What is consulting? An accurate definition

Key Takeaways

Consulting is a very broad term, and the lines are blurring more and more with emerging industries such as Digital and Fintech. You need to make sure that everyone in your company shares YOUR definition of consulting.

So take the time to create the taxonomy of what you consider “consulting services”. Even better, write a guide for your executives explaining how they should work with Procurement depending on the type of consulting they need.

Transcript

Hello and welcome to episode 66 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. In Last week’s episode, I gave you 5 Real-Life Lessons About Consulting Sourcing.

Nothing complicated. Anticipate your needs, define the right criteria to find the right consultants, apply a sensible sourcing process, define your expectations and measure the performance. See? Nothing groundbreaking, just common sense!

Today, I’ll do something different. I wanted to define what consulting is.

I was interviewing the Head of Procurement of a large company recently. And I asked him. “When and how is Procurement involved when buying consulting services? ”

And he answered. “It depends on what you define as consulting…”

I was about to ask what this meant when he dove into his answer, which I will share with you in this podcast. Here’s what he said.

“Today, everybody is a consultant. You can be a legal consultant, a public relations consultant, social media consultant, … And for us, it can be Strategy consulting, operational consulting, or interim. And depending on that, we will be involved, or not.”

And I found his perspective interesting and thought it might be worth devoting an episode to define what I call consulting.

What is consulting then?

Consulting is often defined as giving expert advice to other professionals. True, but I think it is a bit simplistic. Because sometimes the consultants don’t give advice: they do the work.

A few years ago, I sourced a procurement consulting firm to help a client optimize their tail spend on raw materials. The consultants even went to negotiate directly with the suppliers on behalf of the client. Is it still consulting, yes. But you will agree that it is way more than recommendations.

Same thing, when consultants support implementing a new organization: they design the org charts, write the job descriptions, define the interfaces, prepare the communication to the teams, etc. Do we still agree that this is way more than giving expert advice?

So what is consulting? I see it as a project-based work organization with dedicated teams and little interdependencies with the rest of the organization.

Now let’s get to the next question: what is consulting from a sourcing standpoint? Let’s imagine that you have led your make-or-buy analysis and decided to outsource your project.

What are the different capabilities?

I use consulting as a short for management consulting, also called business consulting. It covers 7 high-level capabilities:

Companies need to build a competitive advantage and make profits. As a result, the Strategy & management capability is geared toward high-level, business-wide decisions. It aids executives in deciding “where to play” and “how to win.” A substantial portion of high-level consulting projects falls into this category.

Sales & Marketing involves short-term activities to assist businesses to achieve profitable development. Sales and marketing consultants help clients improve their marketing abilities or sales effectiveness to achieve above-average growth.

Human capital consulting focuses on increasing the return on investment generated from Human Resources (or employees) in an organization. The services offered range from Organization and Leadership Development to Enhancing the Effectiveness of the HR Department.

Finance & Risk consultants help their clients make decisions, develop tailored strategies, and deliver superior results by analyzing their companies’ financial and economic risks and uncertainties.

Though Operations may be a source of innovation and a differentiator, the main objective is usually to cut expenses and improve productivity. Operations consultants utilize ideas such as Lean, Six Sigma, and Quality Management to assist their clients in optimizing and improving operational effectiveness.

IT consulting may also be referred to as technology consulting. However, the advent of Digital, Fintech, and all the Tech Startups industries is disrupting the game. Technology & Digital consultants work with businesses to help them embrace new technologies, digitize their procedures, and update their aging infrastructure.

Finally, Research & Development Consultants help their clients optimize the development of Products and Services. The goal of most enterprises is to strike a balance between customer needs and cost-effective returns. The consulting services include identifying where technologies and skills will be required and how goods and services are produced.

Is it consulting?

But let’s keep in mind the definition from before: a project-based work organization with dedicated teams and little interdependencies with the rest of the organization.

Is staff augmentation a form of consulting? According to this definition, no. It is rather interim work.

Are expert networks consulting firms? Not really. Or it would be micro-consulting where the project is 1-hour long.

Are all consulting activities project-based? 90% of the time, yes. Then you have the remaining 10% that is divided between trusted advisory, coaching, and training.

Are all IT activities consulting? That’s a tricky one. IT Strategy and ERP implementation are clearly consulting work. But IT maintenance or app development? Not really.

Is consulting always external? Nope. It can absolutely be led internally. This is what you call internal consulting, or center of excellence or whatever fancy name your company has invented.

Is engineering consulting the same thing as management consulting? Yes and no. It is project-based with dedicated teams. The difference is in the type of work done. And there are some overlaps on feasibility projects, for instance.

What is the conclusion?

Consulting is a very broad term, and the lines are blurring more and more with emerging industries such as Digital and Fintech. Then what?

You don’t need to adopt my definition. But you need to make sure that everyone in your company shares YOUR definition. So take the time to create the taxonomy of what you consider as “consulting services.”

Even better, write a guide for your executives explaining how they should work with Procurement depending on the type of consulting they need.

That’s where our episode ends; thank you for listening. Next week, I’ll try to decipher for you the consulting fees & rates. We’ll talk about cost structure, fee structure, and all that jazz.

Hope to see you next Thursday!

If you want more episodes go to podcast.smartconsultingsourcing.com.

And if you have any questions, or want to learn more about what we do at consulting quest, just send me an email at helene.laffitte@consultingquest.com
You can also have a look at our website consultingquest.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!

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