Trends impacting the internal operations of consulting firms
A new report has identified several major trends hitting the operations of consulting firms. Above all, the research tells companies one thing: a swift adoption of new technology is key.
The world of business is changing rapidly, and this is driving organisations to turn to the consulting industry for help. Like any other sector, however, consultants themselves are not immune to change, and face a range of threats that they need to mitigate in order to position themselves adequately to capitalise on these opportunities and remain successful in the competitive market.
According to a new study by Deltek, a global provider of software and information solutions to project-based businesses, technology is playing a major role in driving professionalisation in service portfolios, internal decision-making and efficiency. The study, which surveyed 700 senior decision-makers from the professional services industry around the globe, found that consulting’s own house – the internal operations that support client engagements – could greatly benefit from the very same digital trends which consultancies are pioneering at their clients.
One major trend sweeping through industry is the change of client demands. Of those surveyed by Deltek, 52% of consulting leaders said responding effectively to client demands will be a top business development priority in five years’ time. Changes which are currently taking place include increasing demand for a personalised and tailored approach, building trust, providing more value at the same cost, the need for different ways of working such as performance-based working, risk-sharing or more agile-driven project management, and a greater need for transparency and information flow.
According to Deltek research, “clients’ demands are more complex”, and against the backdrop of “increasing competition and tighter margins”, delivering projects profitably has become not just more difficult, but also more important.
To manage this increased complexity, consultants need to show they have a good understanding of their clients and the state of their project portfolios, and that they have a handle on expected costs, schedules, risk and required resources. One of the key fronts to address the gap in capabilities consultancies currently experience is talent.
Another analysis recently conducted by Deltek, found that 44% of executives and partners in consulting firms felt that recruitment of new talent was a major hurdle looking forward. In the UK in particular, unemployment is low and freelancing in the sector is booming, while an ageing population and increasing restrictions to cross-border labour movement mean that demand for talent is high. If consultancies can overcome this problem, though, they can provide themselves with a new generation of talent, raised in the digital era, which will be able to help firms better navigate a more digitalised business environment.
Digitalising reports
Other trends identified by Deltek’s report as developments that could impact internal operations of consulting firms include regulation, the need for more collaboration and working with partners in ecosystems, and becoming more agile in both primary as well as secondary processes.
To be able to both better serve clients and make sure the right team is in-house, consulting firms track their progress through all kinds of reports. These track things such as sales, project performance, service line performance, financial profitability, sales and margin per consultant, employee staffing (chargeability), compliance and progress toward strategic plans. As consulting is a business where accurate forecasting typically goes no further than 4-6 months, such reporting is essential to manage the pipeline of projects, as well as business overall.
The downside however is that this is an intensive process. In Deltek’s survey, 59% of professional services firms said that they spend hundreds of hours producing reports. A further 52% mentioned that their reports for important decisions come too late.
The findings reveal that a large proportion of consulting businesses spend too much time working on reports to enhance business performance and planning. Spending so many hours producing these reports manually is a waste of valuable resources, and ensuring efficient and easy reporting processes are key.
Adopting smart technology can provide a major step forward in staying ahead of the aforementioned trends. In the case of client management, technology can support client tracking through the sales funnel, all the way from first contact to actual delivery. In doing so, consultants can better supply contact with staff in need of support, while ensuring they are better informed and work toward goals which clients find most important.
In the area of talent, this retooling process can support strategic talent management, optimisation of staffing on and in between projects and an overall better resource management process. From a reporting perspective, meanwhile, consulting firms must urgently focus on automating their reports to reduce production time and get clear and instant visibility of their project pipeline and people. The ultimate key is to provide a firm’s leaders with the full picture and the right foresight to enable informed, real-time decision making.
For more information, download the full report: ‘Insight to Action: The Future of the Professional Services Industry’.
