By Leon Gauhman, chief strategy officer, Elsewhen
Covid Consultancy Contracts , a legal dispute between Hertz and Accenture, and question marks over EY’s involvement in the collapse of Wirecard have combined to erode the consultancy sector’s hard-won reputation for insight and attention to detail. At the same time, high-profile errors and a failure to deliver meaningful results on vital public health projects such as Track and Trace have led watchdogs and the media to question the value big consultancy is delivering. Little wonder media commentators are blasting the “waste, negligence and cronyism” at the heart of Britain’s pandemic spending.
It doesn’t need to be this way: the consulting sector could, and should, play a key role in helping the UK economy upgrade its infrastructure and improve its competitiveness ready for a post-Covid/Brexit landscape. But the industry’s leading firms need to rethink their ethos if they are to reverse the negative headlines, public outrage and lawsuits that threaten their reputation.
Here are five action points that big consulting should embrace as a manifesto for the future:
- Prioritise purpose over profits: Big consultancies, required to deliver robust shareholder value, have sought to make themselves invaluable by doing more for their clients. Increasingly this has seen them taking on jobs that they don’t necessarily have the expertise to deliver. This relentless pursuit of profit over purpose has been exposed as deeply problematic during the current pandemic. For example, consultants are excellent at insight, analysis and advice, but are they really equipped to run Test and Trace testing centres? Trying to be all things to all people may give a short-term bump to the bottom line, but it can have negative repercussions down the line in terms of reputational damage and, potentially, litigation. A far more effective model would be for big consultancies to act as honest brokers, helping clients to source expertise from the right experts. The government’s repeated failures on the issue of PPE contracts – which included paying a Spanish businessman £21m out of public funds – is a case in point. This honest broker role might also have helped the government avoid accusations of Covid-19 cronyism.
- Bring your A team – including technologists and designers – to the game and keep them there: Consultancy behemoths are caught in a cultural trap whereby senior people pitch and win business, then pass the responsibility for delivery down the line to juniors. The problem with this approach, however, is that the juniors are not always ready to step up – they lack expertise, assurance and experience. The truth is that consultancies need to ensure their A team leads on execution and delivery if they are to provide a high-end service to customers.Similarly, operational experts (technologists, designers etc.) need to be at the top table, participating in strategic conversations so that solutions are implementable. Basic errors in Track and Trace such as Public Health England using an outdated version of Excel to manage and store large volumes of public data (culminating in the under-reporting of 16,000 Covid-19 positive cases) is a classic example of this: those working on the project clearly didn’t have the necessary technological expertise to know that Excel was not the right software for this project.
- Put customer centricity before supplier network: A recent report concluded that 78% of consulting work goes to preferred suppliers such as Deloitte and KPMG. While this model might work for clients, it’s risky for consultants to replicate it in their own procurement strategies. The reason for this is that delivering a truly customer-centric solution to clients requires best-in-class tech solutions and agile methodologies that are ideally suited for each project. Such is the pace of change in tech that over-reliance on an existing roster of suppliers and technologies exposes clients to the risk of becoming locked in to overpriced and outdated legacy systems. If anything, this issue has become more important for consultants as strategy becomes commoditised and executional capabilities become the added-value differentiator between rivals. To ensure customer-centricity, consultants must talk to clients about what tools the project actually requires – rather than following the path of least resistance. They should also take a rigorous approach to supplier relationship management.
- Challenge opaque procurement processes: Concerns over a culture of cronyism around government Covid contracts have been flagged by a damning National Audit Office report. Unfortunately this commentary does just as much damage to big consultancy’s reputation as it does to the government. What’s more, big consultancies tend to outlive governments, so any reputational taint clings to them for longer. To counter this, big consultancies should use their scale and experience to challenge public sector procurement processes that are opaque, or where the playing field isn’t level. This would help ensure contracts are awarded on merit and value for money rather than cronyism.
- Deliver measurable ROI: The UK consultancy sector is currently generating around £11.3 billion a year in revenues; a 7% annual increase despite the impact of Covid-19. This is rightly presented as a good news story by the industry – but the flipside is that it represents an increased cost burden on businesses and taxpayers. The obvious question is whether this price inflation equates to value for money. Whether it’s HS2, Covid-19 or Brexit, you rarely see a headline celebrating the cost-effectiveness of consultancies. The implicit message for the industry is that it needs to be more accountable – building in KPIs/benchmarks that prove cost effectiveness. There’s no question that leading consultancies have the strategic and accounting firepower to do this – so why not beat the National Audit Office and Parliamentary Select Committees at their own game by providing transparency?
Final thoughts
The consulting sector faces other systematic problems, such as an undue emphasis on scaling up and an unhealthy interdependence between accounting and consulting (which can create a conflict of interests). The Financial Regulatory Council has already put forward proposals for EY, Deloitte, PWC and KPMG to separate consulting from accountancy, with legislation on the cards if the big four don’t take steps to do so voluntarily. For now, transparency, a customer-centric model, effective use of senior and tech talent and a commitment to delivering the best possible results could be a much-needed step towards rebuilding big consultancy’s tarnished reputation.
