Consulting Magazine: An Inside Advantage for Consulting Firms
Savvy firms leaders are discovering that the best way to impact their bottom line is through their own back office.
Running a consulting firm is not easy. Actually, let me rephrase that: Running a successful and profitable consulting firm is no easy task. I suppose anyone could run a firm, but how it’s run, of course, makes all the difference. And, you may be surprised to learn, many consulting firms are still being run the way they were at the turn of the century. (Or even millennium, which, let’s face it, makes their approach to firm management seem really, really old! And, to be brutally honest, some of them are.)
Competition is stiff, clients are smarter than ever, talent is tough to come by and technology has both simplified and complicated things at the same time. As a result, margins are razor thin and firm leaders are constantly on the lookout for anything that can move the needle and make their firms more effective and efficient.
In an earlier blog—Physician, Heal Thyself!—I focused on how consulting firms were finally staring to come around and look in the mirror to apply some of the technology transformation they’ve been talking about so much with clients to their own firms. And that is indeed happening… slowly, but surely.
In this blog, I’m going to focus on what impact integration and transparency can have within a consultancy. (Spoiler alert: It’s huge!) It’s such an important topic that Consulting Magazine has placed a great deal of emphasis on it in 2018 as more and more firm leaders have come to the realization that the two are intertwined and essential to modern-day success in consulting. Integration and transparency are no longer luxuries; they are a need.
For a long time, firm leaders have focused their efforts on new clients, emerging markets and the next big thing. Those are all important, of course, to any healthy consulting firm. But some savvy leaders are discovering the way to their own bottom line may be through their own back office.
Consulting Magazine Best Practices On-Demand Webinar
The Integrated Advantage: Managing Projects for Maximum Profitability
Consulting recently hosted a webinar titled “The Integrated Advantage: Managing Projects for Maximum Profitability,” where Jon Caforio, RSM National Leader for Consulting Strategic Enablement, asks attendees which link in the entire project chain was most important—Prospecting, Qualification, Proposal, Contracting, Execution or Closure. It’s a bit of a trick question as each is essential to the overall project success, but the key factor to remember is that it’s a chain. It must be an integrated and connected process; there must always be overlap where one link ends and the other begins, he said.
Even at some of the top-consulting firms that integration is often elusive. At too many firms, prospecting people have no earthly idea what the proposal people are up to; and the people in contracting aren’t communicating with closure… and don’t even get me started on execution.
ALM Consulting Intelligence research suggests as many as one-third of projects don’t meet the firm’s own profitability metrics. And even more alarming, two-thirds of firms lack the transparency to effectively measure their own profitability benchmarks.
Too often, firm leaders are left in the dark as to why a specific project didn’t deliver. Was it mismanaged? Were the margins wrong from the get-go? Were the wrong people doing the wrong work? Or maybe the project wasn’t worth doing in the first place?
Even a little bit of knowledge is a powerful thing. A firm leader recently admitted to me that more than half—close to 60 percent—of their projects fell short of the mark in terms of profits, but not performance. In other words, clients were happy; the bean counters weren’t. Understandably, he spent lots of time and effort getting to the bottom of it—one, they were pricing their engagements wrong from the get-go; and two, the right people were rarely on the right projects. Those are two biggies that will surely crush a firm’s profitability margins.
An integrated approach with transparency throughout the entire organization would’ve been able to get to the cause and effect much sooner. And someone—or better yet multiple people—being able to see along entire project chains would’ve identified the firm’s shortcomings a lot sooner. With the right technology tools, those types of problems can even be addressed in real time. And it doesn’t get any more real than that.
Joe Kornik is Publisher and Editor-in-Chief of Consulting® magazine. In this role, Joe oversees the editorial operations and overall execution of the publication and the Consulting brand. He is also responsible for the magazine’s Web site and all live and virtual events.
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