Benefits of using our 6 Levers to optimize the ROI of your consulting Spend

Everybody knows that when done correctly, consulting can have a major impact on a business. By now you know that our 6-Levers approach is intended to help consulting buyers make educated choices while buying consulting services. Over the previous episodes, we explained the six levers in detail and how they can help to optimize the ROI of your consulting spend. And a major part of that ROI is related to the value and impact of consulting. You can say, these are the real benefits of using these six levers.

In this episode, Helene discusses the types of impacts you can expect from a successful consulting project. Simply put, by optimizing the ROI on consulting spend, a company can see improvement at all levels of work and this is one of the greatest impacts any company can achieve. Tune in to know about all these impacts in detail.

Key Takeaways

Companies can optimize their return on investment (ROI) of consulting spend to improve financial performance and achieve strategic goals.

To maximize ROI, companies should focus resources on high-value projects and initiatives, negotiate better rates with consultants or find more cost-effective suppliers, have a structured RFP process involving all stakeholders, create a list of preferred suppliers that cover 80%+ needs for building relationships with them as well as managing project changes in scope/duration/staffing.

Maximizing the ROI also requires collaboration between procurement & business lines which could be achieved by identifying biggest users within an organization & asking around colleagues for open professionals willing to share knowledge.

This optimization process can lead to an increase in impact by 15-20%, and 30%-40% savings while potentially increasing the average ROI up to 50%.

Transcript

Consulting Sourcing Maturity is key for successful transformation. To develop this maturity, organizations should invest in defining processes and workflows, building tools such as taxonomies or grids for make-or-buy analysis or train their team on best practices.

Digital platforms can also provide an overview of expenditure & be flexible enough to accompany the organization up the ladder towards a more mature state – yet it’s not just about technology; mindset & literal symbolic acts play an important role too!

By implementing a few key principles we have all that’s required to realize true success here. Now we can maximize our impact while monitoring costs and creating a collaborative work atmosphere. This is how savvy professionals optimize their return on investment – it’s a triple victory!

So, if you want to learn more about improving your consulting sourcing maturity, please watch our previous episode, and for those watching on YouTube, click on the info card in the screen.

Follow us on YouTube, iTunes, Spotify, Samsung Podcast, or any other major streaming platform for more information like this! If at any point you like this video, don’t forget to give it a thumbs-up!

So, let’s get started on today’s topic: What are the benefits of using all our 6-Levers to optimize the ROI of your Consulting Spend?

Optimizing the return on investment (ROI) of consulting spend can significantly impact a company’s bottom line. By carefully evaluating the costs and the impact of consulting services, a company can ensure that it is getting the most value for its money.

This can include identifying areas where costs can be reduced, such as negotiating better rates with consultants or finding more cost-effective suppliers. But also, by focusing on high-value consulting projects and initiatives, a company can maximize the impact of its consulting spend and drive greater returns.

Thus, by optimizing the ROI of their consulting spend, companies can not only improve their financial performance but can also achieve their strategic goals. And this is what you gain from 6-Levers approach, in a nutshell.

Optimizing Impact and Value From Consulting Starts With Choosing the Right Project

But if you want to get the maximum ROI from your consulting project, you will have to involve all six levers.

And the first thing to consider is what projects you invest in. And that takes us back to the first Lever, which is about investing in the right projects!

You need to focus your resources and your money on the projects that matter the most. And to do that, you need to identify which strategic projects will give you the maximum impact.  It can be projected that advance your strategy, enablers to allow you to launch strategic projects or projects that have a high ROI that give you more resources to launch more strategic projects.

Start by asking yourself: What are the main goals we want to achieve in the next 3 years? Now how would these goals be translated into projects? And which ones will be outsourced to external consultants? These are the projects that you need to focus on.

But you may even wonder and ask me, “Helene, we are just avoiding costs by not investing in certain projects.” You’re right!

