Transformation Journey Must Start With a Diagnosis of Your Consulting Procurement Practices – Why?

You have to improve your Consulting Procurement capability to maximize the ROI of your spend. One way of doing that is using an easy-to-follow framework that we call, at Consulting Quest, “The Consulting Performance Scanner.”

This scanner will let you explore the three main dimensions of your procurement and dig up enough data to help you understand the patterns of your Consulting Spend, capture quick gains, and even gain support from your team members to jumpstart a self-funded journey, helping you to build the case for change.

Join Helene in this episode of our 6-Levers Series to know about the principles of “Consulting Performance Scanner” and how to make the most of it.

Key Takeaways

∙ A framework called “The Consulting Performance Scanner” can help diagnose Consulting Procurement practices

∙ The framework analyzes three main dimensions of the procurement: spending and what it’s being spent on, the decision-making process from start to finish, and expected impact and ROI from projects and suppliers

∙ Building the case for change is important for the success of the procurement process and involves collecting and analyzing data from different business units, defining dimensions and metrics, leveraging the existing organizational structure, and setting a threshold for consulting firms

∙ The goal is to turn data into information and information into insight by collecting data on consulting spend, who bought the consulting services, what type of consulting was purchased, project length, and supplier information

∙ Understanding the patterns in consulting buying decisions involves examining the decision-making process, who made the decisions, who was involved in the process, and whether competition was relevant or necessary

∙ It is essential to evaluate the ROI of consulting investments by considering factors such as project characteristics, partners involved, and supplier performance.

Transcript

In today’s episode of our 6-Levers series, we will discuss the diagnosis of your consulting procurement practices.

But before going into this topic, here’s a brief recap of the previous episode’s discussion.

In the previous episode, we discussed how to use the six levers to start with the transformation journey! Organizations must ensure they stay ahead of the transformation curve if they want to be successful. This requires an all-hands approach, where top management is aligned with a shared vision, and stakeholders from across functions collaborate.

According to John Kotter’s 8 steps for effective change, building urgency around communication makes this process even smoother; similarly, David Nadler encourages learning from past mistakes to maximize ROI for consulting spend.

Opening up channels of dialogue allows outlining who needs what information when, as well as reducing potential resistance that could arise due to cultural or technical differences – ultimately leading towards improved adoption rates & collective celebration successes!

If you missed this episode – have no fear! You can find the podcast on Spotify, iTunes, and other podcast platforms. You can also watch it on YouTube on our channel. And, for those who prefer reading to listening, head to our website, consultingquest.com, where you will find the transcripts of every juicy detail in our thought leadership section!

Now, Straight Into Today’s Topic – Diagnosing Your Consulting Procurement Practices

You have to improve your Consulting Procurement capability to maximize the ROI of your spend. And if you are looking for an upgrade of your Consulting Procurement practices, you’ve come to the right place! In today’s episode, we’ll provide an easy-to-follow framework that we call, at Consulting Quest, “The Consulting Performance Scanner.”

It will help analyze your Consulting Spend and establish a reliable baseline. This will let you explore the three main dimensions of your procurement:

∙ How much is being spent and on what exactly

∙ How decisions are made from start to finish when contracting a provider

∙ What impact and ROI can you expect from your projects and consulting suppliers

This data structure will help you understand the patterns of your Consulting Spend, capture quick gains, and even gain support from your team members to jumpstart a self-funded journey. This data about your procurement will also help you to build the case for change.

In our previous 6-Levers episodes, we have already explained that building the case for change is a very important part of any transformation process. It provides clarity and direction to the project while ensuring everyone involved is on board and making progress efficiently. When improving a Consulting Procurement capability to maximize the ROI of your spend, it’s essential to bring together stakeholders from all relevant departments to create visibility and alignment around the desired outcome. This will ensure that all parties are engaged with the project and can collaborate effectively throughout its lifecycle to help build successful outcomes.

