Hello and welcome to episode 17 of our podcast, smart consulting sourcing. The podcast about consulting procurement. My name is Helene and I’ll be your host today.
Each week I’ll give you the keys to better use, manage and source consulting services. This week I will share my views on how the consulting industry is evolving.
In the last weeks I explored several steps of the consulting sourcing process and also some methodologies to manage the category.
We see that at the same time you have companies that are improving the way they source the consultants, but the industry itself is evolving. And one of the drivers is the fact that the procurement function itself is evolving.
More and more companies have adopted strategic sourcing or category management. We also see a shift from the focus on savings to a focus on value and also a shift from tactical procurement to strategic procurement, and finally the rise of spend management software.
So what does that mean exactly for the consulting industry?
First of all; more scrutiny for the category. A lot of executives and procurement are starting to look at consulting and realize that it’s an important category, that they’re spending a lot of money on it and they want to learn more.
Another element is that the category is more centralized and therefore monitored. We can also observe that buyers are more knowledgeable about consulting and the consulting industry as a whole.
They are more and more often dedicated, even if they’re not a hundred percent, they are the contact point of the company for this specific category.
The approach to that consulting category is also more strategic; we see companies that are implementing demand management. They’re starting to make or buy strategy, they are building lists of preferred providers.
So we see that they’re organizing themselves and trying to anticipate and align with their overall strategy. And finally, buyers are more curious about the industry, not only the basic constructor parts but also in general: how the industry is working, what are the movements of M&As, what are the evolutions that we can see for the market.
We have all of this already in the air and a lot of procurement executives who want to know more.
The evolution of the consulting industry is driven by the disruption of the value chain
Another reason why the industry is evolving is that the consulting value chain itself is being disrupted.
What was before one big box with strategic advisory, access to knowledge and expertise, and analytical powerhouse is now exploding in pieces. And each of these pieces is now available and it’s kind of on the table.
The rise of the internet is making it easier for companies to improve their presence. And their new business models that are emerging; and it means that smaller firms are more visible and therefore, there are more options or opportunities for sourcing for procurement groups.
You have now market research and expert knowledge available in demand. You don’t need to go to your consulting firm to ask for that, you can access directly.
A lot of companies have now put in place analytics software and in-house talent to handle all that data and data crunching that they were, back in the days, calling for consultants to help them with.
We have also thought leadership and methodologies that are available online, and you see that the Gig economy is exploding and giving access to a lot of very highly skilled freelancers.
And so, all of the high-quality services are now there. They’re not only available in a consulting firm but directly on the market for executives, small companies, large companies, whoever wants to hire their services.
And finally of course the pandemic is also impacting consulting.
So as a general trend we can see that companies, in general, are looking for more cost-efficient providers. So they will change the way they approach consulting. It’s kind of accelerating what was already a little bit happening before, but it’s also shifting the demand.
First, you manage the cost function and it can be cost savings, demand management, everything that’s around making sure that you keep your OPEX under control.
After that, we’re moving to another function which is prepare the future, strategy, innovation. Some companies will have to reinvent themselves and change their business model and they will work with consultants to prepare that future.
And finally, the last part is the difficulty of managing remote teams: leadership, team effectiveness, and employee engagement. All those subjects become essential now for those companies and they don’t necessarily have the skills internally to handle that.
And of course, there’s a change in the delivery model. I mean the traditional delivery model has been shattered by the epidemic and now we look at e-consulting and remote working. And all of this is changing the way executives see consultants and also the opportunities that are in front of them.
So, consulting is still a powerful accelerator of value creation and the size and the diversity of the market, make it a strategic standalone category.
The unbundling of the value chains offers significant opportunities for clients to create more value through consulting, but in order to create that value, the clients need to change their practices.
And I truly think that the pressure on OPEX following COVID will be an accelerator for change. We will see tremendous changes in the consulting industry in the years to come.
Well that’s it for today. Next week I’ll discuss with you about when is the right time to work with consultants.
And in the meantime, if you have any questions or want to learn more about what we do at consulting quest just send me an email at firstname.lastname@example.org
Bye and see you next week! Au revoir!
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