London: Clearer definition of business needs and project scope could increase the value of management consultancy spend by 36%, say senior procurement professionals.
Though rated as the most important stage in a typical consulting project, consultancy buyers acknowledged there is room for improvement by giving themselves an average of six out of ten at 'accurately defining the initial business need'.
These findings come from research conducted by The Consultancy Buyers Forum, a networking group sponsored by the Management Consultancies Association (MCA) that enables buyers and clients of consulting services to share knowledge and experience.
Respondents to the survey felt that by adopting a good practice approach to 'defining the initial business need' they could add a further 30% to the value of their organisation's consultancy spend. Considering that the average spend on management consultancy in the UK is £9 billion a year*, and £1.6 billion from those surveyed, this provides a very compelling case for improved buying practices.
The survey showed that adherence to good practice guidelines across all key stages of the buying process (need definition, supplier selection and contracting, delivering outcomes and evaluating performance) could significantly improve the overall value that an organisation would realise from its consultancy expenditure.
For the past five months both buying and selling representatives within The Consultancy Buyers Forum have been working together to identify good procurement practice and today the Forum launches a knowledge portal that makes this output freely available to all consultancy buyers, whatever their role may be in the process. Its specific aim is to help maximise the value gained from the estimated £9 billion spent annually on management consultancy in the UK*.
Alan Leaman, CEO of the Management Consultancies Association, says, "Independent research shows that, on average, clients believe that the benefits of a consulting project are worth around £6 for every £1 spent in fees. Our aim is to increase this further through improved understanding and approach on all sides. The aim of the Forum is to ensure that good practice becomes normal practice."
When asked about the most important stages of buying consultancy services the respondents ranked their organisations current performance in each area. The average scores out of ten (where 10 is outstanding and 0 is extremely poor) were:
- '6.63' for selection of the right consultancy supplier to deliver best value
- '6.08' for accurately defining the initial business need
- '6.06' for specifying the deliverable outcomes of the project
- '6.00' for monitoring the consultancy supplier to ensure the project remains on track
- '4.83' for evaluation of the overall value delivered by the project (eg in terms of ROI)
- '4.66' for evaluation of the suppliers' performance at the end of the project.
Alan Leaman comments, "Respondents are telling us that their performance at these critical moments during the buying process need improvement. Increasing buyers' knowledge and confidence in these areas is key to more successful partnerships and greater value for businesses buying consultancy."
Paul Vincent, Founder and Chair of The Consultancy Buyers Forum, comments, "Consultancy is a very different type of purchase to most, if not all, other spend areas and for a number of reasons there are times when the buying process can have a negative impact on the quality and value of the business outcomes achieved. Often this is caused by a lack of knowledge and understanding about what buying for value really means. By giving clients and procurement professionals access to the same good practice insight they are more likely to be in tune with each other and with consulting firms during the buying process and thereby deliver a better result all round for their organisations."