Capturing and analyzing data is crucial in building the case for change in Consulting Procurement. Normalized data from different business units should be collected to ensure accuracy. At the same time, dimensions and metrics should also be carefully defined to inform decisions about who is spending and what type of consulting is being purchased.

It’s essential to leverage the existing organizational structure when analyzing spend, as this will help identify potential behaviors and list the required capabilities for your business. Additionally, setting a threshold for consulting firms can help filter out outliers that don’t meet set criteria. In terms of the observation period, using data from the previous fiscal year as a baseline gives you enough information to build your insights and analyses.

Turning Procurement Data into Insights for Transformation Journey

Ultimately, what you are striving for here is Carly Fiorina’s famous phrase: “The goal is to turn data into information, and information into insight.”

Collecting Data

The data required includes:

∙ knowing how much money was spent on consulting

∙ who bought the consulting services

∙ what type of consulting was purchased

∙ how long the projects took

∙ who they were purchased from

This data can be found in sources such as invoices and purchase orders, RFPs, and supplier information or RFI.

Getting a Spend Overview

Once you have collected the data, you can prepare an overview of your spend.

∙ This includes financials such as how much was spent, the ratio to revenues, and how much each business unit or division spent.

∙ It also includes users – what functions/business units bought consulting services, who were the project sponsors, and what type of consulting they bought.

∙ It further looks at projects – their capabilities, primary purpose, cost, and sequels; and topics where overspending or underspending may be an issue.

∙ Finally, it looks at their profile, top suppliers, and how many projects have been done with them.

Understanding the Patterns in Consulting Buying Decision

Next up, you need to understand how decisions are made about consulting in your organization. As Daniel Keys Moran said: “You can have data without information, but you cannot have information without data.” To collect this evidence-based picture, it is important to go through each project in detail and organize the data using the organization’s structure and project capabilities.

When considering why they bought consulting, you need to consider who made the decision and what validations were required. You must define who paid for the services, whether it was the same person or not.

Additionally, it is essential to investigate if competitions were organized to select the best supplier for the job and check whether the procurement was involved at any point in the process.

In terms of inception, it is helpful to examine who bought these projects and why they decided to work with consultants. Regarding collaboration, questions such as who was involved from the procurement team, when and what other stakeholders participated are relevant here.

Answers related to decision-making can be found by asking who decided on some aspects of a project and which validations were defined for those decisions.

Lastly, when considering sourcing options, we must assess if a competition was relevant or necessary – did specific units always require or exclude competitions? What threshold determines if one should be conducted or not?

It’s Important to Evaluate Your Consulting ROI And Make Sure That You Get the Maximum Return

When investing in a consulting firm, it’s essential to evaluate the return on investment and ensure that you get the most value for your money.

To do this, there are several procurement data points to consider, such as the project’s characteristics (purpose, length, price), the partners involved in the project, and whether or not the consulting team understood and delivered as expected.

Additionally, assessing the performance of suppliers and evaluating areas with higher ROI can provide additional insight into how successful your investment has been.

To analyze these data points, surveys, interviews, proposals, and project documents can be used as sources.

When looking at segmentation & pricing, factors such as average price and length can be analyzed for significant differences by capability, region, unit, and supplier.

For instance, analyzing variability between suppliers’ Capabilities or regions might help identify which ones offer better value for money. Additionally, examining supplier performance can help to identify high- and low performers per capability along with overall performance and NPS ratings. This will enable an informed decision about which suppliers should rely more heavily on in future projects.

Lastly, it is essential to explore areas where ROI was higher or lower than expected to determine what went wrong with less successful projects so that similar mistakes can be avoided moving forward.

Why Does Procurement Capability Diagnosis Matter for Optimizing the ROI of Your Consulting Spend?

Investing in a consulting firm is a big decision that needs careful consideration; understanding exactly why you’re getting good results from your provider is just one piece of the puzzle that helps ensure any investments being made are worthwhile.

