Irish government spend on consulting remains similar after criticism

20 September 2017 Consultancy.uk

The Irish government has continued to reduce its spending on consulting, having come under sustained criticism for its outsourcing practices. Last year the government racked up a €12 million bill on contracts to external consultants, with just three departments accounting for most of the expenditure.

Over the course of 2017, governments around the world have come under mounting pressure to justify the cost of external consultants on the public purse, despite a reluctance to increase public spending in other areas. In the UK, consultancy spending relating only to core Civil Service administrative functions made headlines, with Whitehall’s spending on private consultants and temporary staff rising by between £400 and £600 million since 2013, according to National Audit Office figures, despite the Service remaining spread thin, following austerity cuts. Further afield, Australia’s national government have been under increasing media scrutiny following the announcement executive spending on consultancies had hit a staggering A$5 billion. Meanwhile, in the Netherlands, the government continue to spend large amounts on external contracts, however responding to criticism of their own, it was revealed they had scaled back spending on strategy and management consulting over the past year.

Now, in Ireland, on the back of months of similar criticism, figures for each of the government’s 15 departments have been released, disclosing a total consulting spend of €12,236,769 during 2016. While broadly similar to spending in 2015, the figure represents a significant reduction on consultancy contracts compared to a decade ago when twice that amount was spent. The biggest spenders last year were the Department of Agriculture (€3.2 million), the Department of Children (€3 million) and the Department of Public Expenditure (€1.4 million). The lowest figure was recorded in the Department of Arts, Culture and the Gaeltacht which disclosed a comparatively small spend of only €1,833.

Irish government spend on consulting remains similar after criticism

Much of the consultancy expenditure in the Department of Agriculture was for technical advice including laboratory services, forestry development, marine support and computer development – as the department prepares to support the Irish agricultural sector amid a period of digital transformation – with global investments in agricultural technology having boomed to $46 billion last year. Almost all of the Department of Children’s spending went to the long-running longitudinal study into childhood in Ireland, being conducted by the Economic and Social Research Institute and Trinity College Dublin, which costs more than €2.5 million each year. Much of Department of Public Expenditure’s outside contracts revolved around updating its procurement and ICT systems – which in the wake of global cyberattacks such as WannaCry, has become a growing priority, as governments around the world seek to safeguard their vital confidential information, to avoid becoming the next NHS-style victim. Consultant Deloitte was paid almost €700,000 for strategic market assessment for procurement. Another prominent consultancy firm, Accenture, was paid €250,000 for its work on an ICT project, while KPMG was paid €160,000 for its work on e-invoicing.

The Department of Jobs also spent €744,125 during 2016 on consultancy contracts, including a €119,000 contract with PA Consulting for a study of global markets and opportunities for Irish business, along with Z_Punkt Technology, which picked up €105,000 on a future technology exercise. Consultants at Amárach were paid €98,000 for the firm’s work on alcohol labelling, as part of the Department of Health’s spend of €704,304.

Reallocation rather than reduction

Consulting and professional services have continuously made the wrong kind of headlines in Ireland over the past year. Earlier in 2017, it emerged that the bill for consultants, liquidators and lawyers involved in the winding-down of the Irish Bank Resolution Corporation (IBRC) amounted to €215 million in the 47 months leading to the end of 2016, with the Irish arm of multinational consultancy KPMG receiving a total of €130 million for its role in the proceedings. A number of Irish firms also became embroiled in the Panama Papers scandal of 2016, in which consulting and audit advisories were alleged to have assisted wealthy individuals and corporate players with the avoidance of tax.

Earlier this year it was announced Cork City Council has spent almost €4.5 million on consultants each year from 2009 to 2016. The figure, which was described as ‘incredible money’ by one former Lord Mayor, came as the local authority look to plug gaps left by austerity layoffs which have left permanent staff depleted, part of a growing trend across Ireland and the UK. Drawing parallels with that more localised example, the national government’s figures show a plateau in consulting fees for 2016, which to an extent responds to criticism for a heavy use of public funds on short-term contracting, rather than long-term investment in permanent talent.

Ireland’s consulting sector has continued to book growth recently, with firms like PwC looking set to continue growing their presence in the country over the coming period. Both businesses and local and national governments are thought likely to continue investing in the segment, with changing landscapes in taxation and data regulations increasing demands for specialist services from both international and domestic companies across the Republic. Digital disruption and trading conditions for indigenous business becoming less stable, due to Brexit and other international developments also likely mean that rather than scaling back consulting spending further, the government is more likely to simply reallocate its consulting budget. According to a breakdown of finances for 2017, Ireland’s Civil Service budget allocation for “consultancy services, value-for-money and policy reviews” will rise by 15% to almost €10.5 million, including consultancy spending relating only to core Civil Service administrative functions, which remain spread thin following austerity cuts, the Department of Public Expenditure explained. 

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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.