By Claus Thorsgaard
A Look Ahead
All indications suggest nearly double-digit revenue growth within the consulting sector in 2014. That’s excellent news. Targeting high-opportunity industry sectors—like healthcare and energy with high-demand services – like sales & marketing and operational improvement—will be essential for your firm to carve out its segment of the revenue pie. And if you can price competitively, yet deliver profitably, your firm is in an excellent position for growth.
With the consulting market experiencing such exceptional growth, is your firm well positioned to take advantage of new markets or changes in your service portfolio? And more importantly, can the systems you have in place right now, give your firm the historical insight it needs to make the right decisions and correct pricing, that will lead your firm to success and profitable growth?
Let’s take a look into each of the key consulting market trends, with some thoughts on what your firm might need to do to respond effectively to each trend:
Plan for Market Volatility. Despite spikes in demand, the best response to volatility is to keep your engagement workload as consistent as possible. This might mean being able to see, as far into the future as you can, the likelihood and scope of potential new business. And when those dips in demand occur, appropriately shifting resources across engagements means seeing which resources have both the capacity – and expertise – for the work you need.
Here, you want to be able to respond appropriately when demand spikes or dips. For most firms, this means wide visibility to accurate status of people and work. Keeping utilization consistent (and expensive resources on billable work) means being able to easily spot under-utilized or over-leveraged resources, and to quickly shift talent across jobs.
Streamline Workflow in Mega-Firms. As mergers accelerate, you want an easy way to bring the new entity into the fold. This means streamlining processes and avoiding redundancy. Once they’re on-board, you need visibility into their work and people, so you can take advantage of new capacity – and also understand how well the new entity is performing.
You need increased efficiency as the firm becomes more complex. If yours is like many firms, you probably have several different management systems running the firm – which could mean redundant data and cumbersome workflow, both of which drag down efficiency and eat up time that could be spent on billable work. Seek to streamline workflow across the organization.
Leverage Expertise in Specialized Firms. If you’re planning to specialize, proving your expertise is increasingly important. This is especially true when you strike out for new business – to show why your firm and its people are better suited than anyone else to deliver the work. If part of your specialty includes highly niche services, perhaps with fewer resources than larger competitors, you might look for ways to scale those offerings into packaged, repeatable services. Your specialized expertise may help you justify a higher fee, and you might find higher margins in any repeatable offerings where you can repurpose previous work.
Here, it’s helpful to have easy access to resource expertise. Look for ways to categorize resources not just by available capacity, but also by talent or expertise. Especially savvy firms might even be able to summarize the total hours a resource has worked on a given type of engagement, or within a specific vertical. Equally helpful for producing – and scoping – winning bids, is easy access to past work. You’ll want to be able to study the effectiveness of the resources, determine the actual cost of the deliverables, and also easily demonstrate your firm’s expertise in your focused niche.
Protect Margins Under Fee Pressure. Your rates may come under fire, or clients might ask for extremely generous payment terms—as many as 120 days isn’t uncommon. You don’t want to be a free financier. In light of this, you might look for as much efficiency as possible, so you can keep people on billable work and cut down on administrative expense. This will help protect your margins. Being able to prove your value, perhaps with success stories of other clients, might help you get the rate you want, at least put you in a defensible position with purchasing. And despite the payment terms, you want to bring in as much cash, as quickly as you can.
Here you need to be able to reduce rates, while still protecting margin. Or, move to a fee structure that doesn’t expose your rates to as much negotiation or risk. You need to make it easy for your consultants to enter time, give billers easy access to the project so when milestones are reached, invoices can be sent and an efficient workflow to recognize revenue quickly.
Is Your Firm Ready?
The obvious questions arise. What are some ways you can get workload visibility, and resource management control? What are ways to gain efficiency, and free people for more billable hours? Are your firm’s management systems and processes going to help—or prevent—you from responding to these market trends?
An ideal approach to gaining the necessary insight and control is connecting the entire firm on a single system. Your firm will be much better positioned to capitalize on a changing market. Imagine your firm with the complete visibility for staff access to trusted information anytime, anywhere, and from any device. Imagine informed decisions being made by your consulting manager facing staffing and budget issues, who is able to make appropriate decisions based on being connected to intelligent information in order to make the right decisions for your client, the engagement and your firm. All with the kind of deep insight your firm needs to constantly improve results.
And, if you find a configurable system that adapts to the way you do business—all the better. A solution that adjusts easily to the way your firm works, with the right flexibility for changes you may want to make in the future. Yes, this can be all yours in 2014—cheers!
Claus Thorsgaard, EVP and General Manager of Professional Services at Deltek