With this diagnosis, you can take several corrective actions to generate quick results and savings. Dig deeper into data by analyzing, slicing, finding patterns, and looking for outliers. You may detect that a specific Function or Business Unit is spending disproportionately more on consulting than others.  Or you may find discrepancies in the pricing of the same Consulting Providers across regions like Europe and North America, for instance.

Once you understand your existing portfolio of projects, you have all the necessary information to start improving your sourcing strategy. Define segments or set thresholds for spending. If you have an Internal Consulting Group, investigate why or why not your teams choose to work with them. Check out their prices compared to external providers and investigate if collaboration between your internal consulting group and your teams is running smoothly.

You can also have comprehensive knowledge about who is on your roster of consultants – both demographically and performance-wise – which enables you to fine-tune the panel of Consulting firms based on criteria such as discarding low-performance providers while bringing in fresh blood, diversifying suppliers, and identifying potential synergies across different groups or business units.

Finally, you will be able to hone your Consulting Spend research so that it focuses solely on elements that are crucial for your Company’s success. This continuous analysis will help you keep track of everything related to Consultancy Expenses in the long run.

Regarding successful consulting projects, several factors need to be considered. The scope and objectives of the project as well as the talent of the team, are paramount. An excellent Request for Proposal must also be created with clarity in mind. It is important to note that when describing desired results, one should focus on what they are hoping to achieve rather than how they will get there.

Furthermore, it can often be beneficial to put the consultants in competition and compare different approaches or innovative ideas between firms. Choosing one firm might work for one project, but it’s essential to recognize that this may not necessarily be the best choice for every job.

Above all, a diagnosis of your consulting practice helps you understand where it is in terms of maturity and identify the steps required to make it move toward greatness. This way, you can ensure that you have all processes and procedures firmly established before undertaking a consulting project to avoid mistakes and delays. Ultimately, having a clear understanding of what needs to be achieved is key for any successful project, both outsourced or otherwise.

Post Diagnosis, It’s Time for Improvement

 Having assessed your spend, suppliers, and buying habits, you can now determine the areas for improvement. The value of this process is quantifiable in terms of potential savings resulting from better negotiating, access to specialized consultants with political and industry experience, cost avoidance from pursuing only strategic projects, and impact from more efficient management. All of these benefits combine to provide an attractive and ambitious yet achievable transformation plan for your ways of buying consulting, which will be easy to sell to senior management.

Utilizing the 6 levers at your disposal – whether for achieving more savings or having a greater impact – will help you realize the entire prize that awaits. From improved project management to better-defined needs before external parties are contacted, the improvements stand to make a massive difference in the outcome.

Making the right decisions can unlock newfound opportunities in terms of valuable partnerships with specialized professionals. This allows you to reach outcomes that would otherwise remain beyond grasp while reaping greater rewards through increased efficiency and insight-driven decision-making processes.

The results of such changes could quickly determine what makes this initiative a no-brainer for senior management and create a meaningful shift forward in consulting services procurement. This activity should not be overlooked if success is sought after!

Closing Thoughts

And so, to conclude today’s topic, if you apply the principles of our “Consulting Performance Scanner” that I have described today, you’ll be able to define your baseline by analyzing your consulting spend, measuring the performance of your suppliers, understanding how decisions are made about consulting in your organization.

And that data will provide you with powerful insights into your consulting spend, enabling you to make informed decisions. You will be able to decide the opportunities for your organization and the associated prize.

This is the only way to build an attractive and ambitious yet achievable case for change for your top management. Once they’ve been convinced, you’ll be ready to develop a plan for the future – but we’ll leave that conversation for next week!

Next week I will return with another exciting topic.

Till then, stay safe and happy sourcing, and if you have any questions regarding today’s topic or anything consulting procurement-related, remember you can always contact Helene directly on LinkedIn or by email because she’s always game for a chat and stays connected with us through our community on LinkedIn and follow our Twitter handle @ConsQuest.

Don’t forget to like and subscribe to our channels!

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Happy Sourcing!

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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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