January 8, 2014 at 10:00 pm #292037SIG AdministratorKeymaster
We are a North American communications and media company looking to formalize a sourcing and vendor management program for our Management Consulting category. We would like to gain insight on how you manage the number of consulting firms as well as their performance. Some questions are:
- Have you implemented a sourcing strategy for your Management Consulting spend? Would you be willing to share your ‘Lessons Learned’?
- What cost management strategies have you implemented? For example fixed rates, volume rebates, etc.? What have you found most beneficial and easiest to manage? What was problematic?
If you wish to donate any templates or tools to this inquirer or to the SIG Resource Center, please feel free to email Mary Zampino directly at [email protected]. All templates and tools can be scrubbed by SIG and approved by you before posting.January 9, 2014 at 3:21 pm #292649AnonymousGuest
If you are overly focused on cost containment in management consulting you’re doing something wrong. Consultative agreements should be enhancement or transformational deals, not utility contracts (to use Gartner’s paradigm), so focus on the output/value received not the cost. You’re looking for a trusted advisor, someone who knows/understands your unique size, scope, complexity, regulatory environment, culture, management model, etc. All engagements should have clear deliverables, SLAs, and (whenever possible) outcome based payment schema. Consider incentives and gain-sharing as well as volume discounts (based on dollar spend) where appropriate.January 9, 2014 at 3:22 pm #292651AnonymousGuest
The vendor program for Management Consulting that I’ve worked on was part of an MSP that handled all temporary staffing as well. Certain technologies that are used for contingent labor, such as IQNavigator and Fieldglass, have the capability of requisitioning project based work and also processing spend on a milestone/deliverable basis.
Management Consulting is a very relationship driven industry, I’ve found it hard to effectively bid out these projects on a regular basis. Because of the knowledge these types of companies need to develop about your business in order to effectively consult it becomes more time consuming and expensive to use someone different every time.
One strategy used for cost management included developing rate cards with all of the major firms. When pricing out a fixed bid engagements I would require the vendors to engineer their bids based of the rate cards negotiated to provide visibility in to all the resources they were involving and for how many hours/days. These cards can be standardized across all vendors so that resource rates are comparable. There is also a range of consulting services that most firms offer in terms of strategy level. I would recommend developing multiple rate cards with each firm to differentiate their highest level services like department transformation from lower level work like process advisory or implementation services.
I’ve also utilized volume based discounts, either a percentage off their rates after a certain spend threshold or and end of year rebate. This was the best source of measurable savings however, it can turn in to a significant year end project to ensure all discounts are honored.
Score carding proved beneficial from a relationship building perspective. I incorporated stakeholder feedback by developing a questionnaire for managers to rate the performance of a vendor on the engagement level. I also wrote SLA’s in to each contract that became part of that score card, but were very difficult to track and actually enforce.January 9, 2014 at 3:23 pm #292652AnonymousGuest
This is an area in which our firm (and myself personally) have done a lot of work. Would be happy to talk to the member offline and discuss what they are looking for.
Geoff Peters | Principal | The Hackett Group | 525 W. Monroe Street | Suite 1550 | Chicago, IL 60661 |
tel: +1 312 325 2937 | fax: +1 312 325 2901 | cell +1 773 251 4413January 9, 2014 at 3:23 pm #292653AnonymousGuest
I review annually our total consulting spend and determine which type of consulting they provide (legal, supply chain, accounting/finance, etc.) We do have a short list of preferred consulting firms, however tend to allow others to bid as well to ensure we keep up to date on any new services / experiences they have gained since we last spoke.
Cost Management: I tend to be explicitly clear in the expected deliverables and therefore work with a fixed cost basis with an amount of time agreed to complete (this way if they take longer I am not having to pay anything additional.) If however the deliverables are a little unknown I will agree to a Time & Material basis, but always provide a cap on the amount, if they go over they require further approval from me (this requires tracking of their timesheets = additional work.) I also put a cap on expenses (% of total agreed cost.)January 17, 2014 at 3:26 pm #292654AnonymousGuest
Happy to add some food for thought from experiences in buying consulting services, gleaned through work with major global organizations.
As a start, before looking at rates/alternatives/outcomes, it is important to understand why Consulting Services are different from other areas of spend.
1. You are essentially buying “knowledge” or scarce specialist skills
2. The market value of these skills is often intangible or difficult to measure objectively
3. The individuals involved on both sides of an engagement are typically very senior in the organization and may not welcome an outsider involvement in the procurement process
4. The outputs are often difficult to measure or even to define at the outset
5. Projects have a natural tendency to lead to further initiatives‚“scope creep” and “on sell”
6. The value expected from an engagement is usually much higher than the direct fees charged. Cost savings may not be high on the userÃ¢â‚¬â„¢s agenda
Overall, Consulting Services are not a commodity – success is based on ensuring delivery, extracting value and maximizing outputs, rather than driving down price.
Managing the various consulting firms is ultimately driven by the type of work, risk profile and role the supplier is being asked to fulfil. More mature organizations will use an appropriate model (each model can differ greatly from the other) for each consulting engagement.
I’d be happy to share with you some more concrete lessons learned in a more confidential setting if that would suit‚ where in North America are you based?
Scott SparksFebruary 24, 2014 at 3:26 pm #292655AnonymousGuest
We would be delighted to have an open discussion with your company, please let me know a convenient time and I will set up a call with our SVP Practice Leader for SOW.
Please see attached.
Jon Holden | IQNavigator | SVP Sales EMEA & Asia Pacific Direct Line +44(0)207 340 8681 Mobile: +44(0)7789997370 50 Broadway â€¢ Westminster London SW1H 0RG UK http://www.iqnavigator.com [email protected]September 1, 2014 at 3:21 pm #292650AnonymousGuest
We RFP’d a pretty granular and standardized (across the firms) a rate card and then eauctioned the same. Net result was xx% saves from where we were on rates. We’ve also implemented a good performance scoring process and have to an extent marketed this internally with a selling point not only being a view into past performance and a better price but ease of use in that all the vendor management and contracting is done so “time to start date” is much faster than reinventing the wheel or introducing a new vendor.October 17, 2017 at 5:40 pm #294098[email protected]Guest
Our company also implemented a governance process for management consulting to manage demand. The senior management team forms a committee to understand the cost benefit of hiring management consultants and also look at the bigger picture as how to it contributes to company’s goal and strategy.
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