Five tips for consulting firms to manage changing market conditions
The consulting sector faces challenges that cannot be ignored, as a result of the growing division of the market into a low-cost, project-based section of more commoditised services, and a higher-value classic management consulting aspect. The increasing rift has not only resulted in growing competition within the industry however, it has also presented consulting groups with a number of new opportunities if they can adapt their businesses on course with market trends.
In a report from the research organisation Service Performance Insight (SPI), sponsored by Deltek (a provider of enterprise software and solutions for project-based businesses), the analysts advise consulting firms how to get the best out of the changing market dynamics. Five key tips extracted from the study centre on maximising talent, improving service, making the most of digital technologies, self-evaluation and improving staff morale.
1. Maximise your talent strategy
The first essential ingredient of any successful project is possessing the right talent, in order to deliver every project as effectively and profitably as possible. While the report shows that topline revenue growth is still relatively strong in the industry at 9%, SPI also note that with companies taking action to be more effective and productive, headcount growth has slowed, with only a 6% increase. This presents potential problems in terms of meeting deadlines.
The report suggests the talent shortage trend can have a detrimental effect on professional services firms, as projects suffer from a stretched workforce and consulting firms are unable to deliver their best results. A declining headcount growth can ultimately limit any company’s potential growth. To this end, it is essential for businesses to revisit their recruitment and retention strategies to address service standards across the industry.
Related: Talent management should be at the heart of any growth strategy.
2. Provide exceptional service
Further to this, the analysts recommend companies stay ahead of competition by initiating additional services such as forming partnerships with clients to enhance particular services for their benefit. By offering services that provide demonstrable, measurable value, while conducting regular performance reviews, where clients have the opportunity to provide feedback, firms can reinforce revenue growth. The report asserts that by defining a service delivery blueprint that enables consultants to make project success repeatable and consistent consulting firms are able to beat competitors to new bids and proposals, while maintaining client satisfaction levels that ensure returning business.
3. Embrace digital transformation
According to the ‘2017 Professional Services Benchmark’ report, uneven sector performance is underlying year-over-year revenue growth. Organisations that focus on the cloud, security, analytics and artificial intelligence (AI) are experiencing significant growth. While more traditional sectors, like accounting, architecture and networking are growing more slowly.
Consulting businesses may be preaching the benefits of cloud-based technologies to clients, but also neglecting their embrace internally. The report advises consulting firms to adopt digital processes more thoroughly to grow their businesses. By incorporating digital technologies and processes into their own business practices, firms could build efficiencies and increase control in every area of their project-based organisation.
Related: Seven principles to turn consulting firms into digital transformers.
4. Evaluate the selling process
Another finding from the report is that bid-to-win ratios were lower in 2016 compared to previous years. While this could be an indication of heightened competition, researchers claim it could also suggest underlying sales or marketing issues. If a company pitches for far more projects than it wins, the report suggests such a firm could benefit from going back to basics.
This research recommends starting by examining market positioning to ensure firms pitch for the right kinds of projects and target the right clients. While it might seem obvious, they state that it is important to think about how companies package their services to ensure they provide clients services they really need – echoing a recent study by Zeqr that stated small businesses in the UK collectively spend around £60 billion per year on professional services, yet feel that more than £12 billion of that is wasted on unnecessary or bad advice. Reconsidering how they sell their services could help consultancies tighten proposals and win more business.
5. Keep consultants and staff happy
The cost of replacing a valuable employee can be as high as $150,000 (~£120,500), according to the report’s figures, an amount which can have a detrimental effect on organisational productivity as a whole. Companies should therefore be greatly concerned that staff attrition rates in project-based businesses are rising. As people are critical to the success of any business, the authors conclude that it is essential to have a strategy to keep sustained pressure and fatigue among staff low.
The report also stresses the importance of consulting with employees to discover what benefits resonate with them. By making workers feel valued, listening to their needs and ensuring they are happy with their career progression, companies can ensure they have capable, willing talent in place to deliver successful, profitable projects and trigger growth.
Related: 5 tips to managing talent effectively in the consulting industry.
Conclusion
Overall, the findings from the report show that project-based businesses are performing well, with revenue growing across a number of segments. However, the authors assert that the talent shortage issue and rapid technological advancements must be monitored and managed. Change is constant in professional services, with each year bringing new geopolitical, socioeconomic and digital disruption. In preparation for this, firms can ensure success by staying ahead of these trends, being first to adopt new technologies and having strategies in place to nurture talent, client relations and project performance.
For more information on how consultancies can remain competitive in this changing landscape, consult Deltek’s library of best practice reports on winning bids, managing, delivering and measuring projects and developing professional services talent.
