The right Consultant can play an instrumental role and can help your organization save money, make money, and solve a plethora of business issues. But how to describe and classify consulting work?
On this week’s Smart consulting Sourcing podcast, Consulting Sourcing Expert Hélène Laffitte talks about The 7-High Level Consulting Capabilities Categories That Every Client Should Know.
Key Takeaway: All capabilities can usually be mapped to functions within a given corporation. However, several capabilities are more difficult to link to an existing function since they can have either cross-functional or company-wide impacts. You can see that the consulting market is diverse. Each one of these capabilities is divided in many sub-categories in which some nich consulting firms thrive. And capability is just one of the many dimensions to describe the industry…
Hello and welcome to episode 52 of our podcast: Smart Consulting Sourcing, THE podcast about Consulting Procurement.
My name is Hélène, and I’ll be your host today.
Each week I’ll give you the keys to better use, manage and source consulting services.
This week, I’ll review The 7-High Level Consulting Capabilities That Every Client Should Know
Last week, I talked about 6 Great Advantages of the Gig Economy That Will Affect the Future of Consulting
We saw that they are new business models emerging due to the gig economy in consulting. And as these models are still evolving, pivoting and progressively finding their way, we can observe the key elements that make them a great proposition. One thing is for sure: more than ever, Clients have an abundance of opportunities to source talent, expertise, and offerings tailored to their specific needs and situations.
The right Consultant can play an instrumental role and can help your organization save money, make money, and solve a plethora of business issues. However, the challenge is finding the best candidate who will turn great ideas into carefully executed Consulting projects, and deliver stunning results.
Have you ever wondered, looking at consultant’s website: “What do they actually do? What problems do they solve? And what are they good at?”
Well, it’s not uncommon for companies that are helping others to define their value proposition, sharpen their strategy and optimize their marketing budgets. Many consulting firms are quite slow to embrace the internet and even more social media. So to facilitate your future browsing we have tried in this podscast to give you an overview of the key dimensions that characterize the DNA of a consulting firm.
What Do “Consulting Capabilities” Refer to?
The Capabilities are the services offered by consultants. They usually mirror the business functions that client organizations need to perform. This dimension is crucial to describe the work in consulting. Most Consulting Firms will have at least this information on their company presentations.
And we have identified 7 high-level capabilities that you should know.
The first one is Strategy & Management –
Strategy is about building a competitive advantage among the competition and make profits. As a result, the capability is geared toward high-level, corporate decisions. It helps leaders define “where to play” and “how to win” for achieving a financial return. A significant share of high-level Consulting engagements falls in this category. For long, strategy was the dominant capability. Its relative share in the overall consulting market has been decreasing while implementation and excellence projects were flourishing. Today this category represents about 10% of the global market.
It includes capabilities such as Corporate Strategy, Business Unit Strategy, Organization Architecture, Management Model, Corporate Governance, Innovation Strategy, M&A, Strategic Communication as well as Economic or Government Policy.
The second capability is Sales & Marketing –
Sales & Marketing is focused on top-line activities to help companies drive profitable growth. Sales & marketing consultants support clients to deliver above-market growth by developing their marketing capabilities or improving their sales effectiveness. This capability is striving in the consulting market as its impact on the P&L is usually direct and measurable. The category represents close to 10% of the management consulting market.
It includes capabilities such as Branding, Revenue Management, Market Entry Strategy, Omni Channel Marketing, Sales Effectiveness or Customer Experience.
Let’s move on to our third capability: Operations –
Operations are one of the largest lines of services. It regroups most of the activities where products and services are usually built or delivered. Even though Operations can be a source of innovation and a differentiator, most of the time the focus is on reducing costs and increasing throughout. Operations consultants use concepts such as Lean, Six Sigma, or Quality Management to help their clients streamline and improve operational efficiency. It represents about 25% of the market for management consulting.
The category includes capabilities such as Manufacturing, Procurement, Supply chain, Quality Management, and Compliance, G&A Optimization, Lean or Knowledge Management.
Capability number 4 is Finance & Risk –
Consulting firms specialized in financial advisory service work with finance and risk management executives (such as CFO’s). They help them make decisions, develop customized strategies and deliver superior results by analyzing the financial and economic risk and uncertainties for their companies. The category represents close to 20% of the management consulting industry. Its size is often difficult to assess given the overlap of the activities with legal firms, auditors and M&A boutiques.
The category includes capabilities such as Corporate Finance, Actuarial, Restructuring and Crisis Management, Tax Advisory or Risk Management.
Number 5: Human Capital –
Human Capital consulting focuses on maximizing the value created from Human Resources, or employees, in an organization. The offering is quite wide from Organization and Leadership Development to Improving the Effectiveness of the HR function. Since the capability has low barriers to entry and many consultants set up their own business, the market is highly fragmented. Besides, there is a low level of market share concentration despite the significant number of operators. The top four companies in the industry generate just over 20.0% of the industry’s revenue. The category represents about 10% of the overall consulting market.
The category includes capabilities such as Talent Management, Organization Development, HR Effectiveness, Social Relations or Compensations & Benefits.
Research and Development is our 6th category-
Research & Development Consulting is helping companies to optimize the way they are developing Products and Services. Companies aim to find the right balance between with a strong focus on customer needs and delivering cost-effective returns. In a time of constant change and when innovation cycles are accelerating, the research and development activities have become a key differentiator. The consulting offering ranges from identifying where technologies and skills will be required to how products and services are developed. With about 5%, it represents a small but very valuable portion of the consulting market.
The category includes capabilities such as R&D Strategy, R&D Effectiveness, Product Development, Manufacturing Engineering, and Open Innovation :
Last but not least, Technology & Digital –
Technology Consulting might also be referred to as IT consulting. However, the rise of Digital, Fintech and all the Tech Startups activities is changing the rules of the game. The capability has been rejuvenated as most companies have now elevated technology to the highest level of their agenda. Technology consultants offer services helping companies embrace new technologies, digitize their processes and modernize their legacy systems. In short, leverage technology as a source of competitive advantage. The scope for this activity overlaps with strategy and functional areas for strategy, media, and specific systems and with IT services for the low end or recurring activities. Depending on definitions the category can represent up to one-third of the global consulting market.
It includes capabilities such as Digital Strategy, Digital Architecture, Systems Integration (CRM, ERP, …), Data Management and Analytics, Cyber Security, or IT related services.
All the previous capabilities can usually be mapped to functions within a given corporation. However, several capabilities are more difficult to link to an existing function since they can have either cross-functional or company-wide impacts. Those services can be offered either by large consultancies or by very focused ones. This category includes capabilities such as Disruptive Innovation, Post Merger Integration, Sustainability, and Corporate Responsibility or Value Transformation.
You can see that the consulting market is diverse. Each one of these capabilities is divided in many sub-categories in which some nich consulting firms thrive.And capability is just one of the many dimensions to describe the industry…
That’s it for today. Next time, I’ll go over The 8 Defining Stages in the History of Consulting.
In the meantime, if you have any questions, or want to learn more about what we do at consulting quest, just send me an email at firstname.lastname@example.org
You can also have a look at our website smartconsultingsourcing.com to know more about our book and download free templates & guides to improve your consulting sourcing.
Bye and see you next week! Au revoir!