The UK consulting market is mature. Buyers of consulting services generally have experience of the procurement process, either personally or within their organisation. So how have buying patterns changed and what are the emerging trends going forward?
“The key reason people buy consulting services is to provide a skill or insight that they cannot provide themselves,” says Nigel Raywood, marketing director for Cap Gemini’s insurance division. This is the eternal justification for consulting that will never change, but around it there are shifting elements. Raywood sees consultancy services falling along a continuum from strategic work at one end to delivery of services, or outsourcing, at the other, all with differing risk profiles. “People are more sophisticated in understanding the continuum,” he says. They realise that there are “different strokes for different folks”. They are better at blending the skills of different firms, so that bringing in consultants doesn’t mean buying everything from one organisation.
When selecting consultants, tendering is still widespread but its character is changing slightly. In the past consultants sometimes felt that companies were hiding behind the formal processes, but now the style is becoming more interactive. “There is more openness to engaging with the potential suppliers and using that to help drive the process,” says Graham Oates, UK executive partner for consulting solutions at KPMG. “Now people on the whole accept that the more information you can give to a potential consultant, the better the response they are likely to give.”
This change in style has also been experienced by Deloitte Consulting.
“On very major projects, clients are giving us more opportunity to spend time with them, exploring the issues, discussing them, developing the business case,” says senior partner John Everett. “You may be interviewing managers around the world, getting more under the skin of their needs.
To some extent it may mean they get a better product.” It is also likely to mean the involvement of fewer players in the bidding process. “Clients are getting so sophisticated that they can identify the relatively few players they are interested in,” says Everett. He believes that track record, ability to deliver and consulting style are key selection criteria at that stage. Just three consultancies may then be involved in detailed bidding, before one is selected for fee negotiations.
Alongside the traditional tendering process there also appears to be increasing willingness among some companies to go with just one firm from the start. “There are still the normal, formal procurement processes going on, but there are a number of cases where people are just prepared to go for it,” says Sue Altschuler, director of consulting at Sema Group.
“They know what they want. They are tired of the investment that is involved in some of these long-winded procurement processes.” Raywood also sees this happening and relates it back to the consulting continuum.
Clients look at the job in hand and its associated risk. They look at the consultants and assess their experience and their relationship. “If their experience is good, why go through a very time consuming process?” he asks. If there is a good chance the client will pick one particular firm in the end anyway, why not just go with it immediately?
Smythe Dorward Lambert is a 10-year old communications consultancy with specialist skills in handling mergers and acquisitions and business change.
The nature of its work, requiring speedy appointments, means that Smythe Dorward Lambert doesn’t do as much competitive tendering as Big Five firms.
“The nature of the work means that people are more interested in the results than in going through a formal process,” says vice chairman Colette Dorward. “They are more willing to go with you than to put you through bureaucratic hoops. Everybody is fed up with the amount of wasted hours that go into over-formal processes.”
But if clients are increasingly keen to choose their consultants without wasting too much of their time, they may also expect more from their chosen firm. “The more senior the level you deal with, the less they feel they have to go through formal processes,” says Bruce Tindale, head of the business transformation group at PA Consulting. “But they are being more demanding as to what you give them in return for this favoured position.
If it is a significant project which involves exposing the business to your work, the personal risk is higher. So they look for value in terms of bottom line impact. They also look for implementation, not just to have a report dumped on their desk. You have to have a clear view of the journey and how you are going to manage it. You need an idea of the specialisms needed. Throwing generalists into an assignment probably isn’t sufficient.”
Dorward also senses a more demanding attitude from clients. “I think people are tougher, which is good,” she says. “And they are looking for the quality of the thinking, and the ideas, not just the product. They look at capability. They look for track record, always, they look for experience, always. They look to see that you will fit with the organisation.” Clients also want to see skills being transferred. “People are looking for a learning experience more than they were previously,” says Dorward.
Team 121, a SAP specialist, has also noted clients becoming more demanding.
“They want people who have full project life cycle experience and experience in their sector,” says Colin Galbraith, director of projects and technology.
“Customers also seem to be better versed in the products and they have got feedback from people who have done similar things before. They know more about the processes they are about to embark on. They are also starting to expect much more from the consultant. For example, a few years ago, when demand far outstripped supply, they weren’t even too bothered about looking at consultants’ CVs before they arrived on site. Now they are.”
At KPMG, Oates believes there has been a change in the type of service people seek from consultants. “A few years ago consultants were seen very much as advisory people,” he says. “Clients were looking at Big Five people to be objective and independent. Now they want very much to get to the solution end.” Rather than bringing in consultants to research the market, sector and products and only then make a recommendation, they want more immediate advice. “They want integrity and professionalism but that’s not the same as independence and objectivity,” Oates says.
“People want solutions. They are looking for one person to take responsibility for the solution.”
Many clients are also seeking a more collaborative relationship with their consultants. “It’s now more about using consultants as facilitators, as catalysts to make things happen,” says Altschuler. “Often now people are looking for consultants to come in and help them use their own expert knowledge. It’s not so much about consultants coming in and telling them about their business.” The collaborative approach is also having an impact on fee agreements. “Doing work on a fee rate basis is not necessarily the only way to go,” says Altschuler. “There are lots of other commercial approaches you can take if you trust each other. It’s a question of how the project is funded and how we share the benefits. It’s not necessarily something you can jump into straight away but we are doing that with some of our bigger accounts.” She gives as an example an organisation which is totally back-end focused with no customer service aspect, but that wanted to set up a front-end element servicing customers directly. It could set up the operation by itself, call in consultants to do it, or achieve the end result in partnership. “The two partners could invest in it together and get the benefit together,” says Altschuler. “Each of the parties brings to the venture what it can do best.” These agreements have to be clearly drawn. “It can be quite complicated but we have done a few,” says Altschuler. “You can do it in a way that isn’t too complex in terms of measurement and clients are more open to these creative ways of doing things.”