Investing in the right projects will only not only save the cost actually. Because since you are working on the projects that matter most, the impact on your strategy and your organization is higher. So you are also increasing the impact.

And when you increase the impact and you reduce the costs… you are improving the ROI of your projects. It is that simple.

Now one other benefit of using these 6 levers is getting more organized and structured in the way you use, buy, and manage consulting.

What do I mean by being more organized and more structured?

First of all, you need to have a structured RFP process when you make sure the main stakeholders are involved early in the process and the final RFP is a compromise. That tells you that everybody is aligned internally.

And the consultants would know that you have a clear vision and everyone is on board in the organization.

Then you have a list of Preferred Suppliers that you can choose from as a first intention. Of course, you will have projects where you need to chase for another profile, but that should not represent more than 20% of your projects. Your internal stakeholders should find their dream team in the list you have in hand.

If you are able to have a dynamic PSL, that covers more than 80% of your needs, it means that you can build relationships with your suppliers. And that means they will be familiar with your organization.

This is the intimacy that we have discussed previously. The consultant knows you, he knows what works for you and what doesn’t. He knows your culture, your ways of working, and the important people in your organization.  He probably also knows where you want to go and what you have done in the past. But when a new consultant doesn’t have that “insider” knowledge, so he can only assume.

The less your consultants know, the riskier for them. And this risk will definitely reflect in the cost of their proposal. Unless… you have defined your needs very well in your RFP and make sure the expectations were clear for your consulting partner and your internal stakeholders. And then the consulting firm will be ready to adjust the price.

So indeed, being organized and structured can get you better prices.

And going one step further in the process, managing your projects and in particular, the changes in scope, duration, or staffing, will help you keep your costs under control.

So, controlling your cost and getting the impact and value delivered is not only about having the right consultants but also the right decision-making process and procedures that go around that decision.

What you are looking for here is neither the lowest price nor the most impact. We have an expression in French for that. We talk about the “moins disant” which literally means the “one who says less”  – the lowest bidder as opposed to the “mieux disant”, the “one who says better” = which is the most cost-effective bidder.

So what you should be looking for the most cost-effective solution, the one with the best ROI. When I say optimize your consulting spend,

I don’t just think about the cost. I think value and impact from consulting!

You must be extremely practical in thinking about each step of the process you need to optimize.

Impact 2: Achieve Collaboration As a Part of the Optimization Process

So to make sure things run as smoothly and efficiently as possible, you want all parties to work well together. So how can you make sure that your teams reach their maximum potential?

We stress a lot about how procurement and business lines should work closely on projects, and this is not something that happens with a snap of your fingers. This takes time and will eventually improve over time.

And I have always said in my podcast that there is no way you can maximize the ROI on your consulting spend unless you have business lines and procurement working together very closely.

The tough problem is that consulting is one of those categories where everyone in the company could become a client.

Because when it comes to direct procurement, you have your directors, your technical director, and operations director, etc., and that’s it. You have 5-10 people to work with, so it gets easy to develop relations and work closely with them.

But when it comes to indirect procurement such as consulting, the scope of who can launch a project is much broader, you know, you have strategy, marketing, admins, operations, HR, and procurement, supply chain, to name a few.

Everyone in the company might need consulting! And to be honest, you cannot develop relationships with everyone. Especially since buyers in charge of consulting are often young professionals, freshly hired, that do not have the internal network or the “weight” to talk to senior leadership.

So what can you do in this situation? You will need to build your network little by little, starting with your larger spenders. So you should run a spend analysis to identify your biggest users within the organization in terms of spend and strategic needs. You can also ask around to your colleagues in Procurement to know who is the easiest to approach, the most open to innovation or new ways of working.

When I started working, last century (ok it was September 99, but it still qualifies as last century, right?), I was in charge of Quality Management. I was charged with preparing our teams for an ISO9000 certification. I had only worked one year before, and I knew nothing about Gas distribution or Energy. I am a civil engineer by training.

