| | By John Niland
For over a decade,
professional advisers
have lived in a
relatively benign
market. Waves of
corporate
reorganisation,
regulation /
deregulation,
post-merger
systems-integration and
market-expansion have
produced ripples of
change-management,
leadership support,
technical challenge and
straightforward
resourcing needs.
Consultants have
benefitted enormously,
along with their cousins
in interim-management,
financial accounting,
project-management, IT
contracting, recruitment
and training.
However, all this has
now changed ...
sometimes permanently.
Describing these changes
in terms of downturn -
and hoped-for subsequent
upturn - runs the risk
of framing these changes
in terms of economic
cycles, when in fact we
are collectively living
through a global
step-change in the
provision of
professional services .
Like all historical
“step-changes”, the
significance is usually
understood in the
rear-view mirror.
Similar step-changes
have already occurred in
our lifetime, for
example...
* The Internet
facilitated the global
marketplace and virtual
working. Among other
things, this introduced
Far-Eastern development
resources and
call-centres, which have
permanently changed the
landscape of
business-services.
* The desktop
computer replaced entire
departments of clerical
officers, secretaries,
book-keepers and
administrators.
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* Low-cost airlines
(using the internet to
communicate directly to
customers) have
permanently changed the
world of airline travel.
An entire generation of
consumers have never
visited a travel-agent.
Consultancy (and many
other professional
services) are now
experiencing roughly the
same commoditisation as
the management of
hotel-bookings did a
decade ago. To those who
cry “Absolutely not!
Trust is a key
ingredient in the
relationship with an
advisor /
project-manager” ...
we need to remember that
a previous generation of
professionals said all
the same things about a
good travel-agent.
The forces of
change
The commoditisation
of the advisory market
is not confined to
consultants. Lawyers
and accountants are also
feeling the pinch.
Clients have less
tolerance for hourly
rates and seek
competitive quotes. A
significant chunk of
“value-in-advance” is
required in order to
secure the business.
Professional advisors
are required to be
proactive in the
client’s interest, and
not just respond to
requests.
But it is perhaps in
the world of consultancy
in which we can see the
most dramatic changes of
all.
Polarisation
If we add together
the influx of
consultants created by
corporate
reorganisation, plus
those who are competing
from low-cost countries,
plus more demanding
client criteria and
accountability, it is
fairly obvious that in
most fields the | |
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| | supply-demand balance is
shifting.
The consequences are
inevitable:
* More choice for
those who have
assignments, with
perhaps increased
hesitation to employ any
one consultant or firm
given the array of
talent available
* Downward pressure
on fees
* Higher demand that
consultants be real
thought leaders in their
field, and be able to
produce tangible
evidence for this
* Shorter engagements
– more frequent review
and re-tendering
* Greater insecurity
will drive many
consultants to economise
on development (both in
time and in money),
therefore exacerbating
the tendency to stay
stuck
* Those who do invest
in development will
invest in technical
skills e.g.
project-management
qualifications or MBAs,
but unless they also
learn to reposition
their services; they may
simply find that this
depletes their financial
reserves. This is
particularly true for
independents.
Taken together, these
factors spell a tough
outlook for the majority
of firms engaged in
consulting, advisory and
professional services
for quite a few years
ahead. Those who are
hiring consultants will
find themselves in a
buyer’s market, with
lots of people to choose
from, and every reason
not to rush the
decision.
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