the last months and I have to tell you it is simply breathtaking!! From the top you're so high up you feel like you're in the clouds - then you look down and see the London Eye way below... it really is quite an experience.
So if you're free the evening of 26th July and would be interested in finding out more about consulting career opportunities at BT then take a look here and be sure to register in the next days. This is an opportunity not to be missed...
Tony
London bomb blasts
July 7th was a distressing day for all those of us who work, live or know people in Central London. Our thoughts go out to everyone who was caught up or affected by last Thursday's events.
Following the bomb blasts, the Institute of Management Consultancy was compelled to postpone its much-anticipated annual conference - due to take place the very next day. The event has now been rescheduled to 9th September and our thanks go to the 160 attendees and speakers for their flexibility and understanding regarding this late change of date.
Full details of the rescheduled conference can be found by clicking here
In the meantime, our thoughts are with all those affected by events in London on July 7th - and particularly those poor individuals who still do not know the whereabouts or fate of their loved ones.
Tony Restell
Director, Top-Consultant.com
Following the bomb blasts, the Institute of Management Consultancy was compelled to postpone its much-anticipated annual conference - due to take place the very next day. The event has now been rescheduled to 9th September and our thanks go to the 160 attendees and speakers for their flexibility and understanding regarding this late change of date.
Full details of the rescheduled conference can be found by clicking here
In the meantime, our thoughts are with all those affected by events in London on July 7th - and particularly those poor individuals who still do not know the whereabouts or fate of their loved ones.
Tony Restell
Director, Top-Consultant.com
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