But during my previous job in Construction, there is that one guy who told me: “Look around, and find the guy who is willing to teach you.” And that’s exactly what I did. I just genuinely asked my teams to teach me about my job, and guess what? They did, and they were quite happy about it. I was more than 20 years younger than them.

For the young ones listening, let me be your Yoda for a couple of minutes. “Questions you will ask. No dumb questions there are.” Most professionals are more than happy to share their knowledge. So go for it. Dare to ask for a bit of their time and listen to them and their experience. I can assure you that in 99% of the cases you will end up savvier and you’ll build relationships that last. For my personal case, I am still in contact with my first boss, 20 years after.

This is how you start building your network, and then you go further and further with every user in the organization.

And it also ensures stakeholder satisfaction because you’re able to deliver, to bring the right consultants to the table, to help them, to guide them to get better impact, then obviously they will be willing to work with you.

So this is how collaboration gets you one of the major benefits in creating value and impact.

Impact 3: Working Better on all the Levels

By optimizing the ROI of your consulting spend, a company can see improvement in impact and costs and this is one of the greatest results any company can achieve.

For instance, what we have seen working with our clients is an increase of, I would say at least on average 15 to 20 percent on the impact, which is pretty significant.

We have an opportunity to make a huge difference in how we manage our projects; by taking the time and resources to focus on the projects that can provide us with the most potential benefit. Additionally, consulting when it makes sense is key for maximizing efficiency – combining these 6 strategies could really help increase ROI significantly!

I’m not saying that we can get 15% more impact and then decrease the cost by 30% on each and every project. But by just reducing the number of projects that should not be there and combining that with demand management and design to cost to make sure that you buy what you need and only what you need, you can make a difference to your portfolio of projects overall.

Additionally, by applying structured sourcing and decision-making process, professionalizing your teams, managing your suppliers, building a list of preferred suppliers, and managing your projects, you will be able to generate, on average 30 to 40% savings.

Now if you combine the 15% impact on the numerator of our ROI and the 30% cost deduction on the denominator, this can uplift your average (emphasis on average) ROI by 25% to 50%. And this can be huge because the ROI for Consulting is sometimes four to ten times the amount you’re spending in Consulting!

So if you have invested 100 million in Consulting, you should yield 300 to 400 million in return. Now, if you get a 50% increase in your ROI. You could end up with 600 million after that hike. So that can be a huge difference on company’s bottom line.

And so, to conclude today’s topic,

Companies that want to get the most out of their consulting should take into account all angles, from getting on board with the right project in the first place up through controlling costs and managing it effectively. All the levers we mentioned in the previous episodes should be reviewed. Of course, you should start with your weaknesses, but let’s not ignore the improvements we can build on our strengths too.

But in a nutshell, it’s essential for procurement teams to collaborate closely with business lines so decisions can be optimally being taken, as this will lead not only to cost savings but also increased value – resulting ultimately in a 50% increase of ROI!

Indeed that’s by working on both sides of the ROI ratio: impact and costs that you can make the most of your consulting! That marks the end of today’s podcast. Thank you for joining us today and let’s keep this conversation going – after all, ROI is just one piece of a much larger puzzle. But I hope that you are now better armed to improve the maturity of your consulting sourcing. And you can always come and ask us at Consulting Quest.

Keep an eye up for me next week when I return with another fascinating topic.

Till then, stay safe and happy sourcing and if you have any questions regarding today’s topic, remember you can always contact me directly on LinkedIn or by email because I’m always game for a chat.

Bye and see you next week, au revoir.

See you at the next episode. Till then, please stay safe and stay connected with us through our community on LinkedIn and follow our Twitter handle @ConsQuest.

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Helene Laffitte

Hélène Laffitte is the CEO of Consulting Quest, a Global Performance-Driven Consulting Platform. With a blend of experience in Procurement and Consulting, Hélène is passionate about helping Companies create more value through Consulting. To find out more, visit the blog or contact her directly.

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