We threatened recently to run a series on buying professional services in the context of public sector organisations and buyers. That came about in part through a report that identified spend by central government in the UK on consultants was rising again after some years of decline.
Let’s make a start today by looking at why organisations use consultants. There are three common and legitimate reasons why organisations use professional services firms: knowledge and specialist skills, intellectual capability, and delivery capability. But there are also occasions where purchasers pay good money for services they do not need.
Knowledge and specialist skills
These are the foundation of many consulting firms and indeed professional services firms generally. Those characteristics will often be mentioned when the budget holder explains to procurement why they want to engage a consulting firm (if indeed that happens).
Such knowledge may be technical know-how, such as professional advice on tax, accounting, or indeed procurement regulations! People working here should be truly deep experts in their field, perhaps with their own professional qualifications. Public organisations often call on this expertise either when they lack it themselves or where, perhaps because a particular course of action is high-risk, they need a second opinion. With cost pressures in recent years, organisations have in many cases lost these skills internally or decided it is not cost effective to have full -time resource; hence consultants may be needed more often these days.
What we call solution know-how is similar to technical know-how, but less formalised and therefore harder to evaluate. It might be a consultant’s knowledge of supply chain management: we would expect the consultant to be an expert, but perhaps defining their expertise is less clear than in the above example.
Market know-how relates to the adviser’s understanding of the client’s sector or another sector that the client wants to examine. Indeed, public sector issues are a good example; we might need someone who has deep understanding of specific issues connected with government. So public sector organisations are audited differently to private sector ones; it might not be enough to have a general expert on audit. These different types of knowledge are not mutually exclusive of course, and many assignments will need a combination of the above.
Intellectual Horsepower and Capability
Clients also want their advisers to analyse and solve problems, to think on their feet, or spot opportunities. That might require creative thinking and problem solving; which are not skills that can be simply taught at business school! Or it might be the consultant’s communication or facilitation skills that are vital. Sometimes assignments are really about the consultant bringing staff together and getting a strong consensus solution from the right internal people. Or it might be information that is really what is wanted: perhaps benchmarking data collected from past clients or analysis of recent economic trends.
Implementation and Delivery of Tasks, Projects or Programmes.
Indeed, a significant trend in professional services over the last decade has been the shift away from pure advice into “doing”. Clients are often looking for speed of implementation, accelerating processes compared to what can be done internally. It may be all about capable resource (quantity and quality), energy and momentum, driving a difficult task or programme through to delivery. Or it may be that the client or organisation knows what it wants to do but not how to do it, through inexperience or lack of knowledge; the consultant who has done it ten times before is an attractive option.
All of these reasons apply to many public sector organisations. What is important though is that clients and procurement professional understand the reason behind each engagement and why the firm is being engaged. If we look at the three main reasons, it is clear that some of the attributes required relate to the individual adviser, not the firm. Some relate to specific knowledge or experience of the firm. Others may simply require a bunch of smart, hard-working people.
That understanding can and should then define both the sort of firms that can be considered (so, for instance, which frameworks or other procurement routes should be chosen), the evaluation criteria for the selection, and the performance mechanisms that should be put in place to help ensure a successful assignment. Is it essential to have the details of the individual(s) who will perform the work, for instance, or is it enough to know that the firm holds the relevant intellectual property and experience?
Featured image courtesy of Markus Spiske.