As the vultures circle and markets feel the pinch where are consultants able to add value to business? Mark Dye, FSNs contributing editor, reports.
Many of us shy away from outsiders, preferring to stick with who and what we know best when it comes to both our professional and personal lives. However, this isn’t always the smart thing to do if you are looking to add value and strategic thinking to your business.
This is where consultants normally step into the fray – experienced guns for hire that can help to assess plans, bring in fresh ideas and push ahead with business objectives that might otherwise be consigned to the wastebasket in a boardroom out of fear or internal objection. Such clarity of thinking is a necessity for those at the top as they seek to validate and legitimise both current and future business processes.
But when the markets get tough where are consultants able to add value? Logic suggests that the very best can deliver business efficiency and real value even if they may at first seem expensive. After all, in the merger markets those companies that move decisively post merger boom were seen to come out on top when deal making in a downturn, according to The Boston Consulting Group. So why shouldn’t strategically deployed consultants make the difference, if not more so, in a downtown?
“We are in the business of making our clients successful,” says Mike Reid, MD EMEA of Sapient, a global services firm. “We achieve this by adding value through helping them to solve their problems or achieve their desired business results.”
Reid says this service may extend from something as simple as facilitating an internal meeting to implementing an entirely new global IT system.
“Whether the market is booming and you are helping your clients grow or whether the market is in decline and you are helping them cut costs, the thought process is the same,” he adds. “We need to continually innovate and add value so that clients want us around.”
As Mark Nutt, principle consultant, Morse, points out, “In a downturn, questions are often asked about the value of consultants. This really isn't a bad thing though as it separates the wheat from the chaff.”
Even during a downturn, he asserts that businesses still need to innovate, while at the same time finding ways to make business operations more efficient.
Good consultants will help with both, he says.
By providing specialist industry and technical knowledge Nutt says they can help clients find ways to bring innovative products to market. At the same time, by examining key business processes and core operations, strategies can be developed to reduce operational expenditure.
“The key is really efficiency,” he adds. “At a time when businesses are feeling the pinch, if consultants can demonstrate how they can help organisations be more efficient they are without doubt going to be valued.”
“Often in a downturn you find that it's specific areas of a business where you can add value,” he says. “For example, at the moment we are seeing a lot of demand for technology and asset lifecycle management services as organisations are finding that they can reduce IT costs without reducing the value that IT provides to the business. Our clients have found that by simply looking at IT procurement and management processes, understanding how IT assets are being used and correlating this information with power usage costs, they have been able to reduce overall operation expenditure on IT," he says.
“The clients we’ve seen, and particularly those based in the hard hit economies of Western Europe and North America have been most interested in complex outsourcing, shared services, process transformation, and governance initiatives,” says Robin Shahani, managing director, Business and Financial Processes, EMEA and APAC, EquaTerra.
Shahani says that Equaterra has been predominantly helping mid-market and multinational clients, alike, drive near, mid-, and long-term improvements in EBITDA by leveraging primarily back office outsourcing, shared services, and process transformation.
Interestingly, Shahani says that buyout firms have increasingly engaged the firm upon acquiring a company to drive immediate improvements and it’s here that he believes the company will see more activity as the prospect of mergers and acquisitions increases.
He also believes that the specialist firms with strong strategic capabilities, a deep marketplace knowledge and relevant, data-driven analysis tend to be the smarter choice for large and small buyers alike when looking to add value.
According to Shahani, there are essentially two types of organisations - those that care primarily about operational cost savings and others, who take a longer term, investment-focused, transformational view.
Which approach they take depends on a company's specific market pressures as well as the executive responsible for employing them.
“For instance,” he says, “one of our financial services clients is interested in a massive back office outsourcing to reduce its cost base within 12 months, while a similarly situated prospect is much more interested in process improvement and risk management, which would yield greater savings in 2-3 years.”
Most of EquaTerra's assignments end up as transformational, in whole or part, rather than driven by operational cost reduction, he says, usually after clients have been introduced to the opportunities lost by a short term view.
“In hard economic times, there are only two choices – we innovate, or we die,” says Neil Davidson, managing director, Maconomy. “Taking a big picture view is essential for innovation to become meaningful and realistic.”
All this, he says, means hard facts to make decisions and the ability to spot trends in real time in order to be able to meet them.
“Practically, that means acting on reliable figures and connecting the right people to the right information,” he adds. “It means avoiding bottlenecks of resources at one time and having skilled people sitting on the bench the next.”
Enterprise Resource Planning (ERP)is an obvious way to plan for change and business innovation and many consultants use this as a map to open up the possibility of deploying resources in new ways.
“It is a fact that nothing like hard times will shine a light on business structures because it is now that small errors matter and organisational flaws show on the bottom line,” adds Davidson. “According to American innovation-guru, Stephen Shapiro, it is precisely in a downturn that innovation will save you. It is when you face diminished growth or even losses that you will feel enough pain to envisage something better and summon up the effort to make it possible.”
Of course, this doesn’t mean rushing out and investing large sums in outlandish projects. Instead, says Davidson, Shapiro suggests that this is the time to fail cheaply. In other words, to try new ideas on the small scale and grow through experimentation.
“The challenge is to remain alive to the possibilities and not become anaesthetised by daily routines and comfort.”
