The challenges of delivering profitable projects in the consulting industry

08 August 2017 Consultancy.uk

Managing projects effectively, and profitably, is the life blood of consulting firms. Successful projects rely on every stage of their lifecycle going to plan. From securing the initial win, to managing scope and delivering on time and at a profit. In an industry that relies so heavily on client relationships, consulting firms must track and assess performance every stage of the project and see what’s working well and what’s not, says Fergus Gilmore, Vice President at Deltek.

In this article, Gilmore, who has over twenty years of experience working with project-based businesses including management and IT consultancies, provides his view on five focus areas that can help consulting firms achieve improved long term profitability on the back of better project delivery.

Bid to Win Ratio

Your bid-to-win ratio is a crucial key performance indicator (KPI) for assessing the effectiveness of your sales and marketing, and how many net new projects are entering your books. Research from Forrester Consulting shows that only 9% of project firm leaders have won 75% or more of their project bids, with around half (49%) reporting they only ever win 25% - 50%. In other words, 61% experience an engagement win rate of less than 50%. Not just a disappointing win rate, but a waste of sales’ efforts in pursuing the wrong opportunities and, in many cases, pitching blind.

To overcome this worrying trend, consulting firms are advised to analyse their historical data to pinpoint which areas they need to address to improve their win rate – whether that’s more thorough deal qualification, increased reference selling or better positioning to target the right markets and clients.

Managing projects effectively, and profitably, is the life blood of consulting firms

Project Information Management

Having a handle on your project information, from emails to contracts and other documentation, can make all the difference to successful project delivery. Disparate systems, information silos and different ways of working by teams and individuals can all be damaging to the success of your projects. Without formal processes and systems in place the efficiency of and collaboration within project teams can be compromised.

Gilmore says in order to have a full and accurate picture of the progress and performance of your projects, and business as a whole, you need to have access to the right information. If there are gaps due to lost documentation and information silos; compounded by a lack of project information management strategy and systems, there will be gaps in your knowledge.

Collaboration and enterprise information management tools are an effective way of moving project management beyond simply setting tasks, resources and budgets to ensuring everyone stays in the loop with all project-related communications.

Employee Retention

In today’s world, people are, more open than ever to opportunities outside their existing employment. In fact, research from CareerBuilder suggests that by age 35, a quarter of workers have held five jobs or more. Smart companies know that one of their greatest resources is their people, particularly for those who work in the knowledge economy of professional services. Retaining first-rate staff can be key to success and integral to growth.

People choose to move on for a variety of reasons. These include not feeling properly compensated, valued or rewarded, or suffering from stagnation and a lack of opportunity to develop their career within your company. According to an Oxford Economics research, replacing talent costs UK businesses over £4 billion per year. With firms spending so much on recruitment, it can be safe to assume that staff retention is a big problem for many. Gilmore indicates that to avoid losing talent, your best bet is to create an employee retention strategy. “It will require investment, but when you add up all the hidden costs of replacing staff, can you really afford not to have one?” Gilmore asks. Taking this approach will mean firms are in a position to create talent-focused development strategies that will improve employee retention and resonate with key objectives for profitability and growth.

Better project delivery is the key for consultancies in achieving long term profitability

Financial Visibility

Managing finances is a critical aspect of project delivery. To forecast and manage costs accurately, you need to understand both past and current performance. Collating information from as many historical projects as possible will give you deeper insights into where mistakes are being made or where there is a lack of commercial focus. You should also implement a set of KPIs that will help you better manage business performance in the future.

Gilmore agrees that looking back at your data is a good start but you also need instant access to current project costs in order to maximise profitability. Without full visibility how do you know if your client billing is accurate, or that management reports include up-to-date measures of project profitability, utilisation and efficiency? If your sales, services and finance systems aren’t aligned, it’s impossible to gain visibility and control over the end-to-end project lifecycle. Only with a clear view of your project costs will you be able to manage projects efficiently and improve working capital.

Measuring Project Success

Measuring project KPIs encourages best practice throughout your firm. Gilmore says helping teams to monitor and report on their KPIs creates transparency across the business and encourages accountability. Some of these key KPIs include Project Schedule Variance, Days Sales Outstanding (DSO), Customer Lifetime Value, and Deal Close Ratio. According to the 2017 Professional Services Maturity Benchmark Report from Service Performance Insight (SPI), DSO is 23% lower per year for the top professional services firms. These top-performing firms constantly keep track of performance throughout their whole project lifecycle.

Delivering Profitable Projects

Gilmore concludes to deliver profitable projects, your whole firm must get involved. You need to employ the best people and invest in them, constantly monitor and improve service delivery and effectively manage your finances. With these internal processes and constant improvements, you will be able to produce the best work, keep customer satisfaction and client retention levels high and, ultimately, maintain good levels of profitability.

In a bid to help partners and consultants with successfully delivering projects, Deltek has created a best practice library with a broad range of tips that span all corners of project management and internal operations.

