Firm Future – what capabilities will consulting firms need next?

Our Partners, Kimble Applications, recently commissioned a report from Source for Consulting on the ‘Future of the Consulting Firm’,

There are six major trends, say Source for Consulting:

‘Industry, not geography’

This trend reflects the internationalisation of clients who naturally want their advisors to maintain a complementary organisation. It also reflects a desire for specialist skills, and accepts that this might mean consultancies taking on specialist associates to provide expertise. Also implicit in an international approach is the requirement to have international rate cards.

We all know the truism that Big Firms regularly re-orientate themselves from market to solution and back again. But in today’s world, even small firms are delivering internationally. Almost 15% of our own Professional Service Organisation (PSO) clients are based overseas and all of our clients are competing with overseas competitors to serve multinational clients’ needs. They too must be able to flex their resource base to match their clients’ specialist needs and their presence across wide geographies. The ability to deploy mixed teams of employees and specialist associates whilst maintaining control of margin, expenses and task assignments will become a key competence of successful PSOs.

‘Outputs, not inputs’

For many years the industry has been predicting the shift from Time & Materials to Fixed Price and risk reward contracts. Source maintain this desire is still true – for both clients and consultants. Our consulting clients have devised many clever contractual arrangements to keep all parties focused on the required outcomes. However in practice it is difficult to manage and measure the resulting complex contracts. Successful consultancies of the future will be able to deploy a variety of contractual elements within an engagement and manage the resources, costs, milestones and risks that ensure a predictable and profitable outcome with a fair sharing of risk.

‘Diamonds and pyramids’

Source refer to the multitude of organisation shapes of consulting firms, noting that the classic pyramid with Partners at the top is not the only expectation from clients. For example many clients want to hire individual specialists, without the overhead of Partner supervision and full engagement management.

Felber Consulting thinks that firms of the future will gain competitive advantage from being able to deploy consultants in a myriad of options: from teams to individuals; full time and part time, continuous and ad-hoc. And all at the same time! Only firms with flexible resource management will be able to adapt.

‘Work-life, not work-work’

Source suggest that managers can no longer rely on consultants putting in limitless hours and weekends to heroically complete impossible deadlines. They suggest that whilst the current unemployment difficulties may be a brake on more extreme change, the current generation are less willing to sacrifice their work-life balance in the interests of the corporation. However in this area, Source suggest that clients, and indeed some consultants, may still have expectations about long days and weekend working by consultants.

So it seems that consulting leaders will have to improve at managing staff expectations and engagement with its workforce, but also at managing the minutiae of long working hours to ensure their workforce see the management of peaks and troughs as rare and equitable.

Some of this, the report suggests can be accomplished by establishing technology (such as video conferencing, collaboration software and carefully managed events) to bring distributed workforces together. At Felber Consulting, we see a huge variety of approaches across our consulting industry clients but we can see competitive advantages to those which can establish purposeful, economic and effective working models that clients can accept.

‘Flexible, not fixed’

Source found a huge majority of client respondents were looking for greater flexibility from their consulting suppliers: ‘the ability to pick the bits they want and leave the bits they don’t’. Source describe this in terms of an Associate Model that firms can flex whilst instilling a common culture, approach and ways of working that is the traditional advantage of employing consultants.

Many of our clients run a mixed model, continuously flexing between employees and associates and we think the ability to successfully incorporate associates will be of increasing competitive advantage.

‘The end of the Firm?’

Source argue that clients want to buy commoditised consulting services but that, quoting Duncan Hare of XMCS, this will only be possible if three conditions are satisfied:

  • That services are ‘codified’: can be described and catalogued from the client’s point of view
  • The client understand how they can use the service in their organisations
  • A market exists to supply such services

If this vision becomes reality, then successful firms will need to be able to organise, componentise and market their services accordingly.

Felber Consulting believes that PSOs need to be able to describe their services in the way that a flexible manufacturing company describes products through bills of material and processing plant, identifying their services through inputs, outputs, resources and the contractual elements that define costs, price and billing arrangements. Firms will achieve this through changes of culture and with the support of technology that can manage their operations through a detailed range of services, resources and commercial deals.

Source’s predominant findings will affect all PSOs, each of which will have to plan their own response and exploitation of the changes. These transformations will require the same attention to people, process and technology that PSOs already promote to their own clients.

How will your organisation respond?