How to successfully implement Demand Management ?

There are several methodologies that can generate value for companies and Demand management is one of them. But what is Demand management exactly?

On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte explains how to implement Demand Management for the Consulting category.

Key Takeaways

Demand Management is a great tool to make sure you invest in the projects that best support your strategy. While launching a demand management initiative, you should consider start thinking about your make or buy strategy for the consulting category.

Transcript

Hello and welcome to episode 15 of our podcast smart consulting sourcing the podcast about consulting procurement.

My name is Hélène 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’ll explore how to implement demand management for the consulting category.

Last week I had a guest: my co-author Laurent Thomas and I discussed where to focus in the consulting sourcing process. And we saw that your focus should be different based on the type of project.

But beyond the sourcing of one single project itself, there are several methodologies that can generate value for companies and demand management is one of them.

So what is demand management exactly?

These days executives get more and more pressure on operational budgets. And this pressure is not going away.

And even though consulting is a strategic lever to accelerate the execution of your strategy, apart from a structuring project, it will be allocated to OPEX.

And so, executives need tools to make sure that they focus on the right expense and demand management allows the teams to make difference between the must have and the nice to have.

In other words, [it helps] to keep your money for what’s really important.

So why is it interesting for consulting services?

Ballooning costs, poor value for money, you know there are so many reasons why companies aren’t satisfied with consulting.

Maybe it comes from a problem of alignment between your strategy and your spend. And that means you’re not spending your money on the right projects.

When you implement demand management, you keep control of what projects are launched and how much money or value they generate.

It’s a great tool if you’re in the middle of a crisis and you need to cut consulting costs for instance, or if you want to refocus your consulting space on highly strategic projects.

Where do you start to implement demand management?

Well, you have to formalize and share the process. The first step is to define what you’re going to do. You need clear and fair methodologies and criteria to prioritize your projects.

That will allow proper consolidation and treatment. And your next step is to align the key stakeholders and communicate widely to your teams.

If you can, you should run some dry runs on historical data or with your largest units and fine tune the methodologies.

Make sure your project assessment and your resource requirements are ready to go and then set a deadline for Demand Management to start.

But you know one thing that is extremely important and that’s the basis for demand management, it’s to choose your battles.

You have to prioritize.

Top projects should be launched immediately, while other attractive but more nice-to-have projects should be placed in the pool and prioritized based on budget feasibility.

And finally small projects, you know the ones that are under a certain threshold, of course, to be defined, should be left to the discretion of management, resource permitting.

Any demand above this threshold has to be addressed to either the strategic or the indirect procurement team.

You know one important thing in demand management is to have very strict governance. It’s mandatory on all projects and it should have the possibility to kill projects that do not yield satisfactory results.

There’s another thing that is extremely important, and sometimes overlooked, it’s, you know, the postmortem analysis. When it’s done at the end of each project, you should lead a postmodern analysis to assess the performance of the consulting firm.

It will allow you to get the real ROI of your project and make sure that your process is rightly designed and implemented.

That will also allow you to check if the priority criteria were justified enabling a virtuous circle. And if that was not right, then you should make their adjustments. And can be either to your decision-making process for the strategy team, or the panel of consulting firms for the procurement team.

Position your projects smartly over the year

And there’s another level that you can use, it is how to position your project over the year. And it’s a key element that is often underestimated.

You can sequence your project and you can position it in the year in a way that makes it more beneficial for you. For instance, you need to find a good balance between transformational projects and projects that generate short-term results that will help you do more with less.

The short-term result project will generate cash that you can reinvest in a transformation project. You could have, for instance, a cost-saving project that allows you to unlock enough resources to kick start a digital transformation.

It can be tricky to finance major consulting projects over the course of the fiscal year. So if the costs are in year one and the results are in year two, your bottom line is obviously negatively impacted.

But there’s a simple way to circumvent this if you start your project after the summer break.

So let’s imagine the first scenario: you have a 60-day payment term and your accrued costs are in year one. And you will spread the cost over the two years, but the benefits hit on the year two. Your year 1 will cost more than it will bring you.

But let’s see another scenario. Now you start later in the year, you have no actual costs. You start paying in January, meaning that the benefits and the cost hit at the same time and the cost versus benefits will now end up positive.

In conclusion

So to summarize all of this: it’s always smarter to use demand management to prioritize your projects and make sure you spend your money on highly strategic ones, to focus on the value you’re getting through your consulting project, and not worry too much about small percentage bargains.

There are two little tips that before we end this session, I would like to kind of bring into the conversation.

When you start implementing demand management, this is a great moment to start also discussing the make or buy strategy. Usually, the analysis and the decision come at the same time and you can have a handsome framework to do both.

And last but not least, don’t forget to communicate with the suppliers. If you are going to change your decision-making process and be extremely thorough in your analysis of the performance of your projects, your suppliers need to be informed.

That’s the best way to make sure that all along the project, especially with your long-time partners, they will put their best efforts toward your success.

Well, that’s it for today. Next time we’ll look at who does what in the sourcing process for consulting services.

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 helene.laffitte@consultingquest.com.

Bye and see you next week. Au revoir.

Implement demand management. Implement demand management. Implement demand management. Implement demand management. Implement demand management. Implement demand management. Implement demand management. Implement demand management. Implement demand management. Implement demand management. Implement demand management.

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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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