Raywood also sees more interest from clients in such shared risk and reward deals. Clients are starting to ask whether there is some part of the fees that consultants are willing to put into a project in return for some of the business benefit. Again there is a partnership feel.
“It’s about commercials – sharing risk and sharing reward,” says Raywood.” I see more and more clients reaching for that. They see a lot of projects as pretty mission critical. If they are going to use a consultant to help them they are going to make sure the consultant buys into the project in the first place.” However, some clients aren’t quite ready to embrace these new kinds of deal. “Some clients don’t fully understand some of the risk-reward of some of the value pricing situations from a supply side,” says Oates. For example, sometimes they question why the consultant should receive higher fees under value pricing than under a time and materials approach. They may fail to see that the risk of earning less has to be mitigated by the potential to earn more. “A lot of people talk about it, but some people, when it comes to the crunch, aren’t so keen to see it through,” Oates says.
One quality sought by virtually all clients is specialist expertise.
“There has been increasing demand for specialisation,” says Oates. “When you put that on a pan-European or global scale, it’s extremely demanding because people want local specialisation too. They want best practice globally, and local capability. How you get that is something that taxes all organisations. And you need to be able to pull in not just functional specialisation, but industry specialisation too.” This is particularly true at the time that the organisation is choosing its consultancy firm.
“People are particularly sensitive about individuals and capabilities up front rather than six months into the project, when they get more comfortable.”
High profile expertise draws clients in. “We all of us, as consultants, work hard to gain a position in the marketplace,” says Raywood. For example, Cap Gemini established itself as experts in the euro in the financial sector. “We became a market leader,” says Raywood. “Now clients come to us for euro business because we have this reputation for expertise and skills. There are always organisations known for an area.” Oates also stresses the value of a high profile. “If you have the expertise in a particular area then making sure people know about it is important,” says Oates. “There is nothing so compelling in the sales message as saying, don’t just listen to us, go and talk to these three people about what we have done.”
That said, one long established and still critical element in the buying decision is that indefinable people factor. “Buyers are going for the people they feel can make it happen for them. It’s more personal,” says Altschuler. When Sema Group wins work the firm tries to find out why it was chosen. “Nearly always the clients say they thought they could work with us, that we wouldn’t trample on them, that we were going to try to make them successful rather than ourselves,” Altschuler says.
“We have listened to that and tried to make that our style of working.” Sema Group also takes trouble to try to match the personalities if its consultants with those of its clients. “We have one client which is very young, active and fast moving,” says Altschuler. “So when a new assignment comes up there we always put forward people of that type of personality and profile. Sometimes, perhaps in the public sector, we know they would prefer a grey-haired, more deliberate and careful risk manager. So we take account of that too.” Raywood agrees with the importance of personalities in the buying decision. “I do believe that people buy from people,” he says. “If a client is looking for someone to help with strategy they are more likely to bring in someone who will act as a catalyst, who can use constructive aggression.”
In some consulting specialisms the personal chemistry element is even more important than in others. “Our line of work is about people issues,” says Dorward. “So our people have to be ‘people’ people. They can’t be like automatons. They have to be enthusiastic. In the course of a meeting they have to be able to engage people. Clients are really looking for energy. They want people who will get things done, who are buzzing, who have the energy to create and do. I think people are uninterested in sales approaches and products.” Getting the people element right can bring long term rewards. Strong relationships create valuable contacts which influence buying decisions. “People move around the major companies,” says Altschuler. “If someone gets headhunted somewhere you may get called in there.” Consultants moving into industry also buy in the services of old colleagues. “If it’s been a happy parting, then that person is going to know how to get the best from that organisation,” Altschuler says.
Getting clients to buy your consultancy’s particular services is a complex challenge. As Dorward notes, it is a buyer’s market. “Clients can choose who they want to work with,” she says. Sometimes personal risk factors will draw people to obvious firms. “A big name matters – you won’t get fired for hiring McKinsey,” she says. But on jobs that aren’t in the McKinsey mega-bucks league, she believes people are primarily concerned with finding consultants who will deliver the results. And ultimately much of the buying decision boils down to one key factor: trust in the consultant. “Trust plays a huge part in it,” says Dorward. “People cannot afford to take risks so they need to feel that they have trust and that you have the quality to deliver.”
Sarah Perrin is a freelance journalist
A CLIENT VIEW POINT
British Airways World Cargo called in Smythe Dorward Lambert three years ago to help it build a communications strategy and manage communication events to support its change programme. The firm was appointed after a tendering process.
“While we viewed a lot of consultancies, and some very big ones, the interesting thing with SDL was that, because internal communication was its specialism, it seemed to have a lot of strength in depth despite being relatively small,” says Angela Paterson, communication manager at British Airways World Cargo.
When choosing a firm Paterson also looks for a consultancy that is “prepared to challenge our views and our beliefs, a consultancy that very quickly recognises what are our key business issues are among a whole host of issues and directs our attention to deal with those”. She says: “You can get a fairly good idea of who is really going to force you to confront things and those ones who will to an extent go along with you because they want to get the next piece of work from you”.