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Accenture's push into the creative sector is an identity crisis

18 April 2019 Consultancy.uk

In its latest push into the creative sector, Accenture Interactive acquired New York and London-based ad agency Droga5 earlier this month, adding illustrious clients such as HBO, Amazon and The New York Times to its roster of clients. With the latest in a long line of similar purchases, Accenture Interactive further demonstrated its ambition of becoming the globe’s leading trusted advisor to chief marketing officers. Yet according to Ben Langdon, Chairman of Class35, Accenture’s strategy may be heading in the wrong direction.

A press release on Accenture’s website announcing the acquisition sits next to a quote stating that “brands aren’t built through advertising” – a huge contradiction from a consultancy firm hell-bent on becoming the ‘CMO agency of choice’. It’s not alone of course. The entire consulting industry wants a piece of the creative pie right now. In addition to Accenture Interactive, recent acquisitions by PwC Digital, IBM iX, and Deloitte Digital meant that in 2017, for the first time ever, four of the world’s ten largest creative agencies were consultancies.

So just what it is that Accenture wants to achieve from this? For one thing, it’s clearly trying to be a digital transformation business. A one-stop creative shop rivalling more traditional models, it wants to lure CMOs in with the promise of lower ad spend and a “more impactful customer experience”. At the same time, though, it’s still in thrall to those same slinky, shiny branding and advertising agencies it’s attempting to disrupt. The Droga5 acquisition and that of Karmarama a few years before are both testament to this.

There’s a fundamental problem with this, though. Digital transformation businesses don’t sell to CMOs. These people have enough on their plates trying to transform their own marketing skills in order to keep up with an ever-changing market – they just don’t have the time or the energy to concern themselves with digitally transforming a whole business. If Accenture’s purpose is digital transformation, then going after creative agencies is barking up the wrong tree.Is Accenture's push into the creative sector an identity crisis?

Worlds apart

Perhaps more importantly, these two industries are worlds apart in terms of the way they think. Creative agencies are all about ideas, campaigns and consumers. Digital businesses, on the other hand, are customer-driven – they think in terms such as lifetime value, measurement, and efficiency. Customer-led thinking is an entirely different beast to consumer-led thinking.

The reality is that the arrival of digital and an all-encompassing obsession with technology, measurement and social has led to the death of agencies in a reductive, zero-sum, efficiency-focused battle with brands. Indeed, agencies have become so obsessed with the latest tech fads, they’re beginning to forget how brands work. Worse still, they’re beginning to forget how brands are built. And, by forgetting, they’re destroying their own values.

Killing creativity

All things considered, it really feels to me as though Accenture is a chip leader in a game it doesn’t understand. Expensive acquisitions like these show that they’ve got the big money, but they don’t appear to have any idea what they’re doing with it. Take talent, for example. The best talent in the creative industry right now is out in the market; it’s not tied to any one agency. Both agencies might well be at the top of their game, but why would a consulting firm waste so much money on buying them when they could hire high-quality creative talent on a contingent basis instead?

As their presence in the top 10 creative agencies shows, there is a growing trend in which Accenture, like many of the other big players, are buying up agencies as if they were nothing more than keywords. What they’re really buying, though, is a collection of credentials, clients and IP. Unfortunately, the talent that created those credentials aren’t going to stay at the business, the clients that hired the agency in the first place won’t be interested in buying what is basically just another part of Accenture, and the IP never really existed to begin with.

Droga5, for example, was one of the few agencies that did great brand work the old-fashioned way – undoubtedly something that made it attractive to Accenture in the first place. The irony, though, is that by leading it further away from the way of working that made it so special, the consulting giant will kill its creativity.

“Accenture Interactive has been dazzled by its ambitions to become the CMO agency of record…. But, in flashing its cash, it is spending millions on acquiring nothing of any value.”

If pressed, the recently acquired agency staff at Accenture will tell you just how dysfunctional the new arrangement is. They’re largely unfulfilled. Rarely do they feel their work has any sort of meaning or purpose. What’s more, the different disciplines have found little or no common ground, and find it hard to work together as a cohesive whole. It’s not surprising, then, to see talented people leaving in droves.

Beyond the window dressing 

It’s clear, then, that consulting firms and creative agencies are no easy bedfellows. But in his company’s defence, Accenture Interactive’s Senior Managing Director for North America, Glen Hartman, described its culture as being “far, far away from what a stereotypical consulting firm would look like. Our office and studios look a lot like Droga5’s.”

In demonstrating a belief that office design equates to workplace culture, this statement serves as an illustration of how confused Accenture is right now. It wants to justify its new strategy so badly, it’s started dressing like a creative agency. But if you look beyond the window dressing and see that you and your partners are speaking a different language with a different purpose, selling to different people in a different market, there’s no getting away from the fact that you’re different.

Accenture Interactive has been dazzled by its ambitions to become the CMO agency of record, and it wants to dazzle others with its new direction. But, in flashing its cash, it is spending millions on acquiring nothing of any value.

Related: Space between consulting firms and creative agencies is converging.