Consulting Business market has about five key trends this year, around which we offer coaching and consultancy.
What to expect in consulting business this year?
1. Mergers and Acquisitions
There is currently an active mergers and acquisitions market in consultancy. Large firms (predominantly Big Four) are doing most of the acquisition, building geographic scale and gaining niche expertise. This presents its own set of threats and opportunities whether the Consulting Business firm is the dominant, subordinate or equal partner in the process.
2. Flexibility, Adaptability, Agility
A whole host of issues concerning flexibility and Consulting Business are appearing. Perhaps in response to especially turbulent times, clients are recognising the need to adapt quickly and effectively and are expecting the same from their consultants. A recent PWC survey of CEOs makes the point: “Far-reaching changes are happening – and they’re also happening faster than before […] in short, improbable risks aren’t so improbable now; they’re becoming the norm in a more uncertain world.”
But what do clients really mean by flexibility and adaptability when it comes to consultants? Clients express frustration with the fact that the consulting business model has not changed in line with the changes in the business landscape.
3. Value-Based Billing in Consulting Business
The Management Consultancies Association (MCA) report ‘Generating Value: Making a Difference’, found the average rate of return on spending across all types of consulting work equated to £6 for every £1 spent on fees. Value-based billing is starting to catch on in the US, Latin America and India — firms are confident enough to make a proportion of their fees contingent on the measurable outcome of their work, varying from a small percentage to the entire fee. This model accounted for 21% of consulting revenues worldwide in 2011, according to the US Association of Management Consulting Firms, but less than 10-15% in Europe.
Contingent contracts can be popular where there is otherwise a ban on consulting spending, or where the prospective client cannot fund the initial fee. This allows the client to pay the consultant using the cash saved or generated. This is a popular approach in Spain for example, and may spread to other countries experiencing economic pressure. For those looking forward to starting a consulting business can consider this option.
Defining, monitoring and managing projects where the fees are contingent upon savings made presents unique challenges.
4. The Changing Role of IT in Consulting Business
IT is no longer ‘just’ IT and this trend impacts both the clients and the consultancies. Yesterday’s CIOs would be tasked to implement a new ERP system or sort out the help desk. Technology was seen as just a component of business dealings — necessary but best left to the IT types to sort out. It was an expense rather than a revenue generator. Today’s CIOs are more likely to be leading strategy discussions for the entire business. Issues of automation, upgrading user experience, determining data strategies and so on are more and more important at the corporate strategy level. Technology is becoming the business rather than being simply an enabler of the business.
The procurement of consulting business and services had been an on-going theme throughout 2018 and 2019. Specialist research firm Source for Consulting reports that buying and selling consulting services have changed massively over the last 10 years, finding that over two thirds (69%) of procurement managers are now strongly influencing the purchasing decisions of larger (greater than €500,000) consulting projects.
Getting on a preferred supplier list (PSL) is extremely important for management consulting firms. Amongst organisations which spent more than €10 million on consulting in the last six months, 70% have a PSL for consulting suppliers. Consulting firms on a PSL win about 78% cent of the total value of all consulting work in an organisation. So how do you get on the list?