Skip to main content

Management consultancies must rethink their models… and their own old habits

MSP cloud technology
(Image credit: Image source: Shutterstock/everything possible)

The once calm waters of the management consultancy sector look rather frothy at the moment. Lower-cost offshore providers continue to make incursions and there is a declining buy-side appetite for 10-year outsourcing mega-deals, knotty integration projects or customizations of major apps. As with every industry that is buffeted by change, the sector needs to create efficiencies, innovate and change ingrained habits. It’s no exaggeration to say that how well consultancies manage these necessary changes will act as the chasm between those who prosper and those who fail. 

Accelerating agile business models and innovation

Let’s look at some of these changes one at a time. First up is agility. This has become a cover-all word but I think what’s key is the ability both to change business and operating models and to respond to changes in the way that customers operate, and therefore want to interact with consultancy partners. It’s the flexibility to flip models, reassign people from one task to another, respond to a competitor’s new strategy… and all without changes taking weeks or months. 

Agility relates closely to speed of innovation. The pandemic has undoubtedly seen an acceleration to Software-as-a-Service (SaaS) models (as watchers from McKinsey to Gartner agree) that mean companies can try out ideas fast and then deploy projects at scale if so desired. SaaS also means faster project development where systems are extensible and there is little to no need for point-to-point integration tasks. Increasingly, we are seeing companies move away from the spider webs of managing hundreds of individual applications to industry-specific enterprise meshes where key spokes such as CRM and HCM are seamlessly linked to the ERP hub and where skills, collaboration systems and composable fabrics based on open APIs mean that associated tools can be instantly served up on an “as needed” basis.

Other advantages of SaaS include frequent and automatic updates to business functionality and sharing and collaboration across the company with all employees (and even partners or customers) sharing a single software version. Overall, we need faster time to market and time to revenue and legacy systems tend to get in the way, creating systemic obstacles that chew through time, momentum and belief. Cloud is a versatile platform highly suited to our time and its challenges.

Then of course there is leadership. Any change project needs strong leaders who can communicate, persuade, cajole, remain resolute in the teeth of objections and have the back of the people at the sharp end. But they also have to be listeners capable of empathizing with fears and objections. Companies with great leadership will also benefit from reputations that help to recruit and retain subsequent waves of talent. 

In the knowledge economy where management consultancies are squarely located this is hugely important. A leading concern with virtual working is that staff – and new hires and young workers especially – will suffer from lacking exposure to leaders and line managers. The old concept of “management by walking around” (at Hewlett-Packard and other culture-conscious firms) and the osmotic approach of learning through proximity have necessarily been in short supply recently.

As SPI’s 2021 Professional Services Maturity Benchmark notes:

“Strong leadership helps employees get on the same page, working toward a common goal. Happy employees are more productive and deliver higher levels of client satisfaction and profitability.”

Management consultancies need to be adaptive and fleet of foot, assembling teams of relevant talents quickly, supplementing them and moving them on the fly. They can’t rely on the ‘glue gun’ integrations of the past nor survive on waves of expensive billable hours. Considering an average ERP deployment now needs to take three to six months, clients have come to expect fast turnarounds for change management programs, demonstrable ROI and the ability to self-serve. If a consultancy can’t give them that then another one will.

Becoming ‘leaders through Wi-Fi’ 

The stresses and strains outlined above require new ways of working. An example comes in the form of onboarding where the pandemic has meant there has been little chance to pave the way to engage with new employees or clients in traditional, face-to-face ways.

We have all seen the boom in Zoom, Teams and Slack and now we are seeing a new vanguard of leaders who can motivate and manage remotely:  a generation of ‘leaders through Wi-Fi’.

According to SPI Research in its 2020 Professional Services Maturity Benchmark, the average time to recruit and make new hires effective is four months. Moving faster using digital engagement (having data in one place, using automated and streamline processes and workflows, and deploying purpose-built talent enablement solutions) means faster time to high utilization rates and income.

As SPI notes: 

“Top-performing firms place a premium on high quality recruiting and on-boarding programs resulting in faster recruiting and ramping times combined with higher billable utilization.  They hire ‘A’ players. They invest a lot in them and expect a lot from them.”

Innovation, as already argued, will be critical but it also comes with challenges. The greater the client expectation for novel thinking, the more it can increase project uncertainty, which in turn can lead to financial uncertainty. To avoid problems, leaders must double-down on efforts to develop processes with real-time information on the status of projects to build accurate, dynamic forecasts. This information needs to be accessible to all relevant parties and be updated in as near to real-time as possible.

Smart process automation

The final building block is making use of smart process automation. McKinsey contends that 30 percent of activities in 60 percent of organizations can be automated. Companies that are advanced in this will save swathes of time and costs so it’s vital that management consultancies mine the most out of bots, macros, RPA, AI and machine learning. Learning to rely on your robotic colleagues will mark the way to step changes in the value that consultancies deliver.  

Management consultancies are going through changes but by addressing their vulnerabilities and targeting excellence in agility, performance and culture they can stay relevant and even prosper as complexity and globalism mean the world moves increasingly to partnering service economies. But the onus is on them to think again, re-engineer models and rethink infrastructure… starting with their own.

Mark Gibbison, Head of Strategic Motions for New Business, Unit4

Mark Gibbison, Head of Strategic Motions for New Business, Unit4