15% of chargeable consulting work is not billed to clients

29 March 2016 Consultancy.uk

Around 15% of consulting work for clients, chargeable hours, is in practice not billed to clients, finds a new study by London Business School and a software firm. The ‘leakage’ in billable hours may come with a considerable cost to firms – internal operations are advised to scrutinise the chain of activities, with large efficiency gains potentially looming around the corner.

For every consultant in professional services, time tracking is notoriously regarded as one of the most tedious and frustrating tasks. Despite time tracking being such a critical part of all consulting firms’ operations, project managers and finance teams continue to struggle with resistance to time tracking tasks. This resistance stems in most cases, besides the dull nature of the task, from the poor user friendliness of IT systems and the inefficient processes that support project management and internal operations. Time tracking is typically, therefore, postponed until the very last moment and people have to rely on their memory and things like their notes and e-mails to figure out what they’ve worked on in the last days, weeks, or even months.

A new study by TIQ and London Business School reconfirms the low popularity time tracking enjoys among professional advisors. The study, which explores time tracking behaviour within the professionals services industry, finds that “only” 20% of surveyed professionals record their activities multiple times a day and 18% does so once a day. Around 40% of professionals track their time once or twice week, while 22% indicate that they only do so once or twice a month.

The nature of time tracking, however, differs across the professional services domain. Management consultants for instance are highly billable (on average client work accounts for 75% of their workweek) yet across the board consultants work on few different clients or projects during an average week. The number for consultants stands at only 2.4 different clients per week, compared to 6.1 different clients/projects a week for accountants or 5.0 for lawyers. This means that consultants have a fairly easy job filling out timesheets – they typically spend 15 minutes a week. Laywers spend nearly six times as much time inputting data in their time tracking systems, while accountants on average lose 45 minutes a week on time tracking.

Hours leaking off the bill
Another difference between the three segments studied is the degree of ‘leakage’ – billable work not charged to clients. Across the sectors, and this is well known, a relatively large share of billable time is foregone. 22% of the respondents of the study indicate that they record less than 70% of the time they spend on client work, implying that more than 30% of all their billable time goes unrecorded. Around 38% of professionals indicate recording between 70% and 90% of their billable time and 40% of the advisors indicate recording between 90% and 100% of the time they spend on client work.

The leakage follows from a variety of tasks – three that stand out as key drivers. Reading and answering e-mail leads the leakage cycle: a whopping 58% of advisors indicate that they record less than 20% of this time. A similar trend is visible for phone calls with clients – 50% record less than 20% of this time – and to a lesser extent also for client meetings, with 38% of respondents indicating that they track less than 20% of the time they spend in meeting spaces. According to the authors, the results illustrate how “normal” it has become for professional services firms to consider (electronic) communication as a ‘standard’, or even free, part of their integral engagements with clients.

Again, differences are visible between lawyers, accountants and consultants. The latter group on average records 85% of the time they spend on client work, accountants do so in 87% of the cases, while lawyers, known to record shorter chargeable lapses (e.g. 15 minutes instead of 1 hour for the other two professions), bill 86% of their client-related time spent.

The 15% or so billable time that is not charged comes with a considerable cost, state the authors. A management consulting example: assuming a 40 hour workweek, a consultant leaks an average of around 4.32 hours a week. With an average hourly billable rate of €212 (sourced from the reports’ authors), leakage costs an average of €915 per advisor per week in lost revenue. With 48 weeks used as a resourcing benchmark, this amounts to an average annual loss of around €44.000 per consultant.

Important to keep in mind however is what explanatory factors sit behind leakage. In some cases it stems from sloppy time tracking behaviour, such cases cost firms dearly as the foregone revenue is completely written off. In other cases leakage can be part of client agreements, i.e. fixed price agreements, or part of a wider strategy to over perform vis a vis expectations, down the line proving effective for retaining client work.

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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.