Most of us are resistant to change. We take comfort in the familiar and how we’ve always done things. We drive the routes we know; even if we have a sneaking suspicion there’s a shorter way to go. And for many decades, the average professional services firm delivering consulting services had a business model that seemed to work very well for them: a time and materials-based contract. Billable hours were king. So why change a good thing?
But these glory days are behind them, “Corporate buyers of professional services have become more demanding, pushing back against concepts such as billable hours, and requiring fixed fees and with greater transparency on costs. In an increasingly agile environment, intensified by rapid digital innovation, clients now expect more value, a higher quality of work, and a faster delivery of solutions and services.” How can companies providing these services rise to the challenge in a manner that makes them stronger over time? As Kelly Clarkson famously sang, “What doesn’t kill you makes you stronger.” Because whether or not business consultants are prepared to change, there’s no doubt that their client behaviors are changing.
Many consulting firms do recognize the need to adapt, “This has hit the margins of consulting firms, forcing consulting executives to recalibrate their own business models accordingly. Fifty-one percent of those surveyed considered price pressure a top business development challenge over the next 12 months, and increasing profitability was a top priority for 54% of the firms surveyed, followed by managing a contracting and/or unpredictable spending environment (27%).”
These changing client behaviors aren’t the only challenges to the professional services business model. Like every industry, post-COVID, there is an increased war for talent and challenges in retaining existing talent (the great resignation). There’s also growing competition from new entrants to the space, “Respondents from management consulting firms worry about competition coming from both new firms (42%) and larger competitors (35.4%), with an edge to the emerging-firm threat."
How to deliver greater value to clients for the same or less money with potentially fewer resources? “Clients increasingly demand more value, higher-quality service, and faster delivery of solutions and services in a more agile environment fueled by rapid innovation. Clients are more interested than ever in the value consultants provide. On the other hand, consulting fees are not always larger, but they are more strongly tied to outcomes.” At BusinessOptix, we have at least part of the solution: We provide consultants, GSIs, and services organizations with various tools to productize their method and IP. These tools enable them to provide consistent and repeatable results to customers, professionalizing and increasing the value extracted by both parties. And they can do this with fewer resources in a significantly compressed time period compared to a traditional engagement.
But the point is not merely to restore the business equilibrium and maintain margins. Instead, it’s to deliver a new and better generation of consulting services. BusinessOptix can enable consultancies to:
Management consultancies have been around for a long time, since the late 19th century. Change is inevitable. Evolution is better. BusinessOptix can help consultancies to evolve into fit-for-purpose, stronger digitally enabled professional services firms.
